e424b5
CALCULATION OF REGISTRATION FEE
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Title of Securities to be Registered |
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Proposed Maximum Offering Price |
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Amount of Registration Fee (1) |
4.70% Notes due 2017 |
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$ |
450,000,000 |
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$ |
32,085 |
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(1) |
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Calculated in accordance with Rule 456(b) and 457(r) of the Securities Act of 1933. |
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-159040
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 7, 2009)
$450,000,000
4.70% Notes due
2017
Health Care REIT, Inc. is offering and selling $450 million
aggregate principal amount of its 4.70% notes due 2017. We
will pay interest on the notes on March 15 and
September 15 of each year, beginning March 15, 2011.
The notes will mature on September 15, 2017. We may redeem
the notes at our option, at any time in whole or from time to
time in part, at the redemption price described in
Description of the Notes Optional
Redemption.
The notes are unsecured and rank equally with all of the other
unsecured senior indebtedness of Health Care REIT, Inc. from
time to time outstanding. The notes will be effectively
subordinated to all liabilities of our subsidiaries and to our
secured indebtedness to the extent of the assets securing such
indebtedness.
The notes will not be listed on any national securities exchange
or any automated dealer quotation system.
Investing in the notes involves
risk. Before buying any notes, you should carefully read the
discussion of material risks of investing in our notes under the
heading Risk Factors beginning on
page S-6
of this prospectus supplement.
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Per Note
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Total
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Public Offering Price
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99.710%
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$
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448,695,000
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Underwriting Discount
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0.625%
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$
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2,812,500
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Our Proceeds, Before Expenses
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99.085%
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$
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445,882,500
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The public offering price set forth above does not include
accrued interest, if any. Interest on the notes will accrue from
September 10, 2010.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the notes in book-entry form
through the facilities of The Depository Trust Company for
the accounts of its participants, including Clearstream Banking,
société anonyme, and Euroclear Bank S.A./ N.V., as
operator of the Euroclear System, on or about September 10,
2010, against payment therefor in immediately available funds.
Joint Book-Running Managers
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UBS
Investment Bank |
J.P. Morgan |
Barclays Capital |
Co-Managers
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Comerica Securities
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Fifth Third Securities, Inc.
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PNC Capital Markets LLC
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RBS
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The date of this prospectus supplement is September 7, 2010.
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-1
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S-6
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S-16
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S-17
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S-18
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S-19
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S-21
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S-30
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S-32
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S-34
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S-35
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S-35
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S-35
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Prospectus
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About This Prospectus
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1
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Cautionary Statement Concerning Forward-Looking Statements and
Risk Factors
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1
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Where You Can Find Additional Information
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2
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Documents Incorporated by Reference
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3
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The Company
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4
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Use of Proceeds
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4
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Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends
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4
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General Description of the Offered Securities
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5
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Description of Debt Securities
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5
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Description of Our Common Stock
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11
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Description of Our Preferred Stock
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12
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Description of Depositary Shares
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16
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Description of Warrants
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19
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Description of Units
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20
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Restrictions on Transfer of Securities
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20
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Description of Certain Provisions of Our Certificate of
Incorporation and By-Laws
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21
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Plan of Distribution
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22
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Legal Opinions
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24
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Experts
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24
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You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any free writing
prospectus we authorize to be delivered to you. We have
not, and the underwriters have not, authorized anyone to provide
you with additional information or information different from
that contained in this prospectus supplement, the accompanying
prospectus and any such free writing prospectus. We
are not, and the underwriters are not, making an offer to sell
these securities in any jurisdiction where the offer or sale of
these securities is not permitted. You should not assume that
the information appearing in this prospectus supplement, the
accompanying prospectus, any such free writing
prospectus or the documents incorporated therein by
reference is accurate as of any date other than their respective
dates. Our business, financial condition, results of operations
and prospects may have changed since those dates.
This document is in two parts. The first part is the
prospectus supplement, which adds to and updates information
contained in the accompanying prospectus. The second part, the
prospectus, provides more general information, some of which may
not apply to this offering. Generally, when we refer to this
prospectus, we are referring to both parts of this document
combined. To the extent there is a conflict between the
information contained in this prospectus supplement, on the one
hand, and the information contained in the accompanying
prospectus, on the other hand, you should rely on the
information in this prospectus supplement.
Before purchasing any securities, you should carefully read
this prospectus supplement, the accompanying prospectus and any
free writing prospectus we authorize to be delivered
to you, together with the additional information described under
the heading, Where You Can Find More Information, in
this prospectus supplement.
Unless we have specifically indicated otherwise, references
in this prospectus supplement to we, us,
our, the Company, or similar terms are
to Health Care REIT, Inc. and its subsidiaries.
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights selected information about us and
this offering. This information is not complete and does not
contain all of the information you should consider before
investing in our notes. You should read this entire prospectus
supplement and the accompanying prospectus carefully, including
Risk Factors and Forward-Looking
Statements contained in this prospectus supplement and
Cautionary Statement Concerning Forward-Looking Statements
and Risk Factors contained in the accompanying prospectus
and the financial statements and the other information
incorporated by reference in this prospectus, before making an
investment decision.
About Our
Company
We are a real estate investment trust that invests across the
full spectrum of senior housing and health care real estate. We
also provide an extensive array of property management and
development services. As of June 30, 2010, our broadly
diversified portfolio consisted of 625 properties in 39 states.
Our principal executive offices are located at 4500
Dorr Street, Toledo, Ohio, 43615, and our telephone number
is
(419) 247-2800.
Our website address is www.hcreit.com. The information on our
website is not part of this prospectus supplement or the
accompanying prospectus.
Our
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.
The
Portfolio
The following table summarizes our portfolio as of June 30,
2010:
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Number of
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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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Investments
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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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(in thousands)
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Senior housing facilities
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$
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2,672,125
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38.7
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%
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241
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19,340 units
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$
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140,726 per unit
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34
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Skilled nursing facilities
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1,434,269
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20.8
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%
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204
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27,442 beds
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52,265 per bed
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26
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Hospitals
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719,324
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10.4
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%
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31
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1,826 beds
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442,424 per bed
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13
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Medical office buildings
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1,722,397
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25.0
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%
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142
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7,587,088 sq. ft.
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250 per sq. ft.
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25
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Life science buildings(2)
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352,385
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5.1
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%
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7
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n/a
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1
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Totals
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$
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6,900,500
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100.0
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%
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625
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39
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(1)
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Investment per metric was computed
by using the total investment amount of $6,858,137,000 which
includes net real estate investments and unfunded construction
commitments for which initial funding has commenced which
amounted to $6,548,115,000 and $310,022,000, respectively.
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(2)
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Includes our share of
unconsolidated joint venture investments. Please see Note 7
to our unaudited financial statements included in our Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2010 for additional
information.
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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
S-1
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. 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. Our internal property management division actively
manages and monitors the medical office building portfolio with
a comprehensive process including tenant relations, tenant lease
expirations, the 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.
Recent
Developments
Effective September 1, 2010, we substantially completed our
previously announced $817 million partnership with Merrill
Gardens, LLC. A total of 32 communities with $628.3 million
investment balance closed effective September 1, 2010, with
the remaining 6 communities valued at $188.7 million expected to
close by September 30, 2010, pending lender consents.
Other
Information
The SEC maintains an Internet website at
http://www.sec.gov
that contains our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and proxy statements, and all amendments thereto. All reports
that we file with the SEC may be read and copied at the
SECs Public Reference Room at 100 F Street,
N.E., Washington, DC 20549. Information about the operation of
the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330.
S-2
The
Offering
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Securities Offered |
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$450 million aggregate principal amount of notes. |
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Interest Rate |
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4.70% per year. |
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Maturity |
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September 15, 2017. |
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Interest Payment Dates |
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Semi-annually in arrears on March 15 and September 15,
commencing March 15, 2011. |
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Ranking |
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The notes will be our senior unsecured obligations and will rank
equally with all of our other unsecured senior indebtedness from
time to time outstanding. The notes will be effectively
subordinated to all liabilities of our subsidiaries and to our
secured indebtedness to the extent of the assets securing such
indebtedness. See Description of the Notes and
Description of Other Indebtedness. |
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Use of Proceeds |
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We intend to use the net proceeds for general corporate
purposes, including investing in health care and senior housing
properties and repaying borrowings under our unsecured line of
credit and other outstanding indebtedness. Pending such use, the
net proceeds may be invested in short-term, investment grade,
interest-bearing securities, certificates of deposit or indirect
or guaranteed obligations of the United States. Affiliates of
certain of the underwriters are lenders under our Fourth Amended
and Restated Loan Agreement dated as of August 6, 2007. See
Use of Proceeds. |
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Optional Redemption |
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The notes are redeemable at our option, at any time in whole or
from time to time in part, at a redemption price equal to the
sum of (1) the principal amount of the notes (or portion of
such notes) being redeemed plus accrued and unpaid interest
thereon to but excluding the redemption date and (2) the
Make-Whole Amount (as defined below), if any. See
Description of the Notes Optional
Redemption. |
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Certain Covenants |
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The notes and the supplemental indenture under which they will
be issued contain various covenants including the following as
described in Description of the Notes Certain
Covenants: |
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A covenant not to pledge or otherwise subject to any Lien (as
defined below), any of our property or assets or those of our
subsidiaries unless the notes are secured equally and ratably
with all other obligations so secured. This covenant does not
apply to Liens securing obligations that do not in the aggregate
at any one time outstanding exceed 40% of the sum of
(1) the Total Assets (as defined below) of us and our
consolidated subsidiaries prior to the incurrence of such
additional Liens, and (2) the purchase price of any real
estate assets or mortgages receivable acquired, and the amount
of any securities offering proceeds received (to the extent that
such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness (as defined
below)), by us or any subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with
the incurrence of such additional Liens. In addition, this
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S-3
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covenant does not apply to certain of our other obligations as
more fully explained in Description of the
Notes Certain Covenants.
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A covenant that we will not incur or otherwise
become liable for any Indebtedness if the aggregate outstanding
principal amount of Indebtedness of us and our consolidated
subsidiaries is, at the time of such creation, assumption or
incurrence and after giving effect thereto and to any concurrent
transactions, greater than 60% of the sum of (1) the Total
Assets of us and our consolidated subsidiaries prior to the
incurrence of such additional indebtedness and (2) the
purchase price of any real estate assets or mortgages receivable
acquired, and the amount of any securities offering proceeds
received (to the extent that such proceeds were not used to
acquire real estate assets or mortgages receivable or used to
reduce Indebtedness), by us or any subsidiary since the end of
such calendar quarter, including those proceeds obtained in
connection with the incurrence of such additional Indebtedness.
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A covenant that we will have or maintain, on a
consolidated basis, as of the last day of each of our fiscal
quarters, Interest Coverage (as defined below) of not less than
150%.
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A covenant that we will maintain, at all
times, Total Unencumbered Assets (as defined below) of not less
than 150% of the aggregate outstanding principal amount of the
Unsecured Debt (as defined below) of us and our subsidiaries on
a consolidated basis.
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Sinking Fund |
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The notes are not entitled to any sinking fund payments. |
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Governing Law |
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New York |
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Denominations |
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The notes will be issued in minimum denominations of $2,000 and
integral multiples of $1,000 in excess thereof. |
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Form of Notes |
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The notes will be issued as fully registered notes, represented
by one or more global notes deposited with, or on behalf of, The
Depository Trust Company (DTC), and registered in
the name of DTCs partnership nominee, Cede & Co.
Investors may elect to hold interests in the global notes
through any of DTC, Clearstream or the Euroclear System. |
S-4
Summary
Historical Consolidated Financial Data
The summary historical consolidated financial data set forth
below should be read in conjunction with the section of this
prospectus supplement entitled Capitalization as
well as the other information that we have filed with the SEC
and incorporated by reference herein. The summary historical
consolidated financial data for each of the years in the
three-year period ended December 31, 2009 have been derived
from our audited consolidated financial statements. These
financial statements have been audited by Ernst &
Young LLP, our independent registered public accounting firm.
The summary selected historical consolidated financial data as
of and for the six months ended June 30, 2010 and 2009 have
been derived from our unaudited interim consolidated financial
statements. In the opinion of our management, the unaudited
interim consolidated financial statements have been prepared on
the same basis as the audited consolidated financial statements
and include all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the financial
position and results of operations as of such dates and for such
periods. Results for the interim periods are not necessarily
indicative of the results to be expected for the full year. This
information is only a summary, and should be read together with,
and is qualified in its entirety by reference to, our historical
consolidated financial statements and notes thereto and the
section entitled Managements Discussion and Analysis
of Financial Condition and Results of Operations included
in our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2010 and our Annual Report on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on Form 8-K filed May 10, 2010, which are
incorporated by reference herein.
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Six Months Ended
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Year Ended December 31,
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June 30,
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2007
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2008
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2009
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2009
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2010
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Amounts are in thousands,
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except per share data
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Operating Data
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Revenues
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$
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427,720
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$
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524,606
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$
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567,168
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$
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277,885
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$
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315,889
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Income from continuing operations attributable to common
stockholders
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77,925
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115,219
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138,932
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88,496
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61,581
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Net income attributable to common stockholders
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113,225
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260,098
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171,190
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120,359
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71,458
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Per Share Data
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Basic:
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Income from continuing operations attributable to common
stockholders
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$
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0.99
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$
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1.23
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$
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1.22
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$
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0.81
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$
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0.50
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Net income attributable to common stockholders
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$
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1.44
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$
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2.77
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$
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1.50
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$
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1.10
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$
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0.58
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Diluted:
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Income from continuing operations attributable to common
stockholders
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$
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0.98
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$
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1.22
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$
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1.21
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$
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0.80
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$
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0.50
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Net income attributable to common stockholders
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$
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1.43
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$
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2.76
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$
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1.49
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$
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1.09
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$
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0.58
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Dividends declared and paid per common share
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$
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2.2791
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$
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2.70
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$
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2.72
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$
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1.36
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$
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1.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
June 30
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
Amounts are in thousands
|
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net real estate investments
|
|
$
|
5,012,620
|
|
|
$
|
5,854,179
|
|
|
$
|
6,080,620
|
|
|
$
|
5,991,360
|
|
|
$
|
6,543,090
|
|
Total assets
|
|
|
5,219,240
|
|
|
|
6,215,031
|
|
|
|
6,367,186
|
|
|
|
6,269,572
|
|
|
|
7,079,331
|
|
Total long-term obligations
|
|
|
2,683,760
|
|
|
|
2,847,676
|
|
|
|
2,414,022
|
|
|
|
2,697,432
|
|
|
|
3,154,763
|
|
Total liabilities
|
|
|
2,784,289
|
|
|
|
2,976,746
|
|
|
|
2,559,735
|
|
|
|
2,808,635
|
|
|
|
3,342,206
|
|
Total redeemable preferred stock
|
|
|
330,243
|
|
|
|
289,929
|
|
|
|
288,683
|
|
|
|
288,713
|
|
|
|
286,410
|
|
Total equity
|
|
|
2,434,951
|
|
|
|
3,238,285
|
|
|
|
3,807,451
|
|
|
|
3,460,937
|
|
|
|
3,737,125
|
|
S-5
RISK
FACTORS
An investment in the notes involves risks. You should
carefully consider the following risk factors, together with all
of the other information included in this prospectus supplement
and the accompanying prospectus or incorporated by reference
into this prospectus, including the section entitled Risk
Factors included in our Annual Report on
Form 10-K
for the year ended December 31, 2009 as updated by our
Current Report on Form 8-K filed May 10, 2010, in
evaluating an investment in the notes.
Risks
Related to Our Business
Our
expected results may not be achieved
Our expected results may not be achieved, and actual results may
differ materially from our expectations. This may be a result of
various factors, including, but not limited to: the status of
the economy; the status of capital markets, including
availability and cost of capital; 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; changes in financing
terms; competition within the health care, senior housing and
life science industries; 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;
our ability to transition or sell facilities with profitable
results; the failure to make new investments as and when
anticipated; acts of God affecting our properties; our ability
to re-lease space at similar rates as vacancies occur; our
ability to timely reinvest sale proceeds at similar rates to
assets sold; operator/tenant or joint venture partner
bankruptcies or insolvencies; the cooperation of joint venture
partners; government regulations affecting Medicare and Medicaid
reimbursement rates and operational requirements; liability or
contract claims by or against operators/tenants; unanticipated
difficulties
and/or
expenditures relating to future acquisitions; environmental laws
affecting our properties; changes in rules or practices
governing our financial reporting; and legal and operational
matters, including real estate investment trust qualification
and key management personnel recruitment and retention.
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 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.
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.
S-6
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 or notifications,
including, but not limited to, 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 a health care facility 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 government 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 government investigations and audits
at such property. In recent years, government 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 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 included in our Annual Report on
Form 10-K
for the year ended December 31, 2009 as updated by our
Current Report on Form 8-K filed May 10, 2010, and
Item 2 Managements Discussion and
Analysis of Financial Condition and Results of
Operations
S-7
Executive Summary Health Reform Laws and
Medicare Program Reimbursement Changes
included in our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010.
Our operators and tenants generally are subject to extensive
federal, state, local and industry-regulated licensure,
certification and inspection laws, regulations and standards.
Our operators or tenants failure to comply with any
of these laws, regulations or standards 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
included in our Annual Report on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on
Form 8-K
filed May 10, 2010, and Item 2
Managements Discussion and Analysis of Financial Condition
and Results of Operations Executive
Summary Health Reform Laws and
Medicare Program Reimbursement Changes included in our
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2010.
Many of our properties may require a license, registration
and/or CON
to operate. Failure to obtain a license, registration or CON, or
loss of a required license, registration 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 the expansion,
including the addition of new beds or services or acquisition of
medical equipment, and the construction or renovation of health
care facilities, by requiring a CON or other similar approval
from a state agency. See Item 1
Business Certain Government Regulations
Licensing and Certification included in our Annual Report
on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on
Form 8-K
filed May 10, 2010, and Item 2
Managements Discussion and Analysis of Financial Condition
and Results of Operations Executive
Summary Health Reform Laws and
Medicare Program Reimbursement Changes included in our
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2010.
