e424b5
The
information in this prospectus supplement is not complete and
may be changed. This prospectus supplement and the accompanying
prospectus are not an offer to sell these securities, and we are
not soliciting offers to buy these securities, in any
jurisdiction where the offer or sale is not permitted.
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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-159040
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PROSPECTUS
SUPPLEMENT
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SUBJECT TO COMPLETION
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PRELIMINARY PROSPECTUS SUPPLEMENT DATED FEBRUARY 28, 2011
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(To
Prospectus dated May 7, 2009)
25,000,000 Shares
Common
Stock
Health Care REIT, Inc. is offering for sale
25,000,000 shares of its common stock to be sold in this
offering.
Our common stock is traded on the New York Stock Exchange under
the symbol HCN. On February 25, 2011, the last
reported sale price of our common stock on the NYSE was $50.86
per share.
Concurrently with this offering, we are offering
12,500,000 shares (or 14,375,000 shares if the
underwriters exercise their overallotment option in full) of
our % Series I Cumulative
Convertible Perpetual Preferred Stock pursuant to a separate
offering registered under the Securities Act. This prospectus
supplement shall not be deemed an offer to sell or a
solicitation of an offer to buy any of our Series I
preferred stock. The completion of this offering of common stock
is not subject to the completion of the concurrent offering of
our Series I preferred stock and the completion of the
concurrent offering of our Series I preferred stock is not
subject to the completion of this offering of common stock. See
The AcquisitionThe Financing TransactionsThe
Preferred Stock Offering.
Investing in our securities involves risk. You
should carefully consider each of the factors described under
Risk factors beginning on
page S-11
of this prospectus supplement, as well as the accompanying
prospectus and the documents we have filed with the Securities
and Exchange Commission that are incorporated by reference
herein for more information, before you make any investment in
our common stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
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Per
Share
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Total
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Public offering price
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$
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$
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Underwriting discounts and commissions
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$
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$
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Proceeds, before expenses, to us
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$
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$
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The underwriters may also purchase up to 3,750,000 additional
shares of common stock from us on the same terms and conditions
as set forth above to cover overallotments, if any, within
30 days from the date of this prospectus supplement. If the
underwriters exercise the option in full, the total underwriting
discounts and commissions will be
$ , and the total proceeds, before
expenses, to us will be $ .
The underwriters are offering the common stock as set forth
under Underwriting. Delivery of the shares will be
made on or about March , 2011.
Joint
Book-Running Managers
Co-Lead
Manager
KeyBanc
Capital Markets
The date of this prospectus supplement
is ,
2011.
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.
TABLE OF
CONTENTS
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Prospectus supplement
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S-1
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S-8
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S-11
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S-24
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S-25
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S-26
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S-27
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S-30
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S-37
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S-38
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S-41
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S-45
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S-45
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S-46
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Base 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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S-i
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.
In this prospectus supplement, unless otherwise indicated herein
or the context otherwise indicates:
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the terms we, us, our, the
Company, or similar terms refer to Health Care REIT,
Inc. together with its consolidated subsidiaries;
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Ø
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the term FC-GEN refers to FC-GEN Investment, LLC
together with its consolidated subsidiaries, which is a joint
venture between affiliates of Formation Capital, LLC and JER
Partners;
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Ø
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the term FC-GEN Acquisition Holding refers to FC-GEN
Acquisition Holding, LLC, a wholly owned subsidiary of FC-GEN,
together with its consolidated subsidiaries;
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Ø
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the term OpCo refers to FC-GEN Operations
Investment, LLC, a wholly owned subsidiary of
FC-GEN
Acquisition Holding, together with its consolidated subsidiaries;
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the term Tenant refers to Genesis Operations, LLC,
an indirect subsidiary of
FC-GEN;
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the term Acquisition refers to the acquisition by
the Company of all of the equity interests of
FC-GEN
Acquisition Holding, pursuant to the purchase agreement, dated
as of February 28, 2011, by and among the Company, FC-GEN and
OpCo;
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the term Series I preferred stock refers to the
Companys % Series I
Cumulative Convertible Perpetual Preferred Stock, $1.00 par
value per share;
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the term Preferred Stock Offering refers to the
Companys offering of 12,500,000 shares of
Series I preferred stock conducted concurrently with this
offering of common stock; and
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Ø
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the term Financing Transactions refers to this
offering, the $2.4 billion bridge loan facility and the
Preferred Stock Offering related to the Acquisition, each as
described elsewhere in this prospectus supplement. See The
AcquisitionThe Financing Transactions.