The American Recovery and Reinvestment 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. On August 10, 2010, the
President signed into law H.R. 1586, which mandates a
six-month extension of the increase in federal Medicaid funding
for states through June 30, 2011, although the enhanced
federal Medicaid funding is scaled back for the first two
quarters of 2011. Under both the ARRA and H.R. 1586, states
meeting certain eligibility requirements will temporarily
receive additional money in the form of an increase in the
federal medical assistance percentage. 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.
The Centers for Medicare and Medicaid Services (CMS)
recently released a number of rulemakings that may potentially
increase or decrease the government reimbursement of our
operators and tenants. On August 16, 2010, CMS issued a
final rule updating the long-term acute care hospital
prospective payment system for fiscal year 2011. Among other
things, the final rule updates payment rates for acute care and
long-term care hospitals and implements certain provisions of
the Patient Protection and Affordable Care Act
(PPACA) and the Health Care Education and
Reconciliation Act of 2010, which amends the PPACA
(collectively, the Health Reform Laws). In the rule,
CMS finalized an update of 2.5% for inflation with a cut of 0.5%
as required by the Health Reform Laws and a negative 2.5%
documentation and coding adjustment for long-term care
hospitals. CMS also released a notice and comment rulemaking for
the prospective payment system and consolidated billing for
skilled nursing facilities for fiscal year 2011 on July 22,
2010. CMS adjusts the nursing home payment rates for fiscal year
2011 by including a market basket increase factor of 2.3% and a
negative 0.6 percentage point forecast error adjustment,
which would result in a net increase update of 1.7% for nursing
home rates. In addition, on July 13, 2010, CMS released a
proposed rule to update the Physician Fee Schedule for calendar
year 2011, which provides for a negative 6.1% update
S-8
for 2011 under the statutory sustainable growth rate formula.
This measure, if finalized, would replace the 21.3% reduction in
physician Medicare reimbursement in 2010 required by the
sustainable growth rate formula. Because these rulemakings have
not yet taken effect, we cannot predict the potential financial
implications they may have on our operators or tenants. To the
extent that these rulemakings decrease government reimbursement
to our operators and tenants, our revenue and operations may be
adversely affected.
New
health care reform laws may have a significant impact on our
business
Recently enacted public laws reforming the health care system in
the United States may have a significant impact on our business.
In March 2010, the President signed into law the Health Reform
Laws, which contain various provisions that may impact us
directly and that may impact the operators and tenants of our
properties. Some of the provisions of these laws may have a
positive impact on operators or tenants revenues,
for example, by increasing coverage of uninsured individuals
while others may have a negative impact on the reimbursement of
our operators or tenants, for example, by altering the market
basket adjustments for certain types of health care facilities.
The Health Reform Laws also enhance certain fraud and abuse
penalty provisions that could apply to our operators and tenants
in the event of one or more violations of the federal health
care regulatory laws. In addition, there are provisions that
impact the health coverage that we and our operators and tenants
provide to our respective employees. We cannot predict whether
the existing Health Reform Laws or future health care reform
legislation or regulatory changes will have a material impact on
our operators or tenants property or business. If
the operations, cash flows or financial condition of our
operators and tenants are materially adversely impacted by the
Health Reform Laws, our revenue and operations may be adversely
affected as well. See Item 2
Managements Discussion and Analysis of Financial Condition
and Results of Operations Executive
Summary Health Reform Laws and
Medicare Program Reimbursement Changes
included in our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010.
Risk
factors related to liability claims and insurance
costs
In recent years, skilled nursing and seniors housing operators
have experienced substantial increases in both the number and
size of patient care liability claims. As a result, general and
professional liability costs have increased in some markets.
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 joint ventures
We have entered into, and may continue in the future to enter
into, partnerships or joint ventures with other persons or
entities. Joint venture investments involve risks, including the
possibility that our partner might become insolvent or otherwise
refuse to make capital contributions when due; that our partner
might at any time have investment goals which are inconsistent
with ours; that we could become engaged in a dispute with our
partner, which could require us to expend additional resources
to resolve such disputes; and that our partner may be in a
position to take action or withhold consent contrary to our
instructions or requests. In addition, our ability to transfer
our interest in a joint venture to a third party may be
restricted. In some
S-9
instances, we and our partner may each have the right to trigger
a buy-sell arrangement, which could cause us to sell our
interest, or acquire our partners interest, at a time when
we otherwise would not have initiated such a transaction. Joint
ventures require us to share decision- making authority with our
partners, which limits our ability to control the properties in
the joint ventures. Even when we have a controlling interest,
certain major decisions may require partner approval.
Risk
factors related to life sciences facilities
Our tenants in the life sciences industry face high levels of
regulation, expense and uncertainty that may adversely affect
their ability to make payments to us. Research, development and
clinical testing of products and technologies can be very
expensive and sources of funds may not be available to our life
sciences tenants in the future. The products and technologies
that are developed and manufactured by our life sciences tenants
may require regulatory approval prior to being made, marketed,
sold and used. The regulatory process can be costly, long and
unpredictable. Even after a tenant gains regulatory approval and
market acceptance, the product still presents regulatory and
liability risks, such as safety concerns, competition from new
products and eventually the expiration of patent protection.
These factors may affect the ability of our life sciences
tenants to make timely payments to us, which may adversely
affect our revenue and 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 rating agencies.
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
We plan to manage the Company to maintain 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 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
S-10
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
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.
S-11
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 2079. 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 health care
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.
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. This 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
S-12
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 and could
adversely affect the value of our common stock. In addition, if
we fail to qualify as a REIT, we would not be required to make
distributions to stockholders since in general a corporation is
not required to pay dividends to stockholders; however, all
distributions to stockholders would continue to be treated as
dividends to the extent of our current and accumulated earnings
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. See Item 1
Business Taxation Federal Income Tax
Considerations of our Annual Report on
Form 10-K
for the year ended December 31, 2009 for a discussion of
the provision of the Internal Revenue Code that apply to us and
the effects of non-qualification.
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 of
our Annual Report on
Form 10-K
for the year ended December 31, 2009.
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 being subject to nondeductible excise tax, we
must make certain distributions to our stockholders. See
Item 1 Business
Taxation Federal Income Tax
Considerations Qualification as a REIT
Annual Distribution Requirements included in our Annual
Report on
Form 10-K
for the year ended December 31, 2009. 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, we have
insufficient cash or liquid assets to meet the distribution
requirement, or we deem it appropriate to retain cash, then 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
S-13
capital to meet our obligations, even if the then-prevailing
market conditions are not favorable for raising such capital.
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, including the notes we are
offering in this prospectus supplement. 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 be unfavorable. In those circumstances, we
may decide or 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. Our Second Restated
Certificate of Incorporation and Second 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.
Risks
Related to Our Notes
The
notes will be effectively subordinated to our secured
indebtedness and subordinated to all liabilities of our
subsidiaries from time to time outstanding
The notes are obligations only of Health Care REIT, Inc. and
will be effectively subordinated to all liabilities of our
subsidiaries and to our secured indebtedness to the extent of
the assets securing such indebtedness. See Description of
the Notes and Description of Other
Indebtedness.
Our
business operations may not generate the cash needed to service
our indebtedness
We cannot assure you that our business will generate sufficient
cash flow from operations or that future borrowings will enable
us to pay our indebtedness, including the notes we are offering
in this prospectus supplement. Our total consolidated debt as of
June 30, 2010 was approximately $3.2 billion, which
represented approximately 45.8% of our total capitalization as
of that date.
You
may not be able to resell the notes because there may not be an
active trading market for the notes
We do not intend to apply for listing of the notes on any
securities exchange or any automated dealer quotation system. A
market for the notes may not develop, or if one does, it may not
necessarily be sustained. The marketability of the notes will
depend on the number of holders, the market for notes of other
issuers, our performance and interest rates.
We may
be able to issue substantially more debt, a portion of which
could be additional secured debt
The indenture does not limit the amount of indebtedness we may
issue. However, the limitation on liens provision of the
indenture limits the amount of secured debt that we are able to
issue. As of June 30, 2010, we would have been able to
incur up to approximately $2.0 billion of secured debt that
would be senior to the notes under this test.
S-14
An
adverse rating of the notes may cause their trading price to
fall
A rating agency rating the notes may assign a rating that is
lower than the ratings assigned to our other debt. Ratings
agencies also may lower ratings on the notes in the future. If
rating agencies assign a lower-than-expected rating or reduce,
or indicate that they may reduce, their ratings in the future,
the trading price of the notes could significantly decline.
S-15
FORWARD-LOOKING
STATEMENTS
This prospectus supplement, the accompanying prospectus and the
documents incorporated by reference contain
forward-looking statements as that term is defined
under 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
actual results may differ materially from our expectations. This
may be a result of various factors, including, but not limited
to, the risks discussed above and the risks discussed in the
sections captioned Risk Factors in this prospectus
supplement and Cautionary Statement Concerning
Forward-Looking Statements and Risk Factors in the
accompanying prospectus and the documents that are incorporated
herein by reference. We assume no obligation to update or revise
any forward-looking statements or to update the reasons why
actual results could differ from those projected in any
forward-looking statements.
S-16
RATIO OF
EARNINGS TO FIXED CHARGES
The table below sets forth our ratio of earnings to fixed
charges for the periods indicated. The ratio of earnings to
fixed charges was computed by dividing earnings by our fixed
charges. For purposes of calculating this ratio,
earnings includes income from continuing operations
before extraordinary items, excluding the equity earnings in a
less than 50% owned subsidiary, plus fixed charges and reduced
by capitalized interest. Fixed charges consists of
interest on all indebtedness and the amortization of loan
expenses or interest expensed and capitalized and the amortized
premiums, discounts and capitalized expenses related to
indebtedness.
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Six
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Months
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Ended
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Year Ended December 31,
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June 30,
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2005
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2006
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2007
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2008
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2009
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2009
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2010
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Consolidated ratio of earnings to fixed charges (unaudited)
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1.74
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1.82
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1.66
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1.81
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1.95
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2.19
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1.88
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S-17
USE OF
PROCEEDS
The net proceeds from the sale of the notes are estimated to be
$445.4 million after deducting the underwriting discount
and our estimated offering expenses. We intend to use the net
proceeds for general corporate purposes, including investing in
health care and senior housing properties and repaying
borrowings under our unsecured line of credit and other
outstanding indebtedness. Pending such use, the net proceeds may
be invested in short-term, investment grade, interest-bearing
securities, certificates of deposit or indirect or guaranteed
obligations of the United States. As of September 2, 2010,
we had an outstanding balance of $560 million under our
unsecured line of credit bearing interest at an average rate of
0.87%. Affiliates of certain of the underwriters are lenders
under our Fourth Amended and Restated Loan Agreement dated as of
August 6, 2007. The net proceeds of this offering may be
used to repay borrowings under such agreement. See
Underwriting.
S-18
CAPITALIZATION
The table below sets forth our capitalization as of
June 30, 2010 on a historical basis, and on an as adjusted
basis to give effect to the notes offered by this prospectus
supplement:
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June 30, 2010
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Actual
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As Adjusted
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(in thousands)
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Cash and cash equivalents
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$
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55,423
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$
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294,805
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Debt:
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Borrowings under unsecured line of credit(1)
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206,000
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0
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Senior notes due 2012
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76,853
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76,853
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Senior notes due 2013
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300,000
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300,000
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Senior notes due 2015
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250,000
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250,000
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Senior notes due 2016
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300,000
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300,000
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Senior notes due 2017
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0
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450,000
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Senior notes due 2020
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450,000
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450,000
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4.75% convertible senior notes due 2026(2)
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125,588
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125,588
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4.75% convertible senior notes due 2027(2)
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168,086
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168,086
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3.00% convertible senior notes due 2029(2)
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494,403
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494,403
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Secured debt
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813,749
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813,749
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Unamortized premiums/discounts and fair value adjustments
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(29,916
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(31,221
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Total debt
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3,154,763
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3,397,458
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Stockholders equity:
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Preferred Stock, $1.00 par value; authorized
50,000,000 shares
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Series D Cumulative Redeemable Preferred Stock;
4,000,000 shares issued and outstanding
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100,000
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100,000
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Series E Cumulative Convertible and Redeemable Preferred
Stock; 74,380 shares issued and outstanding(3)
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1,860
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1,860
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Series F Cumulative Redeemable Preferred Stock;
7,000,000 shares issued and outstanding
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175,000
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175,000
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Series G Cumulative Convertible Preferred Stock;
322,872 shares issued and outstanding(4)
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9,550
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9,550
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Common Stock, $1.00 par value; authorized
225,000,000 shares; 124,781,646 shares issued and
124,498,970 shares
outstanding(5)
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124,520
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124,520
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Capital in excess of par value
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3,937,485
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3,937,485
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Treasury stock
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(11,315
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(11,315
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Cumulative net income
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1,630,120
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1,630,120
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Cumulative dividends
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(2,237,720
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(2,237,720
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Accumulated other comprehensive income
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(8,526
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(8,526
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Other equity
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5,755
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5,755
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Total Health Care REIT, Inc. stockholders equity
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3,726,729
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3,726,729
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Noncontrolling interests
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10,396
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10,396
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Total equity
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3,737,125
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3,737,125
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Total capitalization
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$
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6,891,888
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$
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7,134,583
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(1)
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$560 million was outstanding
under our unsecured line of credit at September 2, 2010.
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(2)
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The amounts shown do not reflect
original issue discount pursuant to FASB Staff Position
No. APB
14-1,
Accounting for Convertible Debt Instruments That May Be Settled
in Cash Upon Conversion (Including Partial Cash Settlement).
Under FSP APB
14-1, an
entity must separately account for the liability and equity
components of the convertible debt instruments (such as the
convertible senior notes) that may be settled entirely or
partially in cash upon conversion in a manner that reflects the
issuers economic interest cost. The effect of FSP APB
14-1 on the
accounting for the convertible senior notes is that the equity
component is included in the capital in excess of par value
section of stockholders equity on our consolidated balance
sheet and the value of the equity component is treated as
original issue discount for purposes of accounting for the debt
component of the convertible senior notes. The original issue
discount for the convertible senior notes is included in
Unamortized premiums/discounts and fair value
adjustments.
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S-19
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(3)
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On September 2, 2010, we
received notice of conversion from the holder of all outstanding
shares of the Series E Cumulative Convertible and
Redeemable Preferred Stock. The 74,380 outstanding shares of the
Series E Cumulative Convertible and Redeemable Preferred
Stock will be converted into 56,935 shares of common stock.
From and after the date of conversion, the Series E
Cumulative Convertible and Redeemable Preferred Stock will no
longer be deemed outstanding.
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(4)
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We called all of the shares of
Series G Cumulative Convertible Preferred Stock for
redemption on August 31, 2010. The redemption date is
September 30, 2010. On that date, we will redeem all
outstanding shares of the Series G Cumulative Convertible
Preferred Stock at a price of $25.46875 per share plus accrued
and unpaid dividends through the redemption date. From and after
such date, the Series G Cumulative Convertible Preferred
Stock will no longer be deemed outstanding.
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(5)
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Excludes:
(i) 1,287,253 shares of common stock reserved for
issuance that relate to outstanding options under the 1995 Stock
Incentive Plan, Stock Plan for Non-Employee Directors, 2005
Long-Term Incentive Plan and Windrose Medical Properties
Trust 2002 Stock Incentive Plan;
(ii) 9,613,553 shares of common stock reserved for
issuance under our dividend reinvestment and stock purchase
plan; (iii) 56,935 shares of common stock reserved for
issuance that relate to the Series E Cumulative Convertible
and Redeemable Preferred Stock; (iv) 231,146 shares of
common stock reserved for issuance that relate to the
Series G Cumulative Convertible Preferred Stock;
(v) 2,650,208 shares of common stock reserved for
issuance that relate to the $125,588,000 aggregate principal
amount of 4.75% Convertible Senior Notes due 2026;
(vi) 3,376,091 shares of common stock reserved for
issuance that relate to the $168,086,000 aggregate principal
amount of 4.75% Convertible Senior Notes due 2027;
(vii) 9,644,022 shares of common stock reserved for
issuance that relate to the $494,403,000 aggregate principal
amount of 3.00% Convertible Senior Notes due 2029; and
(viii) 431,082 shares of common stock issued since
June 30, 2010 under our equity distribution program with
UBS Securities LLC.
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You should read this table in conjunction with the sections
entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations included in
our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010 and our Annual Report
on
Form 10-K
for the year ended December 31, 2009 as updated by our
Current Report on Form 8-K filed May 10, 2010, and our
consolidated financial statements, related notes and other
financial information that we have incorporated by reference
into this prospectus supplement and the accompanying prospectus.
S-20
DESCRIPTION
OF THE NOTES
The following description of the particular terms of the notes
supplements and, to the extent inconsistent therewith, replaces
the description of the general terms and provisions of the Debt
Securities set forth in the accompanying prospectus, to which
reference is hereby made. The following summary is qualified in
its entirety by reference to the Indenture (as defined below and
as described in the accompanying prospectus), and the
Supplemental Indenture (as defined below). Capitalized terms not
otherwise defined herein shall have the meanings given them in
the accompanying prospectus. In this section, unless
specifically noted otherwise, the terms we,
us, and our refer only to Health Care
REIT, Inc., and not its subsidiaries.
General
The notes will be issued as a separate series of debt securities
under an indenture, dated as of March 15, 2010 (the
Indenture), between us and The Bank of New York
Mellon Trust Company, N.A. (the Trustee), as
supplemented by a supplemental indenture thereto, to be dated as
of September 10, 2010 (the Supplemental
Indenture), relating to the notes. The notes initially
will be limited in aggregate principal amount to
$450 million. This series may be re-opened and we may from
time to time issue additional notes of the same series. The
notes will be issued only in fully registered form without
coupons, in minimum denominations of $2,000 and integral
multiples of $1,000. The notes will be evidenced by a global
note in book-entry form, except under the limited circumstances
described under Book-Entry System below.
The notes will not be listed on any national securities exchange
or any automated dealer quotation system.
The notes will mature on September 15, 2017 (unless earlier
redeemed). The notes will bear interest from September 10,
2010 at the rate per year shown on the front cover of this
prospectus supplement payable semi-annually in arrears on
March 15 and September 15 of each year, commencing
March 15, 2011, to the persons in whose names the notes are
registered at the close of business on March 1 or
September 1, as the case may be, next preceding such
interest payment date. If an interest payment date or the
maturity date falls on a day that is not a business day, the
related payment of principal or interest will be made on the
next business day as if made on the date payment was due and no
interest will accrue on the amount payable for the period from
and after that interest payment date or the maturity date.
The notes will be senior unsecured obligations of ours and will
rank equally with each other and with all our other unsecured
senior indebtedness outstanding from time to time. The notes
will not be guaranteed by our subsidiaries. The notes will be
effectively subordinated to our secured indebtedness to the
extent of the assets securing such indebtedness and to all
liabilities of our subsidiaries, including certain amounts due
under certain credit facilities. Accordingly, such prior
indebtedness and liabilities will have to be satisfied in full
before you will be able to realize any value from our encumbered
or indirectly held properties. Our subsidiaries, which own
approximately 65.6% of our real estate investments as of
June 30, 2010, are separate legal entities and have no
obligation to pay any amounts due pursuant to the notes. As of
June 30, 2010, our subsidiaries had indebtedness and other
obligations in the principal amount of approximately
$814 million. In addition, as of June 30, 2010, there
was $206 million outstanding under our unsecured line of
credit under which we and certain of our subsidiaries are
co-borrowers. See Description of Other Indebtedness
below. We and our subsidiaries may also incur additional
indebtedness, including secured indebtedness, subject to the
provisions described below under Certain
Covenants.
Certain
Covenants
The notes will not be secured by a mortgage, pledge or other
lien. We will covenant in the Supplemental Indenture not to
pledge or otherwise subject to any Lien, any of our property or
assets or those of our subsidiaries unless the notes are secured
by such pledge or Lien equally and ratably with all other
obligations secured thereby so long as such other obligations
shall be so secured; provided, however, that such covenant does
not apply to Liens securing obligations which do not in the
aggregate at any one time outstanding exceed 40% of the sum of
(i) the Total Assets (as defined below) of us and our
consolidated subsidiaries as of the end of the calendar year or
quarter covered in our most recently filed
Form 10-K
or
Form 10-Q,
as the case may be, prior to the incurrence of such additional
Liens, and (ii) the purchase price of any real estate
assets or
S-21
mortgages receivable acquired, and the amount of any securities
offering proceeds received (to the extent that such proceeds
were not used to acquire real estate assets or mortgages
receivable or used to reduce Indebtedness), by us or any
subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of
such additional Liens. In addition, this covenant does not apply
to:
(a) Pledges or deposits by us or our subsidiaries under
workers compensation laws, unemployment insurance laws,
social security laws, or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than
for the payment of Indebtedness of us or our subsidiaries), or
leases to which we or any of our subsidiaries is a party, or
deposits to secure public or statutory obligations of ours or
our subsidiaries or deposits of cash or United States Government
Bonds to secure surety, appeal, performance or other similar
bonds to which we or any of our subsidiaries is a party, or
deposits as security for contested taxes or import duties or for
the payment of rent;
(b) Liens imposed by law, such as carriers,
warehousemens, materialmens and mechanics
liens, or Liens arising out of judgments or awards against us or
any of our subsidiaries which we or such subsidiary at the time
shall be currently prosecuting an appeal or proceeding for
review;
(c) Liens for taxes not yet subject to penalties for
non-payment and Liens for taxes the payment of which is being
contested in good faith and by appropriate proceedings;
(d) Minor survey exceptions, minor encumbrances, easements
or reservations of, or rights of, others for rights of way,
highways and railroad crossings, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties;
(e) Liens incidental to the conduct of our business or that
of any of our subsidiaries or to the ownership of our or their
respective properties that were not incurred in connection with
Indebtedness of ours or such subsidiarys, all of which
Liens referred to in this clause (e) do not in the
aggregate materially impair the value of the properties to which
they relate or materially impair their use in the operation of
the business taken as a whole of us and our subsidiaries, and as
to all of the foregoing referenced in clauses (a) through
(e), only to the extent arising and continuing in the ordinary
course of business;
(f) Purchase money Liens on property acquired or held by us
or our subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing
all or any part of the cost of such property; provided, that
(i) any such Lien attaches concurrently with or within
20 days after the acquisition thereof, (ii) such Lien
attaches solely to the property so acquired in such transaction,
(iii) the principal amount of the Indebtedness secured
thereby does not exceed 100% of the cost of such property, and
(iv) the aggregate amount of all such Indebtedness on a
consolidated basis for us and our subsidiaries shall not at any
time exceed $1,000,000;
(g) Liens existing on our balance sheet as of
December 31, 2001; and
(h) Any extension, renewal or replacement (or successive
extensions, renewals or replacements), as a whole or in part, of
any Lien referred to in the foregoing clauses (a) through
(g) inclusive; provided, however, that the amount of any
and all obligations and Indebtedness secured thereby shall not
exceed the amount thereof so secured immediately prior to the
time of such extension, renewal or replacement and that such
extension, renewal or replacement shall be limited to all or a
part of the property which secured the Lien so extended, renewed
or replaced (plus improvements on such property).
We will also covenant in the Supplemental Indenture that we will
not create, assume, incur, or otherwise become liable in respect
of, any Indebtedness if the aggregate outstanding principal
amount of Indebtedness of us and our consolidated subsidiaries
is, at the time of such creation, assumption or incurrence and
after giving effect thereto and to any concurrent transactions,
greater than 60% of the sum of (i) the Total Assets of us
and our consolidated subsidiaries as of the end of the calendar
year or quarter covered in our most recently filed
Form 10-K
or
Form 10-Q,
as the case may be, prior to the incurrence of such additional
Indebtedness and (ii) the purchase price of any real estate
assets or mortgages receivable acquired, and the amount of any
S-22
securities offering proceeds received (to the extent that such
proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness), by us or
any subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of
such additional Indebtedness.
We will also covenant in the Supplemental Indenture that we will
have or maintain, on a consolidated basis, as of the last day of
each fiscal quarter, Interest Coverage (as defined below) of not
less than 150%.
Finally, we will covenant in the Supplemental Indenture that we
will maintain, at all times, Total Unencumbered Assets (as
defined below) of not less than 150% of the aggregate
outstanding principal amount of the Unsecured Debt (as defined
below) of us and our subsidiaries on a consolidated basis.
For purposes of the foregoing covenants, the defined terms have
the following meanings:
Capital Lease means at any time
any lease of property, real or personal, which, in accordance
with generally accepted accounting principles
(GAAP), would at such time be required to be
capitalized on a balance sheet of the lessee.
Capitalized Lease Obligations
means as to any Person, the obligations of such Person to pay
rent or other amounts under a lease of (or other agreement
conveying the right to use) real
and/or
personal property which obligations are required to be
classified and accounted for as a Capital Lease on a balance
sheet of such Person under GAAP.
Cash means as to any Person, such
Persons cash and cash equivalents, as defined in
accordance with GAAP consistently applied.
EBITDA means for any period, with
respect to us and our subsidiaries on a consolidated basis,
determined in accordance with GAAP, the sum of net income (or
net loss) for such period plus, the sum of all amounts treated
as expenses for: (a) interest, (b) depreciation,
(c) amortization, and (d) all accrued taxes on or
measured by income to the extent included in the determination
of such net income (or net loss); provided, however, that net
income (or net loss) shall be computed without giving effect to
extraordinary losses or gains.
Funded Indebtedness means as of
any date of determination thereof, (i) all Indebtedness of
any Person, determined in accordance with GAAP, which by its
terms matures more than one year after the date of calculation,
and any such Indebtedness maturing within one year from such
date which is renewable or extendable at the option of the
obligor to a date more than one year from such date, and
(ii) the current portion of all such Indebtedness.
Indebtedness means with respect
to any Person, all: (a) liabilities or obligations, direct
and contingent, which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side
of a balance sheet of such Person at the date as of which
Indebtedness is to be determined, including, without limitation,
contingent liabilities that in accordance with such principles,
would be set forth in a specific dollar amount on the liability
side of such balance sheet, and Capitalized Lease Obligations of
such Person; (b) liabilities or obligations of others for
which such Person is directly or indirectly liable, by way of
guaranty (whether by direct guaranty, suretyship, discount,
endorsement, take-or-pay agreement, agreement to purchase or
advance or keep in funds or other agreement having the effect of
a guaranty) or otherwise; (c) liabilities or obligations
secured by Liens on any assets of such Person, whether or not
such liabilities or obligations shall have been assumed by it;
and (d) liabilities or obligations of such Person, direct
or contingent, with respect to letters of credit issued for the
account of such Person and bankers acceptances created for such
Person.
Interest Coverage means as at the
last day of any fiscal quarter, the quotient, expressed as a
percentage (which may be in excess of 100%), determined by
dividing EBITDA by Interest Expense; all of the foregoing
calculated by reference to the immediately preceding four fiscal
quarters ending on such date of determination.
S-23
Interest Expense means for any
period, on a combined basis, the sum of all interest paid or
payable (excluding unamortized debt issuance costs) on all items
of Indebtedness outstanding at any time during such period.
Lien means any mortgage, deed of
trust, pledge, security interest, encumbrance, lien, claim or
charge of any kind (including any agreement to give any of the
foregoing), any conditional sale or other title retention
agreement, any lease in the nature of any of the foregoing, and
the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction.
Person means any individual,
corporation, partnership, limited liability company, joint
venture, trust, unincorporated organization, government or any
political subdivision thereof.
Total Assets means on any date,
our consolidated total assets and those of our subsidiaries, as
such amount would appear on our consolidated balance sheet
prepared as of such date in accordance with GAAP.
Total Unencumbered Assets means
on any date, our net real estate investments (valued on a book
basis) and those of our subsidiaries that are not subject to any
Lien which secures indebtedness for borrowed money by us and our
subsidiaries plus, without duplication, loan loss reserves
relating thereto, accumulated depreciation thereon plus Cash, as
all such amounts would appear on our consolidated balance sheet
prepared as of such date in accordance with GAAP; provided,
however, that Total Unencumbered Assets does not
include net real estate investments under unconsolidated joint
ventures of ours and of our subsidiaries.
Unsecured Debt means Funded
Indebtedness less Indebtedness secured by Liens on our property
or assets and those of our subsidiaries.
Defeasance
and Covenant Defeasance
The notes are subject to defeasance and covenant defeasance, as
described in the Indenture and the Supplemental Indenture.
Specifically, we, at our option (a) will be discharged from
any and all obligations in respect of the notes (except for
certain obligations to issue definitive notes in exchange for
temporary notes, to register the transfer or exchange of the
notes, to replace destroyed, stolen, lost or mutilated notes,
and to maintain an office or agency in respect of the notes and
hold moneys for payment in trust) or (b) will be released
from our obligations to comply with certain of the covenants
provided for in the Indenture, including but not limited to
those that are specified under Certain Covenants
above with respect to the notes, and the occurrence of an event
of default with respect to any such covenants and including
those events of default described below under Events of
Default shall no longer be an event of default if, in
either case, we irrevocably deposit with the Trustee, in trust,
money or U.S. Government obligations that through payment
of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay
all of the principal of (and premium, if any) and any interest
on the notes on the dates such payments are due (which may
include one or more redemption dates designated by us) in
accordance with the terms of such notes.
Such a trust may only be established if, among other things,
(a) no event of default or event which with the giving of
notice or lapse of time, or both, would become an event of
default under the Indenture shall have occurred and be
continuing on the date of such deposit, and (b) we shall
have delivered an opinion of counsel to the effect that the
holders of the notes of such series will not recognize gain or
loss for United States federal income tax purposes as a result
of such deposit or defeasance and will be subject to United
States federal income tax in the same manner as if such
defeasance had not occurred. In the event we omit to comply with
our remaining obligations under the Indenture after a defeasance
of the Indenture with respect to the notes and the notes are
declared due and payable because of the occurrence of any
undefeased event of default, the amount of money and
U.S. Government obligations on deposit with the Trustee may
be insufficient to pay amounts due on the notes at the time of
the acceleration resulting from such event of default. However,
we will remain liable in respect of such payments.
S-24
Sinking
Fund
The notes are not entitled to any sinking fund payments.
Optional
Redemption
The notes may be redeemed at our option, at any time in whole or
from time to time in part, at a redemption price, as determined
by us, equal to the sum of (i) the principal amount of the
notes (or portion thereof) being redeemed and (ii) the
Make-Whole Amount, if any (the
Redemption Price), plus, in either case,
accrued and unpaid interest thereon to but excluding the
redemption date.
If notice has been given as provided in the Indenture and funds
for the redemption of any notes (or any portion of the notes)
called for redemption shall have been made available on the
redemption date referred to in such notice, such notes (or any
portion of the notes) will cease to bear interest on the date
fixed for such redemption specified in such notice and the only
right of the holders of the notes will be to receive payment of
the Redemption Price.
Notice of any optional redemption of any notes (or any portion
of the notes) will be given to holders at their addresses, as
shown in the security register for such notes, not more than 60
nor less than 30 days prior to the date fixed for
redemption. The notice of redemption will specify, among other
items, the Redemption Price and the principal amount of the
notes held by such holder to be redeemed.
We will notify the Trustee at least 60 days prior to giving
notice of redemption (or such shorter period as is satisfactory
to the Trustee) of the aggregate principal amount of such notes
to be redeemed and their redemption date. If less than all of
the notes are to be redeemed at our option, the Trustee shall
select, in such manner as it shall deem fair and appropriate,
the notes to be redeemed in whole or in part.
As used herein:
Make-Whole Amount means, in
connection with any optional redemption or accelerated payment
of any notes, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and
the amount of interest (exclusive of interest accrued to the
date of redemption or accelerated payment) that would have been
payable in respect of each such dollar if such redemption or
accelerated payment had not been made, determined by
discounting, on a semi-annual basis, such principal and interest
at the Reinvestment Rate (as defined below) (determined on the
third business day preceding the date such notice of redemption
is given or declaration of acceleration is made) from the
respective dates on which such principal and interest would have
been payable if such redemption or accelerated payment had not
been made, over (ii) the aggregate principal amount of the
notes being redeemed or paid.
Reinvestment Rate means 0.40%
plus the arithmetic mean of the yields under the respective
heading Week Ending published in the most recent
Statistical Release under the caption Treasury Constant
Maturities for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the
payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the
two published maturities most closely corresponding to such
maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest
month. For the purpose of calculating the Reinvestment Rate, the
most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.
Statistical Release means that
statistical release designated H.15(519) or any
successor publication that is published weekly by the Federal
Reserve System and that establishes yields on actively traded
United States government securities adjusted to constant
maturities, or, if such statistical release is not published at
the time of any determination under the Indenture, then such
other reasonably comparable index that shall be designated by us.
S-25
Book-Entry
System
The notes will be issued in the form of one or more fully
registered global securities (Global Securities)
that will be deposited with, or on behalf of, The Depository
Trust Company (DTC), and registered in the name
of DTCs partnership nominee, Cede & Co. Except
under the circumstance described below, the notes will not be
issuable in definitive form. Unless and until it is exchanged in
whole or in part for the individual notes it represents, a
Global Security may not be transferred except as a whole by DTC
to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any nominee of DTC to a successor
depository or any nominee of such successor.
DTC has advised us of the following information regarding DTC:
DTC is a limited-purpose trust company organized under the New
York Banking Law, a banking organization within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a clearing corporation within the
meaning of the New York Uniform Commercial Code, and a
clearing agency registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of
1934, as amended.
DTC holds and provides asset servicing for over 3.5 million
issues of U.S. and
non-U.S. equity
issues, corporate and municipal debt issues, and money market
instruments that DTCs participants (Direct
Participants) deposit with DTC. DTC also facilitates the
post-trade settlement among Direct Participants of sales and
other securities transactions in deposited securities through
electronic computerized book-entry transfers and pledges between
Direct Participants accounts. This eliminates the need for
physical movement of securities certificates. Direct
Participants include both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a
wholly-owned subsidiary of The Depository Trust &
Clearing Corporation (DTCC). DTCC is owned by the
holding company for DTC, National Securities Clearing
Corporation and Fixed Income Clearing Corporation, all of which
are registered clearing agencies. DTCC is owned by the users of
its regulated subsidiaries. Access to the DTC system is also
available to others such as both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or
indirectly (Indirect Participants). The DTC rules
applicable to its participants are on file with the Securities
and Exchange Commission.
Purchases of Global Securities under the DTC system must be made
by or through Direct Participants, which will receive a credit
for the Global Securities on DTCs records. The ownership
interest of each actual purchaser of each Global Security
(Beneficial Owner) is in turn to be recorded on the
Direct and Indirect Participants records. Beneficial
Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive
written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests
in the Global Securities are to be accomplished by entries made
on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Global
Securities, except in the event that use of the book-entry
system for the Global Securities is discontinued.
To facilitate subsequent transfers, all Global Securities
deposited by Direct Participants with DTC are registered in the
name of DTCs partnership nominee, Cede & Co., or
such other name as may be requested by an authorized
representative of DTC. The deposit of Global Securities with DTC
and their registration in the name of Cede & Co. or
such other DTC nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners
of the Global Securities; DTCs records reflect only the
identity of the Direct Participants to whose accounts such
Global Securities are credited, which may or may not be the
Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
S-26
Neither DTC nor Cede & Co. (nor any other DTC nominee)
will consent or vote with respect to the Global Securities
unless authorized by a Direct Participant in accordance with
DTCs procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to us as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.s consenting
or voting rights to those Direct Participants to whose accounts
the Global Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Securities will be
made to Cede & Co., or such other nominee as may be
requested by an authorized representative of DTC. DTCs
practice is to credit Direct Participants accounts, upon
DTCs receipt of funds and corresponding detail information
from us or the Trustee, on payable date in accordance with their
respective holdings shown on DTCs records. Payments by
Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in street name, and will be the
responsibility of such Participant and not of DTC, the Trustee
or us, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and
interest to Cede & Co. (or such other nominee as
requested by an authorized representative of DTC) is our
responsibility or that of the Trustee, disbursement of such
payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners
will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with
respect to the Global Securities at any time by giving
reasonable notice to us or the Trustee. Under such
circumstances, in the event that a successor securities
depository is not obtained, Global Security certificates are
required to be printed and delivered.