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S-ii
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 common stock. 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 supplement and the
accompanying prospectus, including the information contained in
our Current Reports on
Form 8-K
filed on February 28, 2011 (except for that information
furnished pursuant to Item 7.01 and the exhibits related to
such information, which are not incorporated into this
prospectus supplement), before making an investment decision.
The closing of this offering is not conditioned upon the
closing of the Acquisition or the completion of the Preferred
Stock Offering. Unless otherwise indicated, this prospectus
supplement does not give pro forma effect to the Acquisition and
the related transactions. Unless otherwise indicated, references
to fiscal year refer to the fiscal year of the
Company, which ends on December 31. Our financial results
on a pro forma basis for the Acquisition for the fiscal year
ended December 31, 2010 are set forth below under
Unaudited pro forma condensed consolidated financial
statements.
ABOUT OUR
COMPANY
We are a real estate investment trust that has been at the
forefront of senior housing and health care real estate since
the Company was founded in 1970. We are an S&P
500 company headquartered in Toledo, Ohio and our portfolio
spans the full spectrum of senior housing and health care real
estate, including senior housing communities, skilled nursing
facilities, medical office buildings, inpatient and outpatient
medical centers and life science facilities. Our capital
programs, when combined with comprehensive planning, development
and property management services, make us a single-source
solution for acquiring, planning, developing, managing,
repositioning and monetizing real estate assets. As of
December 31, 2010, our broadly diversified portfolio
consisted of 683 properties in 41 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.
S-1
The
portfolio
The following table summarizes our portfolio as of
December 31, 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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4,403,208
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49.0
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%
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303
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27,863 units
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$
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162,210 per unit
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36
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Skilled nursing facilities
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1,257,719
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14.0
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%
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180
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24,064 beds
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52,266 per bed
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26
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Hospitals
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782,879
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8.7
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%
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31
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1,857 beds
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446,846 per bed
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13
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Medical office
buildings(2)
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2,195,435
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24.4
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%
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162
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9,047,167 sq. ft.
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254 per sq. ft.
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28
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Life science
buildings(2)
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346,562
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3.9
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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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8,985,803
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100
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%
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683
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41
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(1) |
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Investment per metric was computed by using the total
investment amount of $8,860,164,000, which includes net real
estate investments and unfunded construction commitments for
which initial funding has commenced which amounted to
$8,592,109,000 and $268,055,000, respectively. |
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(2) |
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Includes our share of unconsolidated joint venture
investments. Please see Note 7 to our audited financial
statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2010 for additional
information. |
We invest in senior housing and health care real estate. In
determining whether to invest in a property, we focus on the
following: (1) the experience of the obligors
management team; (2) the historical and projected financial
and operational performance of the property; (3) the credit
of the obligor; (4) the security for the lease or loan; and
(5) the capital committed to the property by the obligor.
We conduct market research and analysis for all potential
investments. In addition, we review the value of all properties,
the interest rates and covenant requirements of any debt to be
assumed and the anticipated sources of repayment of any existing
debt that is not to be assumed.
We monitor our investments through a variety of methods
determined by the type of property. Our asset management process
for senior housing and care 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
S-2
address payment risk, and in so doing, support both the
collectability of revenue and the value of our investment.
The
Acquisition
On February 28, 2011, we entered into a definitive purchase
agreement (the Purchase Agreement) with FC-GEN and
OpCo to acquire 100% of the equity interests of FC-GEN
Acquisition Holding.
FC-GEN
Acquisition Holding indirectly owns (1) 140 senior housing
and care facilities (137 in fee simple and three pursuant to
ground leases) and (2) the leasehold interests in and
option to purchase seven senior housing and care facilities in
11 states in the Northeast and
Mid-Atlantic
operating under the name Genesis HealthCare. Prior to closing,
FC-GEN Acquisition Holding will (a) contribute the assets,
liabilities and equity interests relating to (i) the
business of operating and managing senior housing and care
facilities, (ii) joint venture entities and
(iii) other ancillary businesses to OpCo, and then
(b) distribute all of the equity interests of OpCo to
FC-GEN. The
purchase price for the equity interests of FC-GEN Acquisition
Holding is $2.4 billion (subject to adjustment).