We may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In
that event, Global Security certificates will be printed and
delivered to DTC.
Clearstream. Clearstream Banking,
société anonyme (Clearstream), is
incorporated under the laws of Luxembourg as a professional
depositary. Clearstream holds securities for its participating
organizations (Clearstream Participants) and
facilitates the clearance and settlement of securities
transactions between Clearstream Participants through electronic
book-entry changes in accounts of Clearstream Participants,
thereby eliminating the need for physical movement of
certificates. Clearstream provides Clearstream Participants
with, among other things, services for safekeeping,
administration, clearance and establishment of internationally
traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several
countries. As a professional depositary, Clearstream is subject
to regulation by the Luxembourg Monetary Institute. Clearstream
Participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations, and may include the underwriters. Indirect access
to Clearstream is also available to others, such as banks,
brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Clearstream Participant
either directly or indirectly.
Distributions with respect to notes held beneficially through
Clearstream will be credited to cash accounts of Clearstream
Participants in accordance with its rules and procedures to the
extent received by DTC for Clearstream.
Euroclear. Euroclear Bank S.A./ N.V.
(Euroclear) was created in 1968 to hold securities
for participants of Euroclear (Euroclear
Participants) and to clear and settle transactions between
Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the
need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Euroclear
includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several
markets in several countries. Euroclear is operated by Euroclear
Bank S.A./ N.V. (the Euroclear Operator), under
contract with Euro-clear Clearance Systems S.C., a Belgian
cooperative corporation (the Cooperative). All
operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on
behalf of Euroclear Participants. Euroclear Participants include
banks (including central banks), securities brokers and dealers
and other professional financial intermediaries and may include
the underwriters. Indirect access to Euroclear is also available
to
S-27
other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is regulated and examined by the Belgian
Banking Commission.
Links have been established among DTC, Clearstream and Euroclear
to facilitate the initial issuance of the notes sold outside of
the United States and cross-market transfers of the notes
associated with secondary market trading.
Although DTC, Clearstream and Euroclear have agreed to the
procedures provided below in order to facilitate transfers, they
are under no obligation to perform these procedures, and these
procedures may be modified or discontinued at any time.
The information in this section concerning DTC, Clearstream and
Euroclear and DTCs book-entry system has been obtained
from sources that we believe to be reliable, but we take no
responsibility for the accuracy of this information.
Settlement
and Payment
Settlement for the notes will be made by the underwriters in
immediately available funds. All payments of principal and
interest in respect of the notes will be made by us in
immediately available funds.
Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing house or
next-day
funds. In contrast, the notes will trade in DTCs
Same-Day
Funds Settlement System until maturity or until the notes are
issued in certificated form, and secondary market trading
activity in the notes will therefore be required by DTC to
settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available
funds on trading activity in the notes.
Clearstream and Euroclear will record the ownership interests of
their participants in much the same way as DTC, and DTC will
record the total ownership of each of the U.S. agents of
Clearstream and Euroclear, as participants in DTC. When notes
are to be transferred from the account of a Direct Participant
to the account of a Clearstream Participant or a Euroclear
Participant, the purchaser must send instructions to Clearstream
or Euroclear through a participant at least one day prior to
settlement. Clearstream or Euroclear, as the case may be, will
instruct its U.S. agent to receive notes against payment.
After settlement, Clearstream or Euroclear will credit its
participants account. Credit for the notes will appear on
the next day (European time).
Because settlement is taking place during New York business
hours, Direct Participants will be able to employ their usual
procedures for sending notes to the relevant U.S. agent
acting for the benefit of Clearstream or Euroclear Participants.
The sale proceeds will be available to the DTC seller on the
settlement date. As a result, to the Direct Participant, a
cross-market transaction will settle no differently than a trade
between two Direct Participants.
When a Clearstream or Euroclear Participant wishes to transfer
notes to a Direct Participant, the seller will be required to
send instructions to Clearstream or Euroclear through a
participant at least one business day prior to settlement. In
these cases, Clearstream or Euroclear will instruct its
U.S. agent to transfer these notes against payment for
them. The payment will then be reflected in the account of the
Clearstream or Euroclear Participant the following day, with the
proceeds back valued to the value date, which would be the
preceding day, when settlement occurs in New York, if settlement
is not completed on the intended value date, that is, the trade
fails, proceeds credited to the Clearstream or Euroclear
Participants account will instead be valued as of the
actual settlement date.
You should be aware that you will only be able to make and
receive deliveries, payments and other communications involving
the notes through Clearstream and Euroclear on the days when
those clearing systems are open for business. Those systems may
not be open for business on days when banks, brokers and other
institutions are open for business in the United States. In
addition, because of time zone differences there may be problems
with completing transactions involving Clearstream and Euroclear
on the same business day as in the United States.
S-28
Events of
Default
In addition to the events of default in the Indenture described
in the prospectus, the following constitute events of default
under the Supplemental Indenture:
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We do not pay the principal or any premium on the notes at their
maturity date.
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We default under any of our other indebtedness in an aggregate
principal amount exceeding $10,000,000 after the expiration of
any applicable grace period, which default results in the
acceleration of the maturity of such indebtedness. Such default
is not an event of default if the other indebtedness is
discharged, or the acceleration is rescinded or annulled, within
a period of 10 days after we receive notice specifying the
default and requiring that we discharge the other indebtedness
or cause the acceleration to be rescinded or annulled. Either
the Trustee or the holders of more than 50% in principal amount
of the outstanding notes may send the notice.
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The entry by a court of competent jurisdiction of one or more
judgments, orders or decrees against us or any of our
subsidiaries in an aggregate amount (excluding amounts fully
covered by insurance) in excess of $10,000,000 and such
judgments, orders or decrees remain undischarged, unstayed and
unsatisfied in an aggregate amount (excluding amounts fully
covered by insurance) in excess of $10,000,000 for a period of
30 consecutive days.
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S-29
DESCRIPTION
OF OTHER INDEBTEDNESS
Credit
Facilities
We have a $1,150,000,000 unsecured revolving credit facility
(the Credit Facility) with 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,
Credit Agricole Corporate and Investment Bank and Fifth Third
Bank, as documentation agents, which matures in August 2011.
Borrowings under the Credit Facility 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 (0.95% at
June 30, 2010). The applicable margin is based on certain
of our debt ratings and was 0.6% at June 30, 2010. In
addition, we pay a facility fee annually to each bank based on
the banks commitment amount. The facility fee depends on
certain of our debt ratings and was 0.15% at June 30, 2010.
We also pay an annual agents fee of $50,000.
The Credit Facility contains customary affirmative and
restrictive covenants that, among other things, limit us and
certain of our subsidiaries with respect to indebtedness,
liabilities, liens, dividends, loans, investments, purchases and
fundamental changes to the corporate structure and line of
business. We also are required to maintain a minimum tangible
net worth of $1,700,000,000 plus 85% of net issuance proceeds
received by us in connection with equity issuances (other than
equity issuances in connection with any dividend reinvestment
programs), a fixed charge coverage ratio of not less than 175%,
a leverage ratio of not more than 0.60 to 1.00, and a ratio of
unencumbered assets to unsecured indebtedness of not less than
1.67 to 1.00, all as defined in the Credit Facility.
The Credit Facility contains customary events of default,
including, among other things, and subject to applicable grace
periods, other indebtedness payment defaults, material
misrepresentations, covenant defaults, certain bankruptcy events
and judgment defaults. We and certain of our subsidiaries are
co-borrowers under the Credit Facility.
As of June 30, 2010, we
and/or
certain of our subsidiaries had secured indebtedness in the
aggregate principal amount of approximately $814 million,
collateralized by owned properties, with fixed annual interest
rates ranging from 4.60% to 7.98%, payable monthly.
Senior
Notes
In April 2010 and June 2010, we completed the sale of
$300,000,000 and $150,000,000, respectively, of senior unsecured
notes due 2020. The notes have a weighted average interest rate
of 6.125%.
In December 2005, we completed the sale of $300,000,000 of
senior unsecured notes due 2016. The notes have a weighted
average interest rate of 6.20%.
In April 2005, we completed the sale of $250,000,000 of senior
unsecured notes due 2015. The notes have a weighted average
interest rate of 5.875%.
In November 2003 and September 2004, we completed the sale of
$250,000,000 and $50,000,000, respectively, of senior unsecured
notes due 2013. The notes have a weighted average interest rate
of 6.0%.
In September 2002 and March 2003, we completed the sale of
$150,000,000 and $100,000,000, respectively, of senior unsecured
notes due 2012. In March 2009, we extinguished $11,723,000 of
these notes, leaving $238,277,000 outstanding. In September
2009, we repurchased $161,424,000 of these notes pursuant to a
tender offer, leaving $76,853,000 outstanding. The notes have a
weighted average interest rate of 8.0%.
Convertible
Senior Notes
In March 2010 and June 2010, we completed the sale of
$342,394,000 and $152,009,000, respectively, of convertible
senior unsecured notes due 2029. The notes have a weighted
average interest rate of 3.00%.
S-30
In July 2007, we completed the sale of $400,000,000 of
convertible senior unsecured notes due 2027. In March 2009, we
extinguished $5,000,000 of these notes, leaving $395,000,000
outstanding. In March 2010, we extinguished $172,725,000 of
these notes, leaving $222,275,000 outstanding. In June 2010, we
extinguished $54,189,000 of these notes, leaving $168,086,000
outstanding. The notes have a weighted average interest rate of
4.75%.
In November 2006 and December 2006, we completed the sale of
$345,000,000 of convertible senior unsecured notes due 2026. In
March 2009, we extinguished $5,000,000 of these notes, leaving
$340,000,000 outstanding. In March 2010, we extinguished
$129,393,000 of these notes, leaving $210,607,000 outstanding.
In June 2010, we extinguished $85,019,000 of these notes,
leaving $125,588,000 outstanding. The notes have a weighted
average interest rate of 4.75%.
S-31
UNDERWRITING
UBS Securities LLC, J.P. Morgan Securities LLC and Barclays
Capital Inc. are acting as joint book-running managers of the
offering. Subject to the terms and conditions of the
underwriting agreement, the underwriters named below, through
their representatives, UBS Securities LLC, J.P. Morgan
Securities LLC and Barclays Capital Inc. have severally agreed
to purchase from us the following respective principal amounts
of notes set forth opposite the underwriters name at the
public offering price less the underwriting discount set forth
on the cover page of this prospectus supplement.
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Principal Amount
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Underwriter
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of Notes
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UBS Securities LLC
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$
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130,500,000
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J.P. Morgan Securities LLC
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130,500,000
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Barclays Capital Inc.
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112,500,000
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Comerica Securities, Inc.
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19,125,000
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Fifth Third Securities, Inc.
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19,125,000
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PNC Capital Markets LLC
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19,125,000
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RBS Securities Inc.
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19,125,000
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Total
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$
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450,000,000
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The underwriting agreement provides that the obligations of the
several underwriters to purchase the notes offered by this
prospectus supplement are subject to certain conditions
precedent and that the underwriters will purchase all of the
notes offered by this prospectus supplement if any of these
notes are purchased.
We have been advised by the representatives of the underwriters
that the underwriters propose to offer the notes to the public
at the public offering price set forth on the cover of this
prospectus supplement. Any notes sold by the underwriters to
securities dealers may be sold at a discount from the public
offering price of up to 0.375% of the principal amount of the
notes. Any such securities dealers may resell any notes
purchased from the underwriters to certain other brokers or
dealers at a discount from the public offering price of up to
0.200% of the principal amount of the notes. After the initial
offering of the notes, the representatives of the underwriters
may change the public offering price and other selling terms.
Sales of notes made outside the United States may be made by
affiliates of the underwriters.
The underwriting discount to be paid by us to the underwriters
is 0.625% of the principal amount of the notes. We estimate that
our share of the total expenses of this offering, excluding the
underwriting discount, will be approximately $500,000.
We have agreed to indemnify the underwriters against some
specified types of liabilities, including liabilities under the
Securities Act of 1933, as amended, and to contribute to
payments the underwriters may be required to make in respect of
any of these liabilities.
The notes offered by this prospectus supplement are a new issue
of securities with no established trading market. We do not
intend to apply for listing of the notes on a national
securities exchange or on any automated dealer quotation system.
We have been advised by the representatives of the underwriters
that they intend to make a market in the notes, but the
underwriters are not obligated to do so and may discontinue
market-making at any time without notice. We can provide no
assurances as to the development or liquidity of any trading
market for the notes. If an active public trading market for the
notes does not develop, the market price and liquidity of the
notes may be adversely affected.
In connection with the offering, the underwriters may engage in
activities that stabilize, maintain or otherwise affect the
price of the notes. These transactions may include short sales,
purchases to cover positions created by short sales and
stabilizing transactions. Short sales involve the sale by the
underwriters of a greater principal amount of notes than they
are required to purchase in the offering. The underwriters may
close out any short position by purchasing notes in the open
market. Stabilizing transactions consist of various bids for or
purchases of the notes made by the underwriters in the open
market prior to the completion of the offering.
S-32
The underwriters may impose a penalty bid. This occurs when a
particular underwriter repays to the other underwriters a
portion of the underwriting discount received by it because the
representatives of the underwriters have repurchased notes sold
by or for the account of that underwriter in stabilizing or
short covering transactions.
Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or slowing a decline in the
market price of the notes. Additionally, these purchases, along
with the imposition of a penalty bid, may stabilize, maintain or
otherwise affect the market price of the notes. As a result, the
price of the notes may be higher than the price that might
otherwise exist in the open market. These transactions may be
effected on the
over-the-counter
market or otherwise and may be discontinued at any time without
notice.
Certain of the underwriters have, from time to time, provided
investment banking and other financial advisory services to us,
for which they have received customary fees. Affiliates of UBS
Securities LLC, J.P. Morgan Securities LLC, Barclays
Capital Inc., Comerica Securities, Inc., Fifth Third Securities,
Inc., PNC Capital Markets LLC and RBS Securities Inc. are
lenders under our Fourth Amended and Restated Loan Agreement
dated August 6, 2007. Also, UBS Securities LLC,
J.P. Morgan Securities LLC, Barclays Capital Inc. and Fifth
Third Securities, Inc. are documentation agents under such
agreement. In addition to using the net proceeds for general
corporate purposes, we intend to use the net proceeds of the
offering to repay borrowings under such agreement and to repay
other outstanding indebtedness. In addition, we and UBS
Securities LLC have entered into an Equity Distribution
Agreement, dated as of November 6, 2008, as amended on
May 8, 2009, relating to the offer and sale from time to
time of up to $250,000,000 aggregate amount of our common stock.
S-33
NOTICE TO
INVESTORS
Notice to
Prospective Investors in the European Economic Area
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive, each referred to
as a Relevant Member State, an offer to the public
of any notes which are the subject of the offering contemplated
by this prospectus supplement and the accompanying prospectus
may not be made in that Relevant Member State except that an
offer to the public in that Relevant Member State of any notes
may be made at any time under the following exemptions under the
Prospectus Directive, if they have been implemented in that
Relevant Member State:
(a) to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities;
(b) to any legal entity which has two or more of
(1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts;
(c) by the underwriters to fewer than 100 natural or legal
persons (other than qualified investors as defined
in the Prospectus Directive) subject to obtaining the prior
consent of the representatives for any such offer; or
(d) in any other circumstances falling within
Article 3(2) of the Prospectus Directive, provided that no
such offer of notes shall result in a requirement for the
publication by us or any underwriter of a prospectus pursuant to
Article 3 of the Prospectus Directive.
Any person making or intending to make any offer within the EEA
of notes which are the subject of the offering contemplated in
this prospectus supplement and the accompanying prospectus
should only do so in circumstances in which no obligation arises
for us or any of the underwriters to produce a prospectus for
such offer. Neither we nor the underwriters have authorized, nor
do they authorize, the making of any offer of notes through any
financial intermediary, other than offers made by the
underwriters which constitute the final offering of notes
contemplated in this prospectus supplement and the accompanying
prospectus.
For the purposes of this provision, and the buyers
representation below, the expression an offer to the
public in relation to any notes in any Relevant Member
State means the communication in any form and by any means of
sufficient information on the terms of the offer and any notes
to be offered so as to enable an investor to decide to purchase
any notes, as the same may be varied in that Relevant Member
State by any measure implementing the Prospectus Directive in
that Relevant Member State and the expression Prospectus
Directive means Directive 2003/71/EC and includes any
relevant implementing measure in each Relevant Member State.
Buyers
representation
Each person in a Relevant Member State who receives any
communication in respect of, or who acquires any notes under,
the offers contemplated in this prospectus supplement and the
accompanying prospectus will be deemed to have represented,
warranted and agreed to and with each underwriter and us that:
(a) it is a qualified investor within the meaning of the
law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive; and
(b) in the case of any notes acquired by it as a financial
intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the notes acquired by it in the
offering have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons in any
Relevant Member State other than qualified investors
as defined in the Prospectus Directive, or in circumstances in
which the prior consent of the representatives has been given to
the offer or resale; or (ii) where notes have been acquired
by it on behalf of persons in any Relevant Member State other
than qualified investors, the offer of those notes to it is not
treated under the Prospectus Directive as having been made to
such persons.