Immediately after the closing of the Acquisition, a subsidiary
of the Company will enter into a master lease (the Master
Lease) with Tenant under which Tenant will operate the 140
owned and ground leased facilities and will enter into a pass
through master
sub-sublease
with an affiliate of Tenant under which such affiliate will
operate the seven leased facilities. The Master Lease is
supported by a guaranty from OpCo. See The
Acquisition for additional information.
The Acquisition is expected to close in the second quarter of
2011, and will be subject to the fulfillment or waiver of
various conditions to closing, the failure of which to occur
could delay the closing or result in the Acquisition not closing.
In addition, in conjunction with the Acquisition, the Company
will have the option to acquire a 9.9% ownership interest in
OpCo for a fixed price equal to $47 million at any time
during the initial
15-year term
of the Master Lease.
In connection with the Acquisition, we obtained a commitment for
a bridge loan facility in the aggregate amount of up to
$2.4 billion, which may be used to finance all or part of
the purchase price of the Acquisition. However, we currently
anticipate using the proceeds of this offering, the Preferred
Stock Offering, cash on hand and any amounts raised in future
capital raising activities or refinancings in lieu of some of or
all borrowings available under the $2.4 billion bridge loan
facility. See Description of bridge loan facility
for additional information.
Concurrent
offering of Series I preferred stock
Concurrently with this offering, we are offering
12,500,000 shares of our Series I preferred stock (or
14,375,000 shares if the underwriters exercise their
overallotment option in full) pursuant to a separate public
offering registered under the Securities Act (the
Preferred Stock Offering). The completion of this
offering of common stock is not subject to the completion of the
Preferred Stock Offering and the completion of the Preferred
Stock Offering is not subject to the completion of this offering
of common stock. See The AcquisitionThe Financing
TransactionThe Preferred Stock Offering for
additional information.
This prospectus supplement shall not be deemed to be an offer to
sell or a solicitation of an offer to buy our Series I
preferred stock and we cannot assure you that the Preferred
Stock Offering will be completed or completed for the amount or
on the terms contemplated.
Recent
developments
In January 2011, we formed a $298 million partnership with
Silverado Senior Living structured as a RIDEA investment. We
acquired a 95% interest to own and operate 18 senior housing
facilities with 1,454 beds located primarily in California and
Texas. Silverado will continue to manage the facilities
S-3
and own the remaining 5% interest. The partnership assumed
$55.9 million in secured debt at an average rate of 6.9%.
We have entered into a purchase agreement and expect to complete
an acquisition of four combination senior housing facilities
located in the Chicago and New York metro areas totaling
628 units. Our $141 million investment will include
the assumption of $48 million in secured debt at an average
rate of 6.5%. The investment will be structured as a
triple-net
lease with Capital Senior Living (NYSE:CSU) with an initial term
of 15 years and an initial rental yield of 7.25% with
annual escalators of 3%. The transaction is expected to close in
March 2011.
We have entered into a purchase agreement and expect to form an
$890 million partnership with Benchmark Senior Living
structured as a RIDEA investment. We will acquire a 95% interest
to own and operate 34 senior housing facilities located
primarily in New England. Benchmark will continue to manage the
facilities and own the remaining 5% interest. The partnership
will assume $509 million in secured debt at an average rate
of 5.3%. We have obtained a $400 million bridge loan
commitment from UBS Loan Finance, LLC to complete this
acquisition. The transaction is expected to close in March or
April 2011.
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-4
The offering
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Issuer |
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Health Care REIT, Inc. |
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Common Stock Offered |
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25,000,000 shares of our common stock, $1.00 par value
per share. We have also granted the underwriters an option to
purchase up to 3,750,000 additional shares of our common stock
to cover overallotments. |
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Common Stock to be Outstanding After this Offering |
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172,097,381 shares (175,847,381 shares if the
underwriters exercise their overallotment option in full). |
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Concurrent Offering |
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Concurrently with this public offering of common stock, we are
offering 12,500,000 shares (or 14,375,000 shares if
the underwriters exercise their overallotment option in full) of
our Series I preferred stock pursuant to a separate public
offering registered under the Securities Act (the
Preferred Stock Offering). The completion of this
offering of common stock is not subject to the completion of the
Preferred Stock Offering and the completion of the Preferred
Stock Offering is not subject to the completion of this offering
of common stock. See The AcquisitionThe Financing
TransactionsThe Preferred Stock Offering. |
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Use of Proceeds |
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Assuming a public offering price per share of $50.86 (the last
reported sale price of our common stock on the NYSE on
February 25, 2011), we estimate the net proceeds from this
offering will be approximately $1.2 billion
($1.4 billion if the underwriters exercise their
overallotment option in full), after deducting underwriting
discounts and commissions and estimated offering expenses. The
net proceeds to us from the Preferred Stock Offering are
expected to be approximately $605.5 million
($696.4 million if the underwriters exercise their
overallotment option in full), after deducting underwriting
discounts and commissions and estimated offering expenses. We
intend to use the net proceeds from this offering, the Preferred
Stock Offering, cash on hand and any amounts raised in future
capital raising activities or refinancings to finance the
aggregate purchase price of the Acquisition, including the
repayment of any amounts drawn on the $2.4 billion bridge
loan facility. See The AcquisitionThe Financing
Transactions. If the Acquisition is not consummated, we
intend to use the net proceeds from this offering 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. The Preferred Stock Offering may not be
completed or, if completed, may not be completed for the amount
or on the terms contemplated. Accordingly, the amounts described
above may differ materially from the actual amounts we receive.
The completion of this offering of |
S-5
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common stock is not subject to the completion of the Preferred
Stock Offering and the completion of the Preferred Stock
Offering is not subject to the completion of this offering of
common stock. See Use of proceeds. |
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Dividends |
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We are currently paying dividends of $0.69 per quarter, or $2.76
per year, per share of common stock. Our board of directors has
approved an increase in the dividend to $0.715 per quarter, or
$2.86 per year, per share of common stock, beginning with the
quarterly dividend expected to be paid in May 2011. |
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New York Stock Exchange Symbol |
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HCN |
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Risk Factors |
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You should carefully consider the information set forth in the
section of this prospectus supplement entitled Risk
factors as well as the other information included in or
incorporated by reference in this prospectus supplement and the
accompanying prospectus before deciding whether to invest in our
common stock. |
The number of shares of our common stock outstanding after this
offering is based on 147,097,381 shares outstanding as of
December 31, 2010 and also excludes as of December 31,
2010:
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Ø
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1,207,372 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;
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Ø
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8,511,532 shares of common stock reserved for issuance
under our dividend reinvestment and stock purchase plan;
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Ø
|
2,655,860 shares of common stock reserved for issuance upon
conversion of $125,588,000 aggregate principal amount of our
4.75% Convertible Senior Notes due 2026;
|
|
Ø
|
3,380,411 shares of common stock reserved for issuance upon
conversion of $168,086,000 aggregate principal amount of our
4.75% Convertible Senior Notes due 2027;
|
|
Ø
|
9,648,216 shares of common stock reserved for issuance upon
conversion of $494,403,000 aggregate principal amount of our
3.00% Convertible Senior Notes due 2029;
|
|
Ø
|
349,854 shares of common stock reserved for issuance upon
conversion of our outstanding shares of Series H Cumulative
Convertible and Redeemable Preferred Stock;
|
|
Ø
|
10,685,770 shares of common stock reserved for issuance
upon conversion of the Series I preferred stock assuming
the consummation of the Preferred Stock Offering at the amount
and on the terms presently contemplated with no exercise by the
underwriters of their overallotment option;
|
|
Ø
|
shares of common stock that may be issued upon conversion of the
convertible senior notes or the Series I preferred stock as
a make-whole premium (or similar consideration) upon the
occurrence of a make-whole fundamental change or fundamental
change (as applicable); and
|
|
Ø
|
3,750,000 shares of our common stock that may be purchased
by the underwriters to cover overallotments, if any.