S-34
LEGAL
MATTERS
Certain legal matters regarding the notes offered hereby will be
passed upon for us by Shumaker, Loop & Kendrick, LLP,
Toledo, Ohio. Arnold & Porter LLP will pass upon
certain federal income tax matters relating to us. Calfee,
Halter & Griswold LLP, Cleveland, Ohio will pass upon
certain legal matters for the underwriters.
EXPERTS
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedules included in our Current Report on
Form 8-K
dated May 10, 2010, and the effectiveness of our internal
control over financial reporting as of December 31, 2009,
included in our Annual Report on
Form 10-K
for the year ended December 31, 2009, as set forth in their
reports, which are incorporated by reference in this prospectus
supplement and the accompanying prospectus. Our financial
statements and schedules are incorporated by reference in
reliance upon Ernst & Young LLPs reports, given
on their authority as experts in accounting and auditing.
WHERE YOU
CAN FIND MORE INFORMATION
The prospectus supplement and the accompanying prospectus are
part of a registration statement that we filed with the SEC
covering the securities that may be offered under the
accompanying prospectus. The registration statement, including
the attached exhibits and schedules, contain additional relevant
information about the securities.
Additionally, we file annual, quarterly and current reports,
proxy statements and other information with the SEC, all of
which are made available, free of charge, on our Internet
website at
http://
www.hcreit.com as soon as reasonably practicable after they are
filed with, or furnished to, the SEC. The information on or
connected to our Internet website is not, and shall not be
deemed to be, a part of, or incorporated into this prospectus
supplement or the accompanying prospectus. You can review these
SEC filings and the registration statement by accessing the
SECs Internet website at
http://www.sec.gov.
You also may read and copy the registration statement and any
reports, statements or other information on file at the
SECs public reference room at 100 F Street,
N.E., Washington, DC 20549. You can request copies of those
documents upon payment of a duplicating fee to the SEC. Please
call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room. These filings with the SEC are also available through the
New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
Incorporation
of Information Filed with the SEC
The SEC allows us to incorporate by reference the
information we file with the SEC, which means:
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we consider incorporated documents to be part of this prospectus;
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we may disclose important information to you by referring you to
those incorporated documents; and
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information we subsequently file with the SEC will automatically
update and supersede the information in this prospectus.
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Documents
Incorporated by Reference
This prospectus incorporates by reference the following
documents we filed with the SEC:
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Annual Report on
Form 10-K
for the year ended December 31, 2009;
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Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010;
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Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010;
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S-35
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Current Report on
Form 8-K
filed on March 15, 2010, April 5, 2010, April 7,
2010, May 10, 2010, June 8, 2010 and June 18,
2010;
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The description of our common stock as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on June 17, 1985, including any amendment or report for the
purpose of updating such description;
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The description of the rights to purchase our Series A
Junior Participating Preferred Stock, par value $1.00 per share,
associated with our common stock, as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on August 3, 1994, including any amendment or report for
the purpose of updating such description;
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The description of our
77/8%
Series D Cumulative Redeemable Preferred Stock as set forth
in the registration statement filed under the Exchange Act on
Form 8-A/A
on July 8, 2003, including any amendment or report for the
purpose of updating such description;
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The description of our
75/8%
Series F Cumulative Redeemable Preferred Stock as set forth
in the registration statement filed under the Exchange Act on
Form 8-A
on September 10, 2004, including any amendment or report
for the purpose of updating such description;
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The description of our 7.5% Series G Cumulative Convertible
Preferred Stock as set forth in the registration statement filed
under the Exchange Act on
Form 8-A
on December 18, 2006, including any amendment or report for
the purpose of updating such description; and
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All subsequent documents filed by us under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934 after the date of
this prospectus supplement and before the date this offering is
terminated;
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other than the portions of such documents that by statute or
rule, by designation in such document or otherwise, are not
deemed to be filed with the SEC or are not required to be
incorporated herein by reference.
This prospectus summarizes material provisions of contracts and
other documents to which we refer. Since this prospectus may not
contain all the information that you may find important, you
should review the full text of those documents. Upon request, we
will provide each person receiving this prospectus a free copy,
without exhibits, of any or all documents incorporated by
reference into this prospectus. You may direct such requests to:
Erin C. Ibele
Senior Vice President Administration and Corporate
Secretary
Health Care REIT, Inc.
4500 Dorr Street
Toledo, Ohio 43615
(419) 247-2800
S-36
HEALTH CARE REIT,
INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
UNITS
We may periodically offer and sell, in one or more offerings:
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debt securities
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shares of common stock
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shares of preferred stock
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depositary shares
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warrants to purchase debt securities, preferred stock,
depositary shares or common stock
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units consisting of one or more debt securities or other
securities
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We may offer these securities from time to time on terms we will
determine at the time of offering. We will provide the specific
terms of the securities being offered in supplements to this
prospectus prepared in connection with each offering. You should
read this prospectus and the supplement for the specific
security being offered carefully before you invest.
We may offer these securities directly, through agents we
designate periodically, or to or through underwriters or
dealers. If designated agents or underwriters are involved in
the sale of any of the securities, we will disclose in the
prospectus supplement their names, any applicable purchase
price, fee, compensation arrangement between or among them, and
our net proceeds from such sale. See Plan of
Distribution. No securities may be sold without the
delivery of the applicable prospectus supplement describing the
securities and the method and terms of their offering.
Our shares of common stock are listed on the New York Stock
Exchange under the symbol HCN. Our executive offices
are located at One SeaGate, Suite 1500, Toledo, Ohio 43604,
telephone number:
419-247-2800,
facsimile:
419-247-2826,
and website: www.hcreit.com. Unless specifically noted
otherwise in this prospectus, all references to we,
us, our, or the Company
refer to Health Care REIT, Inc. and its subsidiaries.
Investing in our securities involves risk. See
Cautionary Statement Concerning Forward-Looking Statements
and Risk Factors beginning on page 1 of this
prospectus.
The information in this prospectus is not complete and may be
changed. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities, or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is May 7, 2009.
TABLE OF
CONTENTS
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i
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement we filed
with the SEC using a shelf registration process.
Under this shelf process, we may sell any combination of the
securities described in this prospectus from time to time in one
or more offerings. This prospectus provides you only with a
general description of the securities we may offer. Each time we
sell securities, we will provide a prospectus supplement
containing specific information about the terms of that
offering. The prospectus supplement may also add to, update or
change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with
additional information described under the heading Where
You Can Find Additional Information and Documents
Incorporated By Reference.
You should rely only on the information contained and
incorporated by reference in this prospectus. Neither we nor the
underwriters have authorized any other person to provide you
with different or inconsistent information from that contained
in this prospectus and the applicable prospectus supplement. If
anyone provides you with different or inconsistent information,
you should not rely on it. You should assume that the
information in this prospectus and the applicable prospectus
supplement, as well as information we previously filed with the
SEC and incorporated by reference, is accurate only as of the
date on the front cover of this prospectus and the applicable
prospectus supplement. Our business, financial condition,
results of operations and prospects may have changed since those
dates.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
AND RISK FACTORS
This prospectus and the documents incorporated by reference in
this prospectus contain forward-looking statements
as that term is defined under 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 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
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; and
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legal and operational matters, including real estate investment
trust qualification and key management personnel recruitment and
retention.
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Our business is subject to certain risks, which are discussed in
our most recent Annual Report on
Form 10-K,
as amended or updated, under the headings Business,
Risk Factors and Managements Discussion
and Analysis of Financial Condition and Results of
Operations. Updated information relating to such risks, as
well as additional risks specific to the securities to be
offered hereby, will be set forth in the prospectus supplement
relating to such offered securities. We assume no obligation to
update or revise any forward-looking statements or to update the
reasons why actual results could differ from those projected in
any forward-looking statements.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
This prospectus is part of a registration statement that we have
filed with the SEC covering the securities that may be offered
under this prospectus. The registration statement, including the
attached exhibits and schedules, contains additional relevant
information about the securities.
Additionally, we file annual, quarterly and current reports,
proxy statements and other information with the SEC, all of
which are made available, free of charge, on our Internet
website at www.hcreit.com as soon as reasonably
practicable after they are filed with, or furnished to, the SEC.
You can review our SEC filings and the registration statement by
accessing the SECs Internet site at
http://www.sec.gov.
You also may read and copy the registration statement and any
reports, statements or other information on file at the
SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. You can request copies of
those documents upon payment of a duplicating fee to the SEC.
Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room. Our filings with the SEC are also available through the
New York Stock Exchange, 20 Broad Street, New York,
New York 10005.
This prospectus does not contain all the information set forth
in the registration statement. We have omitted certain parts
consistent with SEC rules. For further information, please see
the registration statement.
2
DOCUMENTS
INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the
information we file with the SEC, which means:
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we consider incorporated documents to be part of the prospectus;
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we may disclose important information to you by referring you to
those documents; and
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information we subsequently file with the SEC will automatically
update and supersede the information in this prospectus.
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This prospectus incorporates by reference the following
documents we filed with the SEC; provided, however, that we are
not incorporating any documents or information deemed to have
been furnished and not filed in accordance with SEC rules:
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Annual Report on
Form 10-K
for the year ended December 31, 2008;
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Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2009;
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Current Reports on
Form 8-K
filed on January 5, 2009, January 29, 2009 (except
that the information furnished pursuant to Items 2.02 and
7.01 of
Form 8-K
and the exhibits relating to such information are not
incorporated into this prospectus), January 30, 2009
(except that the information furnished pursuant to
Item 7.01 of
Form 8-K
and the exhibit relating to such information are not
incorporated into this prospectus) and May 7, 2009;
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The description of our common stock as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on June 17, 1985, including any amendment or report for the
purpose of updating such description;
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The description of the rights to purchase our Series A
Junior Participating Preferred Stock, par value $1.00 per share,
associated with our common stock, as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on August 3, 1994, including any amendment or report for
the purpose of updating such description;
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The description of our
77/8%
Series D Cumulative Redeemable Preferred Stock as set forth
in our registration statement filed under the Exchange Act on
Form 8-A/A
on July 8, 2003, including any amendment or report for the
purpose of updating such description;
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The description of our
75/8%
Series F Cumulative Redeemable Preferred Stock as set forth
in our registration statement filed under the Exchange Act on
Form 8-A
on September 10, 2004, including any amendment or report
for the purpose of updating such description;
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The description of our 7.5% Series G Cumulative Convertible
Preferred Stock as set forth in the registration statement filed
under the Exchange Act on
Form 8-A
on December 18, 2006, including any amendment or report for
the purpose of updating such description; and
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All subsequent documents filed by us under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934 after the date of
this prospectus and before the termination of the offering.
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other than the portions of such documents that by statute or
rule, by designation in such document or otherwise, are not
deemed to be filed with the SEC or are not required to be
incorporated herein by reference.
This prospectus summarizes material provisions of contracts and
other documents to which we refer. Since this prospectus may not
contain all the information that you may find important, you
should review the full text of those documents. Upon request, we
will provide each person receiving this prospectus a free copy
of any or all documents incorporated by reference into this
prospectus. You may direct such requests to:
Erin C. Ibele
Senior Vice President-Administration and Corporate Secretary
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, Ohio 43604
(419) 247-2800
3
THE
COMPANY
We are a real estate investment trust that invests in senior
housing and health care real estate. We also provide an
extensive array of property management and development services.
Our principal executive offices are located at One SeaGate,
Suite 1500, Toledo, Ohio, 43604, and our telephone number
is
(419) 247-2800.
Our website address is www.hcreit.com. The information on
our website is not part of this prospectus.
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.
For additional information regarding our business, please see
the information under the heading Business in our
most recent Annual Report on
Form 10-K,
which is incorporated by reference in this prospectus.
USE OF
PROCEEDS
Unless otherwise described in a prospectus supplement, we intend
to use the net proceeds from the sale of any securities under
this prospectus for general business purposes, which may include
acquisition of and investment in additional health care and
senior housing properties and the repayment of borrowings under
our credit facilities or other debt. Until the proceeds from a
sale of securities by us are applied to their intended purposes,
they may be invested in short-term, investment grade,
interest-bearing securities, certificates of deposit or direct
or guaranteed obligations of the United States.
RATIOS OF
EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred
stock dividends for the periods indicated. The ratio of earnings
to fixed charges was computed by dividing earnings by our fixed
charges. The ratio of earnings to combined fixed charges and
preferred stock dividends was computed by dividing earnings by
our combined fixed charges and preferred stock dividends. For
purposes of calculating these ratios, earnings
includes income from continuing operations, excluding the equity
earnings in a less than 50% owned subsidiary, plus fixed charges
and reduced by capitalized interest. Fixed charges
consists of interest expensed and capitalized and the amortized
premiums, discounts and capitalized expenses related to
indebtedness.
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Year Ended December 31,
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Three Months Ended March 31,
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2004
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2005
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2006
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2007
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2008
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2008
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2009
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Consolidated ratio of earnings to fixed charges
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1.89
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1.77
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1.87
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1.71
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1.85
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1.78
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2.18
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Consolidated ratio of earnings to combined fixed charges and
preferred stock dividends
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1.62
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1.41
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1.54
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1.47
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1.61
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1.54
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1.89
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We issued 4,000,000 shares of
77/8%
Series D Cumulative Redeemable Preferred Stock in July
2003. We issued 1,060,000 shares of 6% Series E
Cumulative Convertible and Redeemable Preferred Stock in
September 2003. During the year ended December 31, 2004,
certain holders of our Series E Preferred Stock converted
480,399 shares into 367,724 shares of our common
stock, leaving 350,045 of such shares outstanding at
December 31, 2004. During the year ended December 31,
2005, certain holders of our Series E Preferred Stock
converted 275,056 shares into 210,541 shares of our
common stock, leaving 74,989 of such shares outstanding at
December 31, 2005, 2006, 2007 and 2008 and March 31,
2009. We issued 7,000,000 shares of
75/8%
Series F Cumulative Redeemable Preferred Stock in September
2004. We issued 2,100,000 shares of 7.5% Series G
Cumulative Convertible Preferred Stock in December 2006. During
the year ended December 31, 2007, certain holders of our
Series G Preferred Stock converted 295,000 shares into
211,702 shares of our common stock, leaving 1,804,200 of
such shares outstanding at
4
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. During the quarterly period ended
March 31, 2009, certain holders of our Series G
Preferred Stock converted 40,600 shares into
29,056 shares of our common stock, leaving 400,713 of such
shares outstanding at March 31, 2009.
GENERAL
DESCRIPTION OF THE OFFERED SECURITIES
We may offer under this prospectus one or more of the following
categories of our securities:
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debt securities, in one or more series;
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shares of our common stock, par value $1.00 per share;
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shares of our preferred stock, par value $1.00 per share, in one
or more series;
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depositary shares, representing interests in our preferred
stock, in one or more series;
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warrants to purchase any of the foregoing securities; and
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units consisting of any combination of the foregoing securities.
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The terms of any specific offering of securities, including the
terms of any units offered, will be set forth in a prospectus
supplement relating to such offering.
Our certificate of incorporation authorizes us to issue
225,000,000 shares of common stock and
50,000,000 shares of preferred stock. Of our preferred
stock:
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13,000 shares have been designated as Junior Participating
Preferred Stock, Series A;
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4,000,000 shares have been designated as
77/8%
Series D Cumulative Redeemable Preferred Stock;
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1,060,000 shares have been designated as 6% Series E
Cumulative Convertible and Redeemable Preferred Stock;
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7,000,000 shares have been designated as
75/8%
Series F Cumulative Redeemable Preferred Stock; and
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2,100,000 shares have been designated as 7.5% Series G
Cumulative Convertible Preferred Stock.
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As of March 31, 2009, we had outstanding
111,013,261 shares of common stock, 4,000,000 shares
of Series D Preferred Stock, 74,989 shares of
Series E Preferred Stock, 7,000,000 shares of
Series F Preferred Stock and 400,713 shares of
Series G Preferred Stock.
Our common stock is listed on the New York Stock Exchange under
the symbol HCN. We intend to apply to list any
additional shares of common stock that are issued and sold
hereunder. Our Series D Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock are listed on
the New York Stock Exchange under the symbols HCN
PrD, HCN PrF and HCN PrG,
respectively. We may apply to list shares of any series of
preferred stock or any depositary shares which are offered and
sold hereunder, as described in the applicable prospectus
supplement relating to such preferred stock or depositary shares.
For a discussion of the taxation of the Company and the material
federal tax consequences to you as a holder of our common stock
and debt securities offered under this prospectus, see
Item 1 Business
Taxation Federal Income Tax Considerations
included in our most recent Annual Report on
Form 10-K.
The applicable prospectus supplement delivered with this
prospectus will provide any necessary information about
additional federal income tax considerations, if any, related to
the particular securities being offered.
DESCRIPTION
OF DEBT SECURITIES
The debt securities sold under this prospectus will be our
direct obligations, which may be secured or unsecured, and which
may be senior or subordinated indebtedness. The debt securities
may be guaranteed on a secured or unsecured, senior or
subordinated basis, by one or more of our subsidiaries. The debt
securities will be issued under one or more indentures between
us and a specified trustee. Any indenture will be subject to and
governed by the Trust Indenture Act of 1939, as amended.
The statements made in this prospectus relating to any
indentures and the debt securities to be issued under the
indentures are summaries of certain anticipated provisions of
the indentures.
5
The following is a summary of the material terms of our debt
securities. Because it is a summary, it does not contain all of
the information that may be important to you. If you want more
information, you should read the form of indenture for senior
debt securities and the forms of indentures for senior
subordinated and junior subordinated debt securities which we
have filed as exhibits to the registration statement of which
this prospectus is a part. We will file any final indentures for
senior subordinated and junior subordinated debt securities and
supplemental indentures if we issue debt securities of this
type. See Where You Can Find Additional Information.
This summary is also subject to and qualified by reference to
the descriptions of the particular terms of the securities
described in the applicable prospectus supplement.