|
S-6
Summary selected
historical consolidated financial data
The summary selected historical consolidated financial data set
forth below should be read in conjunction with the sections of
this prospectus supplement entitled Capitalization
and Prospectus supplement summary, as well as the
other information that we have filed with the SEC and
incorporated by reference herein. The summary selected
historical consolidated financial data for each of the years in
the three-year period ended December 31, 2010 have been
derived from our audited consolidated financial statements. Our
audited consolidated financial statements have been audited by
Ernst & Young LLP, our independent registered public
accounting firm. 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 Annual
Report on
Form 10-K
for the year ended December 31, 2010, which is incorporated
by reference herein. See Unaudited pro forma condensed
consolidated financial statements for a presentation of
the effect on a pro forma basis of this offering, the Preferred
Stock Offering and the Acquisition on our consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
amounts are in
thousands, except per share data
|
|
|
Operating Data
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
504,525
|
|
|
$
|
546,092
|
|
|
$
|
680,530
|
|
Income from continuing operations attributable to common
stockholders
|
|
|
105,260
|
|
|
|
127,387
|
|
|
|
62,350
|
|
Net income attributable to common stockholders
|
|
|
260,098
|
|
|
|
171,190
|
|
|
|
106,882
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common
stockholders
|
|
$
|
1.12
|
|
|
$
|
1.12
|
|
|
$
|
0.49
|
|
Net income attributable to common stockholders
|
|
$
|
2.77
|
|
|
$
|
1.50
|
|
|
$
|
0.84
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common
stockholders
|
|
$
|
1.12
|
|
|
$
|
1.11
|
|
|
$
|
0.49
|
|
Net income attributable to common stockholders
|
|
$
|
2.76
|
|
|
$
|
1.49
|
|
|
$
|
0.83
|
|
Dividends declared and paid per common share
|
|
$
|
2.70
|
|
|
$
|
2.72
|
|
|
$
|
2.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
amounts are in
thousands
|
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
Net real estate investments
|
|
$
|
5,854,179
|
|
|
$
|
6,080,620
|
|
|
$
|
8,590,833
|
|
Total assets
|
|
|
6,215,031
|
|
|
|
6,367,186
|
|
|
|
9,451,734
|
|
Total long-term obligations
|
|
|
2,847,676
|
|
|
|
2,414,022
|
|
|
|
4,469,736
|
|
Total liabilities
|
|
|
2,976,746
|
|
|
|
2,559,735
|
|
|
|
4,714,081
|
|
Total preferred stock
|
|
|
289,929
|
|
|
|
288,683
|
|
|
|
291,667
|
|
Total equity
|
|
|
3,238,285
|
|
|
|
3,807,451
|
|
|
|
4,733,100
|
|
On February 28, 2011, we entered into a definitive purchase
agreement (the Purchase Agreement) with FC-GEN and
OpCo to acquire 100% of the equity interests of FC-GEN
Acquisition Holding. FC-GEN Acquisition Holding indirectly owns
(1) 140 senior housing and care facilities (137 in fee
simple and three pursuant to ground leases) and (2) the
leasehold interests in and option to purchase seven senior
housing and care facilities in 11 states in the Northeast
and
Mid-Atlantic
operating under the name Genesis HealthCare. Prior to closing,
FC-GEN
Acquisition Holding will (a) contribute the assets,
liabilities and equity interests relating to (i) the
business of operating and managing senior housing and care
facilities, (ii) joint venture entities and
(iii) other ancillary businesses to OpCo, and then
(b) distribute all of the equity interests of OpCo to
FC-GEN. The
purchase price for the equity interests of FC-GEN Acquisition
Holding is $2.4 billion (subject to adjustment).
In addition, in conjunction with the Acquisition, the Company
will have the option to acquire a 9.9% ownership interest in
OpCo for a fixed purchase price equal to $47 million at any
time during the initial
15-year term
of the Master Lease.
In connection with the Acquisition, we obtained a commitment for
a bridge loan facility in the aggregate amount of up to
$2.4 billion, which may be used to finance all or part of
the purchase price of the Acquisition. However, we currently
anticipate using the proceeds of this offering, the Preferred
Stock Offering, cash on hand and any amounts raised in future
capital raising activities or refinancings to fund the
Acquisition in lieu of some of or all borrowings available under
the $2.4 billion bridge loan facility. See
Description of bridge loan facility for additional
information.
The Acquisition is subject to the fulfillment or waiver of
various closing conditions, including, among other things,
obtaining certain governmental and regulatory approvals and
landlord consents, the absence of laws, regulations or orders of
a governmental body prohibiting the Acquisition, the accuracy of
the representations and warranties made by, and the absence of a
material breach in the performance of covenants by, FC-GEN and
us in the Purchase Agreement. The parties have also made
customary representations, warranties and covenants in the
Purchase Agreement, including among others, FC-GENs
covenant not to solicit acquisition proposals or participate in
discussions relating to an acquisition proposal. The Acquisition
is expected to close in the second quarter of 2011; however, we
cannot assure you that the Acquisition will close or, if it
does, when such closing will occur. See Risk
factorsRisks Related to the Offering and the
Acquisition. The Acquisition is not subject to a financing
contingency.
This offering is not conditioned upon the consummation of the
Acquisition.
MASTER
LEASE
Immediately after the closing of the Acquisition, a subsidiary
of the Company will enter into a master lease (the Master
Lease) with Tenant under which Tenant will operate the 140
owned or ground leased facilities and will enter into a pass
through master
sub-sublease
with an affiliate of Tenant under which such affiliate will
operate the seven leased facilities. The Master Lease is
supported by a guaranty from OpCo.
The initial term will be 15 years (the Initial
Term). Tenant will have one option to renew for an
additional term of 15 years. The renewal option is
exercisable as to all facilities in the aggregate only.
The Master Lease will provide that the base rent for the first
year will be $198 million, and will increase at least 1.75%
but no more than 3.50% (subject to CPI changes) for each of the
years two through six during the Initial Term and at least 1.50%
but no more than 3.00% per year thereafter (subject to CPI
changes).
Tenant
and/or OpCo
will be subject to certain financial covenants, including
requirements to maintain a minimum payment coverage ratio, a
minimum net worth, a minimum cash balance, a minimum current
ratio
S-8
The
Acquisition
and a maximum leverage ratio. Tenant will grant the Company the
exclusive right and option to own any facilities that Tenant or
its affiliates develop or acquire during the Initial Term.
The seven senior housing and care facilities leased by FC-GEN
Acquisition Holding (the Leased Facilities) are each
subject to a fixed price purchase option (each an
Option). Pursuant to the Acquisition, the benefit of
the Options will be transferred to the Company. If the Company
exercises an Option and acquires a Leased Facility (a
Purchased Facility), the Purchased Facility will be
leased to Tenant pursuant to the terms of the Master Lease.
The Master Lease will be structured so that Tenant will be
responsible for all operating costs associated with the
facilities, including the payment of operating expenses, real
estate taxes, insurance, building repairs and maintenance and
all payments due under the three ground leases. Tenant will also
provide indemnities against liabilities associated with the
operation of the facilities.
The Company will have the right of first offer on the sale of
any direct interest comprising less than a 20% ownership
interest in OpCo, other than (1) a transfer between any
direct or indirect owners as of the closing date, or
(2) transfers in connection with an initial public offering
of OpCo.
THE FINANCING
TRANSACTIONS
The
$2.4 Billion Bridge Loan Facility
On February 28, 2011, the Company obtained a commitment from UBS
Loan Finance LLC, UBS Securities LLC, as joint lead arranger,
Bank of America, N.A., as co-syndication agent,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arranger, Barclays Bank PLC, as
co-syndication agent, Barclays Capital Inc., as joint lead
arranger, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank
Securities Inc., as joint lead arranger and co-documentation
agent, JPMorgan Chase Bank, N.A., as co-syndication agent,
J.P. Morgan Securities LLC, as joint lead arranger, Wells
Fargo Bank, N.A., as co-documentation agent, Wells Fargo
Securities, LLC, as joint lead arranger, KeyBank National
Association, as senior managing agent, and KeyBanc Capital
Markets Inc. to provide a bridge loan facility to the Company in
an aggregate amount of up to $2.4 billion subject to
certain customary terms and conditions. No borrowings have been
made under the $2.4 billion bridge loan facility as of the
date of this prospectus supplement, and the commitments
thereunder are available until May 31, 2011. See
Description of bridge loan facility.
The Preferred
Stock Offering
Concurrently with this offering, we are offering
12,500,000 shares of our Series I preferred stock
pursuant to a separate offering registered under the Securities
Act (the Preferred Stock Offering). We have granted
the underwriters for the Preferred Stock Offering an
overallotment option to purchase up to 1,875,000 additional
shares of Series I preferred stock. If we complete the
Preferred Stock Offering, we expect to use the proceeds from
that offering and from this offering as described in Use
of proceeds. The completion of this offering of common
stock is not subject to the completion of the Preferred Stock
Offering and the completion of the Preferred Stock Offering is
not subject to the completion of this offering of common stock.
We will pay cumulative distributions on the Series I
preferred stock from and including the date of original issuance
in the amount of $ per share each
year, which is equivalent to % of
the $ liquidation preference per
share.