General
We may issue debt securities that rank senior,
senior subordinated or junior
subordinated. The debt securities that we refer to as
senior will be our direct obligations and will rank
equally and ratably in right of payment with our other
indebtedness not subordinated. We may issue debt securities that
will be subordinated in right of payment to the prior payment in
full of senior debt, as defined in the applicable prospectus
supplement, and may rank equally and ratably with the other
senior subordinated indebtedness. We refer to these as
senior subordinated securities. We may also issue
debt securities that may be subordinated in right of payment to
the senior subordinated securities. These would be junior
subordinated securities. We have filed with the
registration statement, of which this prospectus is a part, a
form of indenture for senior debt securities and two separate
forms of indenture, one for the senior subordinated securities
and one for the junior subordinated securities. We refer to
senior subordinated and junior subordinated securities as
subordinated.
We may issue the debt securities without limit as to aggregate
principal amount, in one or more series, in each case as we
establish in one or more supplemental indentures. We need not
issue all debt securities of one series at the same time. Unless
we otherwise provide, we may reopen a series, without the
consent of the holders of the series, for issuances of
additional securities of that series.
We anticipate that any indenture will provide that we may, but
need not, designate more than one trustee under an indenture,
each with respect to one or more series of debt securities. Any
trustee under any indenture may resign or be removed with
respect to one or more series of debt securities, and we may
appoint a successor trustee to act with respect to that series.
The applicable prospectus supplement will describe the specific
terms relating to the series of debt securities we will offer,
including, where applicable, the following:
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the title and series designation and whether they are senior
securities, senior subordinated securities or subordinated
securities;
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the aggregate principal amount of the securities;
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the percentage of the principal amount at which we will issue
the debt securities and, if other than the principal amount of
the debt securities, the portion of the principal amount of the
debt securities payable upon maturity of the debt securities;
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if convertible, the securities into which they are convertible,
the initial conversion price, the conversion period and any
other terms governing such conversion;
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the stated maturity date;
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any fixed or variable interest rate or rates per annum;
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if other than at the corporate trust office of the trustee, the
place where principal, premium, if any, and interest will be
payable and where the debt securities can be surrendered for
transfer, exchange or conversion;
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the date from which interest may accrue and any interest payment
dates;
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any sinking fund requirements;
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any provisions for redemption, including the redemption price
and any remarketing arrangements;
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any provisions for denomination or payment of the securities in
a foreign currency or units of two or more foreign currencies;
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the events of default and covenants of such securities, to the
extent different from or in addition to those described in this
prospectus;
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whether we will issue the debt securities in certificated or
book-entry form;
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whether the debt securities will be in registered or bearer form
and, if in registered form, the denominations if other than in
even multiples of $1,000 and, if in bearer form, the
denominations and terms and conditions relating thereto;
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whether we will issue any of the debt securities in permanent
global form and, if so, the terms and conditions, if any, upon
which interests in the global security may be exchanged, in
whole or in part, for the individual debt securities represented
by the global security;
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the applicability, if any, of the defeasance and covenant
defeasance provisions described in this prospectus or any
prospectus supplement;
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any provisions for payment of additional amounts on the
securities in respect of any tax, assessment or governmental
charge and rights for us to redeem the debt securities instead
of making this payment;
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the subordination provisions, if any, relating to the debt
securities;
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if the debt securities are to be issued upon the exercise of
debt warrants, the time, manner and place for them to be
authenticated and delivered;
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whether any of our subsidiaries will be bound by the terms of
the indenture, in particular any restrictive covenants;
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the provisions relating to any security provided for the debt
securities; and
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the provisions relating to any guarantee of the debt securities.
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We may issue debt securities at less than the principal amount
payable at maturity. We refer to these securities as
original issue discount securities. If material or
applicable, we will describe in the applicable prospectus
supplement special U.S. federal income tax, accounting and
other considerations applicable to original issue discount
securities.
Except as may be described in any prospectus supplement, an
indenture will not contain any provisions that would limit our
ability to incur indebtedness or that would afford holders of
the debt securities protection in the event of a highly
leveraged or similar transaction involving us or in the event of
a change of control. You should review carefully the applicable
prospectus supplement for information with respect to events of
default and covenants applicable to the securities being offered.
Denominations,
Interest, Registration and Transfer
Unless otherwise described in the applicable prospectus
supplement, we will issue the debt securities of any series that
are registered securities in denominations that are even
multiples of $1,000, other than global securities, which may be
of any denomination.
Unless otherwise specified in the applicable prospectus
supplement, we will pay the interest, principal and any premium
at the corporate trust office of the trustee. At our option,
however, we may make payment of interest by check mailed to the
address of the person entitled to the payment as it appears in
the applicable register or by wire transfer of funds to that
person at an account maintained within the United States.
If we do not punctually pay or otherwise provide for interest on
any interest payment date, the defaulted interest will be paid
either:
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to the person in whose name the debt security is registered at
the close of business on a special record date the trustee will
fix; or
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in any other lawful manner, all as the applicable indenture
describes.
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You may have your debt securities divided into more debt
securities of smaller denominations or combined into fewer debt
securities of larger denominations, as long as the total
principal amount is not changed. We call this an
exchange. You may exchange or transfer debt
securities at the office of the applicable trustee. The trustee
acts
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as our agent for registering debt securities in the names of
holders and transferring debt securities. We may change this
appointment to another entity or perform it ourselves.
The entity performing the role of maintaining the list of
registered holders is called the registrar. It will
also perform transfers. You will not be required to pay a
service charge to transfer or exchange debt securities, but you
may be required to pay for any tax or other governmental charge
associated with the exchange or transfer. The registrar will
make the transfer or exchange only if it is satisfied with your
proof of ownership.
Merger,
Consolidation or Sale of Assets
Under any indenture, we are generally permitted to consolidate
or merge with another company. We are also permitted to sell
substantially all of our assets to another company, or to buy
substantially all of the assets of another company. However, we
may not take any of these actions unless the following
conditions are met:
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if we merge out of existence or sell our assets, the other
company must be an entity organized under the laws of one of the
states of the United States or the District of Columbia or under
United States federal law and must agree to be legally
responsible for our debt securities; and
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immediately after the merger, sale of assets or other
transaction, we may not be in default on the debt securities. A
default for this purpose would include any event that would be
an event of default if the requirements regarding notice of
default or continuing default for a specific period of time were
disregarded.
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Certain
Covenants
Existence. Except as permitted and described
above under Merger, Consolidation or Sale of
Assets, we will agree to do all things necessary to
preserve and keep our existence, rights and franchises, provided
that it is in our best interests for the conduct of business.
Provisions of Financial Information. To the
extent permitted by law, we will agree to file all annual,
quarterly and other reports and financial statements with the
SEC and the trustee on or before the applicable SEC filing dates
whether or not we remain required to do so under the Exchange
Act.
Additional Covenants. Any additional or
different covenants or modifications to the foregoing covenants
with respect to any series of debt securities will be described
in the applicable prospectus supplement.
Events of
Default and Related Matters
Events of Default. The term event of
default for any series of debt securities means any of the
following:
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We do not pay the principal or any premium on a debt security of
that series within 30 days after its maturity date.
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We do not pay interest on a debt security of that series within
30 days after its due date.
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We do not deposit any sinking fund payment for that series
within 30 days after its due date.
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We remain in breach of any other term of the applicable
indenture (other than a term added to the indenture solely for
the benefit of another series) for 60 days after we receive
a written notice of default from the trustee or holders of at
least a majority in principal amount of debt securities of the
affected series specifying the breach and requiring it to be
remedied.
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We default under any of our other indebtedness in specified
amounts after the expiration of any applicable grace period,
which default results in the acceleration of the maturity of
such indebtedness. Such default is not an event of default if
the other indebtedness is discharged, or the acceleration is
rescinded or annulled, within a period of 10 days after we
receive a written notice from the trustee or holders of at least
a majority in principal amount of debt securities of the
affected series specifying the default and requiring that we
discharge the other indebtedness or cause the acceleration to be
rescinded or annulled.
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We or one of our significant subsidiaries, if any,
files for bankruptcy or certain other events in bankruptcy,
insolvency or reorganization occur. The term significant
subsidiary means each of our significant subsidiaries, if
any, as defined in
Regulation S-X
under the Securities Act.
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Any other event of default described in the applicable
prospectus supplement occurs.
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8
Remedies if an Event of Default Occurs. If an
event of default has occurred and has not been cured, the
trustee or the holders of at least a majority in principal
amount of the debt securities of the affected series may declare
the entire principal amount of all the debt securities of that
series to be due and immediately payable. If an event of default
occurs because of certain events in bankruptcy, insolvency or
reorganization, the principal amount of all the debt securities
of that series will be automatically accelerated, without any
action by the trustee or any holder. At any time after the
trustee or the holders have accelerated any series of debt
securities, but before a judgment or decree for payment of the
money due has been obtained, the holders of at least a majority
in principal amount of the debt securities of the affected
series may, under certain circumstances, rescind and annul such
acceleration.
The trustee will be required to give notice to the holders of
debt securities within 90 days after a default under the
applicable indenture unless the default has been cured or
waived. The trustee may withhold notice to the holders of any
series of debt securities of any default with respect to that
series, except a default in the payment of the principal of or
interest on any debt security of that series, if specified
responsible officers of the trustee in good faith determine that
withholding the notice is in the interest of the holders.
Except in cases of default, where the trustee has some special
duties, the trustee is not required to take any action under the
applicable indenture at the request of any holders unless the
holders offer the trustee reasonable protection from expenses
and liability. We refer to this as an indemnity. If
reasonable indemnity satisfactory to it is provided, the holders
of a majority in principal amount of the outstanding securities
of the relevant series may direct the time, method and place of
conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee. These majority holders may also
direct the trustee in performing any other action under the
applicable indenture, subject to certain limitations.
Before you bypass the trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your
rights or protect your interests relating to the debt
securities, the following must occur:
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you must give the trustee written notice that an event of
default has occurred and remains uncured;
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the holders of at least a majority in principal amount of all
outstanding securities of the relevant series must make a
written request that the trustee take action because of the
default, and must offer reasonable indemnity to the trustee
against the cost and other liabilities of taking that
action; and
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the trustee must have not taken action for 60 days after
receipt of the notice and offer of indemnity.
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However, you are entitled at any time to bring a lawsuit for the
payment of money due on your security after its due date.
Every year we will furnish to the trustee a written statement by
certain of our officers certifying that to their knowledge we
are in compliance with the applicable indenture, or else
specifying any default.
Modification
of an Indenture
There are three types of changes we can make to the indentures
and the debt securities:
Changes Requiring Your Approval. First, there
are changes we cannot make to your debt securities without your
specific approval. The following is a list of those types of
changes:
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change the stated maturity of the principal or interest on a
debt security;
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reduce any amounts due on a debt security;
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reduce the amount of principal payable upon acceleration of the
maturity of a debt security following a default;
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change the currency of payment on a debt security;
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impair your right to sue for payment;
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modify the subordination provisions, if any, in a manner that is
adverse to you;
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reduce the percentage of holders of debt securities whose
consent is needed to modify or amend an indenture or to waive
compliance with certain provisions of an indenture;
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reduce the percentage of holders of debt securities whose
consent is needed to waive past defaults or change certain
provisions of the indenture relating to waivers of
default; or
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waive a default or event of default in the payment of principal,
interest, or premium, if any, on the debt securities.
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Changes Requiring A Majority Vote. The second
type of change is the kind that requires the vote of holders of
debt securities owning a majority of the principal amount of the
particular series affected. Most changes fall into this
category, except for clarifying changes and certain other
changes that would not materially adversely affect holders of
the debt securities. We require the same vote to obtain a waiver
of a past default; however, we cannot obtain a waiver of a
payment default or any other aspect of an indenture or the debt
securities listed in the first category described above under
Changes Requiring Your Approval unless we
obtain your individual consent to the waiver.
Changes Not Requiring Approval. The third type
of change does not require any vote by holders of debt
securities. This type is limited to clarifications and certain
other changes that would not materially adversely affect holders
of the debt securities.
Further Details Concerning Voting. Debt
securities are not considered outstanding, and therefore the
holders of debt securities are not eligible to vote on matters
relating thereto, if we have deposited or set aside in trust for
such holders money for payment or redemption of debt securities
or if we or one of our affiliates own the debt securities. The
holders of debt securities are also not eligible to vote if the
debt securities have been fully defeased as described below
under Discharge, Defeasance and Covenant
Defeasance Full Defeasance.
Discharge,
Defeasance and Covenant Defeasance
Discharge. We may discharge some obligations
to holders of any series of debt securities that either have
become due and payable or will become due and payable within one
year, or scheduled for redemption within one year, by
irrevocably depositing with the trustee, in trust, funds in the
applicable currency in an amount sufficient to pay the debt
securities, including any premium and interest.
Full Defeasance. We can, under particular
circumstances, effect a full defeasance of your series of debt
securities. By this we mean we can legally release ourselves
from any payment or other obligations on the debt securities if,
among other things, we put in place the arrangements described
below to repay you and deliver certain certificates and opinions
to the trustee:
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we must deposit in trust for your benefit and the benefit of all
other direct holders of the debt securities a combination of
money or U.S. government or U.S. government agency
notes or bonds or, in some circumstances, depositary receipts
representing these notes or bonds, that will generate enough
cash to make interest, principal and any other payments on the
debt securities on their various due dates;
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under current federal income tax law, the deposit and our legal
release from the debt securities would be treated as though we
redeemed your debt securities in exchange for your share of the
cash and notes or bonds deposited in trust. This treatment would
result in sale or exchange treatment of your notes, which would
cause you to recognize gain or loss equal to the amount
described in Item 1 Business
Taxation U.S. Federal Income Tax
Considerations U.S. Federal Income and Estate
Taxation of Holders of Our Debt Securities
U.S. Holders Sale, Exchange or Other
Disposition of Notes included in our most recent Annual
Report on
Form 10-K; and
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we must deliver to the trustee a legal opinion confirming the
tax law change described above.
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If we did accomplish full defeasance, you would have to rely
solely on the trust deposit for repayment on the debt
securities. You could not look to us for repayment in the
unlikely event of any shortfall. Conversely, the trust deposit
would most likely be protected from claims of our lenders and
other creditors if we ever became bankrupt or insolvent. You
would also be released from any subordination provisions.
Covenant Defeasance. Under current federal
income tax law, we can make the same type of deposit described
above and be released from some of the restrictive covenants in
the debt securities. This is called covenant
defeasance. In that event, you would lose the protection
of those restrictive covenants but would gain the
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protection of having money and securities set aside in trust to
repay the securities and you would be released from any
subordination provisions.
If we did accomplish covenant defeasance, the following
provisions of an indenture and the debt securities would no
longer apply:
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any covenants applicable to the series of debt securities and
described in the applicable prospectus supplement;
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any subordination provisions; and
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certain events of default relating to breach of covenants and
acceleration of the maturity of other debt set forth in any
prospectus supplement.
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If we did accomplish covenant defeasance, you could still look
to us for repayment of the debt securities if a shortfall in the
trust deposit occurred. If one of the remaining events of
default occurred, for example, our bankruptcy, and the debt
securities became immediately due and payable, there may be a
shortfall. Depending on the event causing the default, you may
not be able to obtain payment of the shortfall.
Subordination
We will describe in the applicable prospectus supplement the
terms and conditions, if any, upon which any series of senior
subordinated securities or junior subordinated securities is
subordinated to debt securities of another series or to our
other indebtedness. The terms will include a description of:
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the indebtedness ranking senior to the debt securities being
offered;
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the restrictions, if any, on payments to the holders of the debt
securities being offered while a default with respect to the
senior indebtedness is continuing;
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the restrictions, if any, on payments to the holders of the debt
securities being offered following an event of default; and
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provisions requiring holders of the debt securities being
offered to remit some payments to holders of senior indebtedness.
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Guarantees
Our payment obligations under any series of our debt securities
may be guaranteed by some or all of our subsidiaries. The
guarantees may be secured or unsecured and may be senior or
subordinated obligations. The guarantors will be identified and
the terms of the guarantees will be described in the applicable
prospectus supplement.
Global
Securities
If so set forth in the applicable prospectus supplement, we may
issue the debt securities of a series in whole or in part in the
form of one or more global securities that will be deposited
with a depositary identified in the prospectus supplement. We
may issue global securities in either registered or bearer form
and in either temporary or permanent form. The specific terms of
the depositary arrangement with respect to any series of debt
securities will be described in the prospectus supplement.
DESCRIPTION
OF OUR COMMON STOCK
The following is a summary of certain terms of our common stock.
Because this summary is not complete, you should refer to our
certificate of incorporation and by-laws, which documents
provide additional information regarding our common stock. See
also Description of Certain Provisions of Our Certificate
of Incorporation and By-Laws below. Copies of our
certificate of incorporation and by-laws, as amended, are
incorporated by reference as exhibits to the registration
statement of which this prospectus is a part. This summary is
also subject to and qualified by reference to the description of
the particular terms of the securities described in the
applicable prospectus supplement.
Common stockholders are entitled to receive dividends when
declared by the board of directors and after payment of, or
provision for, full cumulative dividends on and any required
redemptions of shares of preferred stock
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then outstanding. Common stockholders have one vote per share,
and there are no cumulative voting rights. If we are voluntarily
or involuntarily liquidated or dissolved, common stockholders
are to share ratably in our distributable assets remaining after
the satisfaction of all of our debts and liabilities and the
preferred stockholders prior preferential rights. Common
stockholders do not have preemptive rights. The common stock
will be, when issued, fully paid and nonassessable. The common
stock is subject to restrictions on transfer under certain
circumstances described under Restrictions on Transfer of
Securities below. The transfer agent for our common stock
is BNY Mellon Shareowner Services.
The rights, preferences and privileges of holders of our common
stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of our preferred
stock which are outstanding or which we may designate and issue
in the future. See Description of Our Preferred
Stock below.
DESCRIPTION
OF OUR PREFERRED STOCK
The following is a summary description of the material terms of
our shares of preferred stock. Because it is a summary, it does
not contain all of the information that may be important to you.