A holder of our Series I preferred stock may convert such
Series I preferred stock into our common stock subject to
certain conditions summarized in the prospectus supplement and
other offering materials for the Series I preferred stock
filed with the SEC.
For a description of the Series I preferred stock, please
see the prospectus supplement and other offering materials for
the Series I preferred stock, all of which have been or
will be filed with the SEC.
S-9
The
Acquisition
This prospectus supplement shall not be deemed to be an offer to
sell or a solicitation of an offer to buy any Series I
preferred stock and we cannot assure you that the Preferred
Stock Offering will be completed or completed for the amount or
on the terms contemplated.
Sources and uses
of funds for the acquisition
The following table sets forth the expected sources and uses of
funds upon completion of the Acquisition, assuming a closing
date in the second quarter of 2011 and assuming only the
financing sources announced or for which we have a commitment as
of the date of this prospectus supplement. No assurances can be
given that the information in the following table will not
change depending on the nature of our financing arrangements
and/or
whether the Acquisition will be consummated in accordance with
the anticipated timing or at all. See Risk
factorsRisks Related to the Offering and the
Acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources
|
|
Amount
|
|
|
Uses
|
|
Amount
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
Common Stock Offering
|
|
$
|
1,219,500
|
(1)
|
|
Cash portion of purchase price
|
|
$
|
2,400,000
|
|
|
|
|
|
Preferred Stock Offering
|
|
|
605,500
|
(2)
|
|
Estimated fees and expenses
|
|
|
70,800
|
(3)
|
|
|
|
|
Bridge Loan Facility
|
|
|
575,000
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
70,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,470,800
|
|
|
|
|
$
|
2,470,800
|
|
|
|
|
|
|
|
|
(1) |
|
Assuming a public offering price per share of $50.86 (the
last reported sale price of our common stock on the NYSE on
February 25, 2011) and after deducting underwriting
discounts and commissions and our estimated offering
expenses. |
|
(2) |
|
After deducting underwriting discounts and our estimated
offering expenses. |
|
(3) |
|
Our estimated fees and expenses include advisory fees
($6,000,000), legal fees ($2,000,000), due diligence and other
closing costs ($28,000,000) and fees associated with the bridge
loan financing ($34,800,000). Assuming the completion of this
offering and the Preferred Stock Offering, our estimated fees
associated with the bridge loan financing will be $21,113,000,
and as a result, our total estimated fees and expenses will be
$57,113,000. |
S-10
Risk factors
An investment in our common stock 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 supplement and the accompanying prospectus,
including the section entitled Risk Factors included
in our Annual Report on
Form 10-K
for the year ended December 31, 2010, in evaluating an
investment in our common stock.
RISKS RELATED TO
THIS OFFERING AND THE ACQUISITION
There can be no
assurance that the Acquisition will be consummated in accordance
with the anticipated timing or at all, and the closing of this
offering is not conditioned on the consummation of the
Acquisition
Although the Company expects to close the Acquisition in the
second quarter of 2011, there can be no assurance that the
Acquisition will be completed in accordance with the anticipated
timing or at all. In order to consummate the Acquisition, the
Company and FC-GEN must obtain certain regulatory and other
approvals and consents in a timely manner. If these approvals or
consents are not received, or they are not received on terms
that satisfy the conditions set forth in the Purchase Agreement,
then the Company
and/or
FC-GEN will not be obligated to complete the Acquisition. The
Purchase Agreement also contains certain other closing
conditions, which may not be satisfied or waived. In addition,
under circumstances specified in the Purchase Agreement, the
Company or FC-GEN may terminate the Purchase Agreement.
The closing of this offering is not conditioned on the
consummation of the Acquisition. Therefore, upon the closing of
this offering, you will become a holder of the Companys
common stock irrespective of whether the Acquisition is
consummated or delayed. If the Acquisition is not completed, the
Companys common stock that you have purchased in this
offering will not reflect any interest in FC-GEN Acquisition
Holding, and if the Acquisition is delayed, this interest will
not be reflected during the period of delay. If this offering is
consummated and the Acquisition does not occur, your expected
earnings per share of our common stock may be significantly
reduced. Also, the price of the Companys common stock may
decline to the extent that the current market price of the
Companys common stock reflects a market assumption that
the Acquisition will be consummated and that the Company will
realize certain anticipated benefits of the Acquisition.