If you want more information, you should read our certificate of
incorporation and by-laws, copies of which are incorporated by
reference as exhibits to the registration statement of which
this prospectus is a part. This summary is also subject to and
qualified by reference to the description of the particular
terms of the securities described in the applicable prospectus
supplement.
General
Our board of directors or a duly authorized committee thereof
will determine the designations, preferences, limitations and
relative rights of our authorized and unissued preferred shares.
These may include:
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the distinctive designation of each series and the number of
shares that will constitute the series;
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the voting rights, if any, of shares of the series;
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the distribution rate on the shares of the series, any
restriction, limitation or condition upon the payment of the
distribution, whether distributions will be cumulative, and the
dates on which distributions are payable;
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if the shares are redeemable, the prices at which, and the terms
and conditions on which, the shares of the series may be
redeemed;
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the purchase or sinking fund provisions, if any, for the
purchase or redemption of shares of the series;
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any preferential amount payable upon shares of the series upon
our liquidation or the distribution of our assets;
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if the shares are convertible, the price or rates of conversion
at which, and the terms and conditions on which, the shares of
the series may be converted into other securities; and
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whether the series can be exchanged, at our option, into debt
securities, and the terms and conditions of any permitted
exchange.
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The issuance of preferred shares, or the issuance of rights to
purchase preferred shares, could discourage an unsolicited
acquisition proposal. In addition, the rights of holders of
common shares will be subject to, and may be adversely affected
by, the rights of holders of any preferred shares that we may
issue in the future.
The following describes some general terms and provisions of the
preferred shares to which a prospectus supplement may relate.
The statements below describing the preferred shares are in all
respects subject to and qualified in their entirety by reference
to the applicable provisions of our certificate of
incorporation, including any applicable certificate of
designation, and our by-laws.
The prospectus supplement will describe the specific terms as to
each issuance of preferred shares, including:
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the description of the preferred shares;
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the number of preferred shares offered;
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the offering price of the preferred shares;
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the distribution rate, when distributions will be paid, or the
method of determining the distribution rate if it is based on a
formula or not otherwise fixed;
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the date from which distributions on the preferred shares shall
accumulate;
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the voting rights, if any, of the holders of the preferred
shares;
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the provisions for any auctioning or remarketing, if any, of the
preferred shares;
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the provision, if any, for redemption or a sinking fund;
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the liquidation preference per share;
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any listing of the preferred shares on a securities exchange;
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whether the preferred shares will be convertible and, if so, the
security into which they are convertible and the terms and
conditions of conversion, including the conversion price or the
manner of determining it;
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whether interests in the shares of preferred stock will be
represented by depositary shares as more fully described below
under Description of Depositary Shares;
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a discussion of federal income tax considerations;
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the relative ranking and preferences of the preferred shares as
to distribution and liquidation rights;
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any limitations on issuance of any preferred shares ranking
senior to or on a parity with the series of preferred shares
being offered as to distribution and liquidation rights;
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any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to
preserve our status as a real estate investment trust; and
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any other specific terms, preferences, rights, limitations or
restrictions of the preferred shares.
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As described under Description of Depositary Shares,
we may, at our option, elect to offer depositary shares
evidenced by depositary receipts. If we elect to do this, each
depositary receipt will represent a fractional interest in a
share of the particular series of preferred stock issued and
deposited with a depositary. The applicable prospectus
supplement will specify that fractional interest.
Rank
Unless our board of directors otherwise determines and we so
specify in the applicable prospectus supplement, we expect that
the preferred shares will, with respect to distribution rights
and rights upon liquidation or dissolution, rank senior to all
of our common shares.
Distributions
Holders of preferred shares of each series will be entitled to
receive cash
and/or share
distributions at the rates and on the dates shown in the
applicable prospectus supplement. Even though the preferred
shares may specify a fixed rate of distribution, our board of
directors must authorize and declare those distributions and
they may be paid only out of assets legally available for
payment. We will pay each distribution to holders of record as
they appear on our share transfer books on the record dates
fixed by our board of directors. In the case of shares of
preferred stock represented by depositary receipts, the records
of the depositary referred to under Description of
Depositary Shares will determine the persons to whom
dividends are payable.
Distributions on any series of preferred shares may be
cumulative or noncumulative, as provided in the applicable
prospectus supplement. We refer to each particular series, for
ease of reference, as the applicable series. Cumulative
distributions will be cumulative from and after the date shown
in the applicable prospectus supplement. If our board of
directors fails to authorize a distribution on any applicable
series that is noncumulative, the holders will have no right to
receive, and we will have no obligation to pay, a distribution
in respect of the applicable distribution period, whether or not
distributions on that series are declared payable in the future.
If the applicable series is entitled to a cumulative
distribution, we may not declare, or pay or set aside for
payment, any full distributions on any other series of preferred
shares ranking, as to distributions, on a parity with or junior
to the applicable series, unless we declare, and either pay or
set aside for payment, full cumulative distributions on the
applicable series for all past distribution periods and the then
current distribution period. If the applicable series does not
have a cumulative distribution, we must declare, and pay or set
aside for payment, full distributions for the
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then current distribution period only. When distributions are
not paid, or set aside for payment, in full upon any applicable
series and the shares of any other series ranking on a parity as
to distributions with the applicable series, we must declare,
and pay or set aside for payment, all distributions upon the
applicable series and any other parity series proportionately,
in accordance with accrued and unpaid distributions of the
several series. For these purposes, accrued and unpaid
distributions do not include unpaid distribution periods on
noncumulative preferred shares. No interest will be payable in
respect of any distribution payment that may be in arrears.
Except as provided in the immediately preceding paragraph,
unless we declare, and pay or set aside for payment, full
cumulative distributions, including for the then current period,
on any cumulative applicable series, we may not declare, or pay
or set aside for payment, any distributions upon common shares
or any other equity securities ranking junior to or on a parity
with the applicable series as to distributions or upon
liquidation. The foregoing restriction does not apply to
distributions paid in common shares or other equity securities
ranking junior to the applicable series as to distributions and
upon liquidation. If the applicable series is noncumulative, we
need only declare, and pay or set aside for payment, the
distribution for the then current period, before declaring
distributions on common shares or junior or parity securities.
In addition, under the circumstances that we could not declare a
distribution, we may not redeem, purchase or otherwise acquire
for any consideration any common shares or other parity or
junior equity securities, except upon conversion into or
exchange for common shares or other junior equity securities. We
may, however, make purchases and redemptions otherwise
prohibited pursuant to certain redemptions or pro rata offers to
purchase the outstanding shares of the applicable series and any
other parity series of preferred shares.
We will credit any distribution payment made on an applicable
series first against the earliest accrued but unpaid
distribution due with respect to the series.
Redemption
We may have the right or may be required to redeem one or more
series of preferred shares, as a whole or in part, in each case
upon the terms, if any, and at the times and at the redemption
prices shown in the applicable prospectus supplement.
If a series of preferred shares is subject to mandatory
redemption, we will specify in the applicable prospectus
supplement the number of shares we are required to redeem, when
those redemptions start, the redemption price, and any other
terms and conditions affecting the redemption. The redemption
price will include all accrued and unpaid distributions, except
in the case of noncumulative preferred shares. The redemption
price may be payable in cash or other property, as specified in
the applicable prospectus supplement. If the redemption price
for preferred shares of any series is payable only from the net
proceeds of our issuance of shares of capital stock, the terms
of the preferred shares may provide that, if no shares of such
capital stock shall have been issued or to the extent the net
proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, the preferred shares will
automatically and mandatorily be converted into shares of the
applicable capital stock pursuant to conversion provisions
specified in the applicable prospectus supplement.
Liquidation
Preference
The applicable prospectus supplement will show the liquidation
preference of the applicable series. Upon our voluntary or
involuntary liquidation, before any distribution may be made to
the holders of our common shares or any other shares of capital
stock ranking junior in the distribution of assets upon any
liquidation to the applicable series, the holders of that series
will be entitled to receive, out of our assets legally available
for distribution to stockholders, liquidating distributions in
the amount of the liquidation preference, plus an amount equal
to all distributions accrued and unpaid. In the case of a
noncumulative applicable series, accrued and unpaid
distributions include only the then current distribution period.
Unless otherwise provided in the applicable prospectus
supplement, after payment of the full amount of the liquidating
distributions to which they are entitled, the holders of
preferred shares will have no right or claim to any of our
remaining assets. If liquidating distributions shall have been
made in full to all holders of preferred shares, our remaining
assets will be distributed among the holders of any other shares
of capital stock ranking junior to the preferred shares upon
liquidation, according to their rights and preferences and in
each case according to their number of shares.
If, upon any voluntary or involuntary liquidation, our available
assets are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of that series and the
corresponding amounts payable on all shares
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of capital stock ranking on a parity in the distribution of
assets with that series, then the holders of that series and all
other equally ranking shares of capital stock shall share
ratably in the distribution in proportion to the full
liquidating distributions to which they would otherwise be
entitled. For these purposes, our consolidation or merger with
or into any other corporation or other entity, or the sale,
lease or conveyance of all or substantially all of our property
or business, shall not be deemed to constitute a liquidation.
Voting
Rights
Holders of the preferred shares will not have any voting rights,
except as described below or as otherwise from time to time
required by law or as specified in the applicable prospectus
supplement. As more fully described under Description of
Depositary Shares below, if we elect to issue depositary
shares, each representing a fraction of a share of a series of
preferred stock, each holder thereof will in effect be entitled
to a fraction of a vote per depositary share.
Unless otherwise provided for in an applicable series, so long
as any preferred shares are outstanding, we may not, without the
affirmative vote or consent of the holders of a majority of the
shares (or such greater vote or consent as is required by the
then current rules of any stock exchange or trading market on
which we shall have listed the applicable series of preferred
stock for trading or as otherwise provided in our organizational
documents) of each series of preferred shares outstanding at
that time:
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authorize, create or increase the authorized or issued amount of
any class or series of shares of capital stock ranking senior to
that series of preferred shares with respect to distribution and
liquidation rights;
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reclassify any authorized shares of capital stock into a series
of shares of capital stock ranking senior to that series of
preferred shares with respect to distribution and liquidation
rights;
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create, authorize or issue any security or obligation
convertible into or evidencing the right to purchase any shares
of capital stock ranking senior to that series of preferred
shares with respect to distribution and liquidation
rights; and
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amend, alter or repeal the provisions of our certificate of
incorporation relating to that series of preferred shares that
materially and adversely affects the series of preferred shares.
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The authorization, creation or increase of the authorized or
issued amount of any class or series of shares of capital stock
ranking on parity with or junior to a series of preferred shares
with respect to distribution and liquidation rights will not be
deemed to materially and adversely affect that series.
Conversion
Rights
We will describe in the applicable prospectus supplement the
terms and conditions, if any, upon which you may, or we may
require you to, convert shares of any series of preferred shares
into common shares or any other class or series of shares of
capital stock. The terms will include the number of common
shares or other capital stock into which the preferred shares
are convertible, the conversion price or manner of determining
it, the conversion period, provisions as to whether conversion
will be at the option of the holders of the series or at our
option, the events requiring an adjustment of the conversion
price, and provisions affecting conversion upon the redemption
of shares of the series.
Our
Exchange Rights
We will describe in the applicable prospectus supplement the
terms and conditions, if any, upon which we can require you to
exchange shares of any series of preferred shares for debt
securities. If an exchange is required, you will receive debt
securities with a principal amount equal to the liquidation
preference of the applicable series of preferred shares. The
other terms and provisions of the debt securities will not be
materially less favorable to you than those of the series of
preferred shares being exchanged.
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DESCRIPTION
OF DEPOSITARY SHARES
This section describes the general terms and provisions of
shares of preferred stock represented by depositary shares. The
applicable prospectus supplement will describe the specific
terms of the depositary shares offered through that prospectus
supplement and any general terms outlined in this section that
will not apply to those depositary shares.
We have summarized in this section certain terms and provisions
of the deposit agreement, the depositary shares and the receipts
representing depositary shares. The summary is not complete. You
should read the forms of deposit agreement and depositary
receipt that we will file with the SEC at or before the time of
the offering of the depositary shares for additional information
before you buy any depositary shares.
General
We may, at our option, elect to offer fractional interests in
shares of preferred stock, rather than shares of preferred
stock. If we exercise this option, we will appoint a depositary
to issue depositary receipts representing those fractional
interests. Shares of preferred stock of each series represented
by depositary shares will be deposited under a separate deposit
agreement between us and the depositary. The prospectus
supplement relating to a series of depositary shares will
provide the name and address of the depositary. Subject to the
terms of the applicable deposit agreement, each owner of
depositary shares will be entitled to all of the dividend,
voting, conversion, redemption, liquidation and other rights and
preferences of the shares of preferred stock represented by
those depositary shares.
Depositary receipts issued pursuant to the applicable deposit
agreement will evidence ownership of depositary shares. Upon
surrender of depositary receipts at the office of the
depositary, and upon payment of the charges provided in and
subject to the terms of the deposit agreement, a holder of
depositary shares will be entitled to receive the shares of
preferred stock underlying the surrendered depositary receipts.
Distributions
A depositary will be required to distribute all dividends or
other cash distributions received in respect of the applicable
shares of preferred stock to the record holders of depositary
receipts evidencing the related depositary shares in proportion
to the number of depositary receipts owned by the holders.
Fractions will be rounded down to the nearest whole cent.
If the distribution is other than in cash, a depositary will be
required to distribute property received by it to the record
holders of depositary receipts entitled thereto, unless the
depositary determines that it is not feasible to make the
distribution. In that case, the depositary may, with our
approval, sell the property and distribute the net proceeds from
the sale to the holders of depositary shares.
Depositary shares that represent shares of preferred stock
converted or exchanged will not be entitled to distributions.
The deposit agreement also will contain provisions relating to
the manner in which any subscription or similar rights we offer
to holders of shares of preferred stock will be made available
to holders of depositary shares. All distributions will be
subject to obligations of holders to file proofs, certificates
and other information and to pay certain charges and expenses to
the depositary.
Withdrawal
of Shares of Preferred Stock
You may receive the number of whole shares of your series of
preferred stock and any money or other property represented by
your depositary receipts after surrendering your depositary
receipts at the corporate trust office of the depositary.
Partial shares of preferred stock will not be issued. If the
depositary shares that you surrender exceed the number of
depositary shares that represent the number of whole shares of
preferred stock you wish to withdraw, then the depositary will
deliver to you at the same time a new depositary receipt
evidencing the excess number of depositary shares. Once you have
withdrawn your shares of preferred stock, you will not be
entitled to re-deposit those shares of preferred stock under the
deposit agreement in order to receive depositary shares. We do
not expect that there will be any public trading market for
withdrawn shares of preferred stock.
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Redemption
of Depositary Shares
If we redeem a series of the preferred stock underlying the
depositary shares, the depositary will redeem those shares from
the proceeds it receives. The redemption price per depositary
share will be equal to the applicable fraction of the redemption
price per share payable with respect to the series of the
preferred stock. The redemption date for depositary shares will
be the same as that of the preferred stock. If we are redeeming
less than all of the depositary shares, the depositary will
select the depositary shares we are redeeming by lot or pro rata
as the depositary may determine.
After the date fixed for redemption, the depositary shares
called for redemption will no longer be deemed outstanding. All
rights of the holders of the depositary shares and the related
depositary receipts will cease at that time, except the right to
receive the money or other property to which the holders of
depositary shares were entitled upon redemption. Receipt of the
money or other property is subject to surrender to the
depositary of the depositary receipts evidencing the redeemed
depositary shares.
Voting of
the Underlying Shares of Preferred Stock
Upon receipt of notice of any meeting at which the holders of
the preferred stock are entitled to vote, a depositary will be
required to mail the information contained in the notice of
meeting to the record holders of the depositary shares
representing such preferred stock. Each record holder of
depositary receipts on the record date will be entitled to
instruct the depositary as to how the holders depositary
shares will be voted. The record date for the depositary shares
will be the same as the record date for the preferred stock. The
depositary will vote the shares as you instruct. We will agree
to take all reasonable action that the depositary deems
necessary in order to enable it to vote the preferred stock in
that manner. If you do not instruct the depositary how to vote
your shares, the depositary will abstain from voting those
shares. The depositary will not be responsible for any failure
to carry out any voting instruction, or for the manner or effect
of any vote, as long as its action or inaction is in good faith
and does not result from its negligence or willful misconduct.
Liquidation
Preference
Upon our liquidation, whether voluntary or involuntary, each
holder of depositary shares will be entitled to the fraction of
the liquidation preference accorded each share of preferred
stock represented by the depositary shares, as described in the
applicable prospectus supplement.
Conversion
or Exchange of Shares of Preferred Stock
The depositary shares will not themselves be convertible into or
exchangeable for shares of common stock or preferred stock or
any of our other securities or property. Nevertheless, if so
specified in the applicable prospectus supplement, the
depositary receipts may be surrendered by holders to the
applicable depositary with written instructions to it to
instruct us to cause the conversion of the preferred stock
represented by the depositary shares. Similarly, if so specified
in the applicable prospectus supplement, we may require you to
surrender all of your depositary receipts to the applicable
depositary upon our requiring the conversion or exchange of the
preferred stock represented by the depositary shares into our
debt securities. We will agree that, upon receipt of the
instruction and any amounts payable in connection with the
conversion or exchange, we will cause the conversion or exchange
using the same procedures as those provided for delivery of
shares of preferred stock to effect the conversion or exchange.
If you are converting only a part of the depositary shares, the
depositary will issue you a new depositary receipt for any
unconverted depositary shares.
Amendment
and Termination of a Deposit Agreement
We and the applicable depositary are permitted to amend the
provisions of the depositary receipts and the deposit agreement.
However, the holders of at least a majority of the applicable
depositary shares then outstanding (or such greater approval as
is required by the then current rules of any stock exchange or
trading market on which we shall have listed the applicable
underlying series of preferred stock for trading or as otherwise
provided in our organizational documents) must approve any
amendment that adds or increases fees or charges or prejudices
an
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important right of holders. Every holder of an outstanding
depositary receipt at the time any amendment becomes effective,
by continuing to hold the receipt, will be bound by the
applicable deposit agreement, as amended.
Any deposit agreement may be terminated by us upon not less than
30 days prior written notice to the applicable
depositary if (1) the termination is necessary to preserve
our status as a REIT or (2) a majority of each series of
preferred stock affected by the termination consents to the
termination. When either event occurs, the depositary will be
required to deliver or make available to each holder of
depositary receipts, upon surrender of the depositary receipts
held by the holder, the number of whole or fractional shares of
preferred stock as are represented by the depositary shares
evidenced by the depositary receipts, together with any other
property held by the depositary with respect to the depositary
receipts. In addition, a deposit agreement will automatically
terminate if:
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all depositary shares have been redeemed;
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there shall have been a final distribution in respect of the
related preferred stock in connection with our liquidation and
the distribution has been made to the holders of depositary
receipts evidencing the depositary shares underlying the
preferred stock; or
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each related share of preferred stock shall have been converted
or exchanged into securities not represented by depositary
shares.
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Charges
of a Depositary
We will pay all transfer and other taxes and governmental
charges arising solely from the existence of a deposit
agreement. In addition, we will pay the fees and expenses of a
depositary in connection with the initial deposit of the
preferred stock and any redemption of preferred stock. However,
holders of depositary receipts will pay any transfer or other
governmental charges and the fees and expenses of a depositary
for any duties the holders request to be performed that are
outside of those expressly provided for in the applicable
deposit agreement.
Resignation
and Removal of a Depositary
A depositary may resign at any time by providing us notice of
its election to resign. In addition, we may at any time remove a
depositary. Any resignation or removal will take effect when we
appoint a successor depositary and it accepts the appointment.
We must appoint a successor depositary within 60 days after
delivery of the notice of resignation or removal. A depositary
must be a bank or trust company that has its principal office in
the United States and a combined capital and surplus of at least
$50 million.
Miscellaneous
A depositary will be required to forward to holders of
depositary receipts any reports and communications from us that
it receives with respect to the related shares of preferred
stock. Holders of depository receipts will be able to inspect
the transfer books of the depository and the list of holders of
receipts upon reasonable notice. Neither we nor any depositary
will be liable if either party is prevented from or delayed in
performing its obligations under a deposit agreement by law or
any circumstances beyond its control. Our obligations and those
of the depositary under a deposit agreement will be limited to
performing duties in good faith and without gross negligence or
willful misconduct.
Neither we nor any depositary will be obligated to prosecute or
defend any legal proceeding in respect of any depositary
receipts, depositary shares or related shares of preferred stock
unless satisfactory indemnity is furnished. We and each
depositary will be permitted to rely on written advice of
counsel or accountants, on information provided by persons
presenting shares of preferred stock for deposit, by holders of
depositary receipts, or by other persons believed in good faith
to be competent to give the information, and on documents
believed in good faith to be genuine and signed by a proper
party.
If a depositary receives conflicting claims, requests or
instructions from any holder of depositary receipts, on the one
hand, and us, on the other hand, the depositary shall be
entitled to act on the claims, requests or instructions received
from us.
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DESCRIPTION
OF WARRANTS
This section describes the general terms and provisions of the
warrants. The applicable prospectus supplement will describe the
specific terms of the warrants offered through that prospectus
supplement and any general terms outlined in this section that
will not apply to those warrants.
We have summarized in this section certain terms and provisions
of the warrant agreement and the warrants. The summary is not
complete. You should read the forms of warrant and warrant
agreement that we will file with the SEC at or before the time
of the offering of the applicable series of warrants for
additional information before you buy any warrants.
We may issue, together with any other securities being offered
or separately, warrants entitling the holder to purchase from or
sell to us, or to receive from us the cash value of the right to
purchase or sell, debt securities, preferred stock, depositary
shares or common stock. We and a warrant agent will enter into a
warrant agreement pursuant to which the warrants will be issued.
The warrant agent will act solely as our agent in connection
with the warrants and will not assume any obligation or
relationship of agency or trust for or with any holders or
beneficial owners of warrants.
In the case of each series of warrants, the applicable
prospectus supplement will describe the terms of the warrants
being offered thereby. These include the following, if
applicable:
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the offering price;
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the number of warrants offered;
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the securities underlying the warrants;
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the exercise price, the procedures for exercise of the warrants
and the circumstances, if any, that will cause the warrants to
be automatically exercised;
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the date on which the warrants will expire;
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federal income tax consequences;
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the rights, if any, we have to redeem the warrants;
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the name of the warrant agent; and
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the other terms of the warrants.
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Warrants may be exercised at the appropriate office of the
warrant agent or any other office indicated in the applicable
prospectus supplement. Before the exercise of warrants, holders
will not have any of the rights of holders of the securities
underlying the warrants and will not be entitled to payments
made to holders of those securities.
The warrant agreements may be amended or supplemented without
the consent of the holders of the warrants to which the
amendment or supplement applies to effect changes that are not
inconsistent with the provisions of the warrants and that do not
adversely affect the interests of the holders of the warrants.
However, any amendment that materially and adversely alters the
rights of the holders of warrants will not be effective unless
the holders of at least a majority of the applicable warrants
then outstanding (or such greater approval as is required by the
then current rules of any stock exchange or trading market on
which we shall have listed the applicable underlying shares of
capital stock for trading or as otherwise provided in our
organizational documents) approve the amendment. Every holder of
an outstanding warrant at the time any amendment becomes
effective, by continuing to hold the warrant, will be bound by
the applicable warrant agreement, as amended. The prospectus
supplement applicable to a particular series of warrants may
provide that certain provisions of the warrants, including the
securities for which they may be exercisable, the exercise
price, and the expiration date, may not be altered without the
consent of the holder of each warrant.
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DESCRIPTION
OF UNITS
We may, from time to time, issue units comprised of one or more
of the other securities that may be offered under this
prospectus, in any combination. Each unit will be issued so that
the holder of the unit is also the holder of each security
included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security.
The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or
transferred separately at any time, or at any time before a
specified date.
Any applicable prospectus supplement will describe:
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the material terms of the units and of the securities comprising
the units, including whether and under what circumstances those
securities may be held or transferred separately;
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any material provisions relating to the issuance, payment,
settlement, transfer or exchange of the units or of the
securities comprising the units;
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any special federal income tax considerations applicable to the
units; and
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any material provisions of the governing unit agreement that
differ from those described above.
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RESTRICTIONS
ON TRANSFER OF SECURITIES
For us to qualify as a real estate investment trust, not more
than 50% in value of our outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals at any time
during the last half of our taxable year. In order to ensure
that this requirement is satisfied, our by-laws (with respect to
our common stock and preferred stock) and our certificates of
designation (for our preferred stock) provide that no person may
acquire securities that would result in the direct or indirect
beneficial ownership of more than 9.8% of our common stock or
more than 9.8% in value of our outstanding capital stock by such
person. For purposes of application of such limitations to any
person, all options, warrants, convertible securities or other
rights to acquire our common stock held directly or indirectly
by such person will be treated as if all such rights had been
exercised. If any securities in excess of this limit are issued
or transferred to any person, such issuance or transfer shall be
valid only with respect to such amount of securities as does not
exceed this limit, and such issuance or transfer will be void
with respect to the excess. The board of directors may grant
limited exemptions from the ownership restrictions set forth in
the by-laws to specified persons if the board determines that
each such limited exemption is in the best interests of us and
our stockholders.
Our by-laws and certificates of designation further provide
that, if the foregoing stock ownership limitations are
determined to be invalid by virtue of any legal decision,
statute, rule or regulation, then the transferee of the shares
or other securities will be deemed to have acted as our agent in
acquiring the shares or other securities that are in excess of
the limit, and will be deemed to hold such excess shares or
securities on our behalf. As the equivalent of treasury
securities for such purposes, the excess securities will not be
entitled to any voting rights, will not be considered to be
outstanding for quorum or voting purposes, and will not be
entitled to receive dividends, interest or any other
distribution with respect to such securities. Any person who
receives dividends, interest or any other distribution in
respect of the excess securities will hold the same as our agent
and for the transferee of the excess securities following a
permitted transfer.
In addition, under our by-laws and certificates of designation,
we may refuse to transfer any shares, passing either by
voluntary transfer, by operation of law, or under the last will
and testament of any stockholder, if such transfer would or
might, in the opinion of our board of directors or counsel,
disqualify us as a real estate investment trust.
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DESCRIPTION
OF CERTAIN PROVISIONS OF OUR CERTIFICATE OF
INCORPORATION AND BY-LAWS
Anti-Takeover
Provisions
Our certificate of incorporation and by-laws contain provisions
that may have the effect of discouraging persons from acquiring
large blocks of our stock or delaying or preventing a change in
our control. The material provisions that may have such an
effect are:
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Classification of our board of directors into three classes with
the term of only one class expiring each year.
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A provision permitting our board of directors to make, amend or
repeal our by-laws.
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Authorization for our board of directors to issue preferred
stock in series and to fix the rights and preferences of the
series, including, among other things, whether and to what
extent the shares of any series will have voting rights and the
extent of the preferences of the shares of any series with
respect to dividends and other matters (see Description of
Our Preferred Stock above).
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A prohibition on stockholders taking action by written consent
in lieu of a meeting.
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Advance notice procedures with respect to nominations of
directors by stockholders and proposals by stockholders of
business at an annual meeting.
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The grant only to our board of directors of the right to call
special meetings of stockholders.
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Limitations on the number of shares of our capital stock that
may be beneficially owned, directly or indirectly, by any one
stockholder (see Restrictions on Transfer of
Securities above).
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Limitations on transactions that involve us and any stockholder
who beneficially owns 5% or more of our voting stock (see
Limitations on Transactions Involving Us and Our
Stockholders below).
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A provision permitting amendment by the stockholders of certain
of the provisions listed above only by an affirmative vote of
the holders of at least three-quarters of all of the outstanding
shares of our voting stock, voting together as a single class.
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Limitations
on Transactions Involving Us and Our Stockholders
Under our by-laws, in addition to any vote otherwise required by
law, our certificate of incorporation or our by-laws, the
following transactions will require the affirmative vote of the
holders of at least 75% of the voting power of our then
outstanding shares of capital stock entitled to vote generally
in the election of directors, voting together as a single class:
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Our merger or consolidation with or into
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any stockholder that owns 5% or more of our voting stock; or
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any other corporation or entity which is, or after such merger
or consolidation would be, an affiliate of a stockholder that
owns 5% or more of our voting stock.
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Any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of substantially all of our assets, in one
transaction or a series of transactions, to or with any
stockholder that owns 5% or more of our voting stock or an
affiliate of any such stockholder.
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Any reclassification of our securities, including any reverse
stock split, or recapitalization or any other transaction that
has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
our equity securities that is directly or indirectly owned by
any stockholder that owns 5% or more of our voting stock or any
affiliate of such a stockholder, whether or not the transaction
involves such a stockholder.
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The adoption of any plan or proposal for our liquidation or
dissolution proposed by or on behalf of a stockholder that owns
5% or more of our voting stock or any affiliate of such a
stockholder.
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These provisions will not apply to any of the transactions
described above if:
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We are at the time of the consummation of the transaction, and
at all times throughout the preceding twelve months have been,
directly or indirectly, the owner of a majority of each class of
the outstanding equity securities of the 5% stockholder that is
a party to the transaction; or
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The transaction has been approved by a majority of the members
of our board of directors who, at the time such approval is
given, were not affiliates or nominees of the 5%
stockholder; or
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Both of the following conditions have been met:
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the aggregate amount of the cash and the fair market value, as
determined in good faith by our board of directors, of the
consideration other than cash to be received per share by
holders of our voting stock in such transaction shall be at
least equal to the highest per share price paid by the 5%
stockholder for any shares of voting stock acquired by it:
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within the two-year period immediately prior to the first public
announcement of the proposal of the transaction, or
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in the transaction in which it became a 5% stockholder,
whichever is higher; and
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the consideration to be received by holders of a particular
class of outstanding voting stock shall be in cash or in the
same form as the 5% stockholder previously paid for shares of
such voting stock. If the 5% stockholder paid for shares of any
class of voting stock with varying forms of consideration, the
form of consideration to be paid by the 5% stockholder for such
class of voting stock shall be either cash or the form used to
acquire the largest number of shares of such class of voting
stock previously acquired by the stockholder.
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The foregoing summary of certain provisions of our certificate
of incorporation and by-laws does not purport to be complete or
to give effect to provisions of statutory or common law. The
foregoing summary is subject to, and qualified in its entirety
by reference to, the provisions of applicable law and our
certificate of incorporation and by-laws, copies of which are
incorporated by reference as exhibits to the registration
statement of which this prospectus is a part.
PLAN OF
DISTRIBUTION
We may sell the securities:
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through underwriters or dealers;
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through agents;
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directly to purchasers; or
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through a combination of any of these methods of sale.
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The applicable prospectus supplement will describe the plan of
distribution of the securities and the terms of the offering and
will name any underwriter or agent involved in the offer and
sale of the securities. Direct sales to investors or our
stockholders may be accomplished through subscription offerings
or through stockholder purchase rights distributed to
stockholders. In connection with subscription offerings or the
distribution of stockholder purchase rights to stockholders, if
all of the underlying securities are not subscribed for, we may
sell any unsubscribed securities to third parties directly or
through underwriters or agents. In addition, whether or not all
of the underlying securities are subscribed for, we may
concurrently offer additional securities to third parties
directly or through underwriters or agents. If securities are to
be sold through stockholder purchase rights, the stockholder
purchase rights will be distributed as a dividend to the
stockholders for which they will pay no separate consideration.
The prospectus supplement with respect to the offer of
securities under stockholder purchase rights will set forth the
relevant terms of the stockholder purchase rights, including:
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whether common stock, preferred stock or some other type of
capital stock, or warrants for those securities, will be offered
under the stockholder purchase rights;
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the number of those securities or warrants that will be offered
under the stockholder purchase rights;
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the period during which and the price at which the stockholder
purchase rights will be exercisable;
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the number of stockholder purchase rights then outstanding;
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any provisions for changes to or adjustments in the exercise
price of the stockholder purchase rights; and
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any other material terms of the stockholder purchase rights.
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Underwriters and our agents may offer and sell the securities at:
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fixed prices, which may be changed;
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prices related to the prevailing market prices at the time of
sale; or
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negotiated prices.
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We also may, from time to time, authorize underwriters and our
agents to offer and sell the securities upon the terms and
conditions as are set forth in the applicable prospectus
supplement. In connection with the sale of securities,
underwriters may be deemed to have received compensation from us
in the form of underwriting discounts, commissions or fees and
may also receive commissions from purchasers of securities for
whom they may act as agent. Underwriters may sell securities to
or through dealers, and these dealers may receive compensation
in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for whom they
may act as agent, or both. The applicable prospectus supplement
will disclose:
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any underwriting compensation we pay to underwriters or agents
in connection with the offering of securities; and
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any discounts, concessions or commissions allowed by
underwriters to participating dealers.
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Under the Securities Act, underwriters, dealers and agents
participating in the distribution of the securities may be
deemed to be underwriters and any discounts, commissions and
fees received by them and any profit realized by them on resale
of the securities may be deemed to be underwriting compensation,
discounts and commissions. We may agree to indemnify
underwriters, dealers and agents against civil liabilities,
including liabilities under the Securities Act, and to make
contribution to them in connection with those liabilities.
If indicated in the applicable prospectus supplement, we may
also offer and sell securities through one or more firms that
will remarket the securities. These firms may act as principals
for their own account or as our agents. These firms may be
deemed to be underwriters in connection with the securities
being remarketed. We may agree to indemnify these firms against
liabilities, including liabilities under the Securities Act.
If indicated in the applicable prospectus supplement, we may
authorize underwriters, agents or dealers to solicit offers by
institutions to purchase securities at the offering price set
forth in that prospectus supplement under delayed delivery
contracts providing for payment and delivery on the dates stated
in the prospectus supplement. Each contract will be for an
amount not less than, and the aggregate principal amount of
securities sold under contracts will be not less nor more than,
the respective amounts stated in the applicable prospectus
supplement. Institutions with whom contracts, when authorized,
may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all
cases be subject to our approval. Contracts will not be subject
to any conditions except:
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the purchase by an institution of the securities covered by its
contracts will not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which the
institution is subject; and
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if the securities are also being sold to underwriters, we will
have sold to them the total principal amount of the securities
less the principal amount of the securities covered by contracts.
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Underwriters and agents will have no responsibility in respect
of the delivery or performance of contracts.
Some of the underwriters and their affiliates may engage in
transactions with or perform services for us in the ordinary
course of business.
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LEGAL
OPINIONS
Certain legal matters regarding the securities offered hereby
will be passed upon for us by Shumaker, Loop &
Kendrick, LLP, Toledo, Ohio. As of May 7, 2009, the attorneys of
Shumaker, Loop & Kendrick, LLP participating in the
preparation of this prospectus, the registration statement and
the required legal opinions beneficially held, in the aggregate,
approximately 2,500 shares of our common stock and
1,000 shares of our preferred stock. Arnold &
Porter LLP will pass upon certain federal income tax matters
relating to us. Any underwriters or agents will be represented
by their own legal counsel.
EXPERTS
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedules included in our Current Report on
Form 8-K
dated May 7, 2009, and the effectiveness of our internal
control over financial reporting as of December 31, 2008,
included in our Annual Report on
Form 10-K
for the year ended December 31, 2008, as set forth in their
reports, which are incorporated by reference in this prospectus
and elsewhere in the registration statement. Our financial
statements and schedules are incorporated by reference in
reliance upon Ernst & Young LLPs reports, given
on their authority as experts in accounting and auditing.
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$450,000,000
4.70% Notes due
2017
PROSPECTUS SUPPLEMENT
September 7, 2010
Joint Book-Running Managers
UBS Investment Bank
J.P. Morgan
Barclays Capital
Comerica Securities
Fifth Third Securities,
Inc.
PNC Capital Markets
LLC
RBS