If the Company is
unable to raise sufficient proceeds through this offering, the
Preferred Stock Offering, cash on hand and any amounts raised in
future capital raising activities or refinancings, the Company
may draw down on the $2.4 billion bridge loan facility in
order to close the Acquisition, which would significantly
increase our indebtedness. If the Company elects not to
consummate the financing under the $2.4 billion bridge loan
facility, the Company may seek alternative sources of financing
for the Acquisition, the terms of which are unknown to us and
could limit our ability to operate our business
The offering of the common stock forms part of a larger
financing plan for the Acquisition described elsewhere in this
prospectus supplement. See The AcquisitionThe
Financing Transactions. Concurrently with this offering,
the Company has obtained a commitment for a bridge loan facility
pursuant to which the bridge lenders have committed to provide,
subject to certain conditions, the additional financing required
for the Acquisition through a $2.4 billion bridge loan
facility in the event that sufficient proceeds are not raised
from this offering, the Preferred Stock Offering, cash on hand
and any amounts raised in future capital raising activities or
refinancings. See Description of bridge loan
facility. The Company may use this bridge loan facility to
finance all or part of the Acquisition. See Use of
proceeds. The Companys obligations under the
Purchase Agreement are not conditioned upon the consummation of
any or all of the Financing Transactions.
S-11
Risk
factors
In the event that the Company is unable to raise sufficient
proceeds through the consummation of this offering, the
Preferred Stock Offering, cash on hand and any amounts raised in
future capital raising activities or refinancings, the Company
may draw down on the bridge loan facility, in whole or in part,
in order to finance all or part of the Acquisition. See
Description of bridge loan facility. In the event of
such draw down, we would be significantly more highly leveraged,
which means we will have a larger amount of indebtedness in
relation to our equity. Our interest expense would significantly
increase.
In the event that the Company elects not to consummate the
financing under the $2.4 billion bridge loan facility or
fails to satisfy certain of the various conditions pursuant to
which the bridge lenders have committed to fund the
Companys $2.4 billion bridge loan facility, it could
seek alternative sources of financing for the Acquisition. There
can be no assurance as to the terms on which the Company would
issue future additional securities or borrow funds.
We will incur
substantial expenses and payments even if the Acquisition is not
completed
We have incurred substantial legal, accounting, financial
advisory and other costs and our management has devoted
considerable time and effort in connection with the Acquisition.
If the Acquisition is not completed, we will bear certain fees
and expenses associated with the Acquisition without realizing
the benefits of the Acquisition. The fees and expenses may be
significant and could have an adverse impact on our results of
our operations.
The intended
benefits of the Acquisition may not be realized, which could
have a negative impact on the market price of the Companys
common stock after the Acquisition
The closing of the Acquisition poses risks for the ongoing
operations of the Company, including that:
|
|
Ø
|
the FC-GEN Acquisition Holdings portfolio may not perform as
well as the Company anticipates;
|
|
Ø
|
Genesis Operations, LLC (Tenant) may not be able to
achieve and maintain occupancy and rate levels that will enable
it to meet all its obligations to us, which may result in the
bankruptcy or insolvency of Tenant, or Tenant may become subject
to bankruptcy or insolvency proceedings for other
reasons; and
|
|
Ø
|
unforeseen difficulties may arise in integrating FC-GEN
Acquisition Holdings assets into the Companys portfolio.
|
If the Company fails to realize the intended benefits of the
Acquisition, the market price of the Companys common stock
could decline from its market price before the Acquisition.
We cannot assure
you that the Preferred Stock Offering will be completed on the
terms contemplated
Concurrently with this public offering of common stock, we are
offering 12,500,000 shares (or 14,375,000 shares if
the underwriters exercise their overallotment option in full) of
our Series I preferred stock pursuant to a separate public
offering (the Preferred Stock Offering). The completion of
this offering of common stock is not subject to the completion
of the Preferred Stock Offering and the completion of the
Preferred Stock Offering is not subject to the completion of
this offering of common stock. We cannot assure you that the
Preferred Stock Offering will be completed or, if completed,
that it will be completed for the amount or on the terms
contemplated.
S-12
Risk
factors
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; regulatory
approval and market acceptance of the products and technologies
of life science tenants; 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 other legal and
operational matters, including REIT 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 recent credit and liquidity crisis, and the weakened
economy, may have a lingering 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 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.
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
S-13
Risk
factors
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 1BusinessCertain Government
RegulationsReimbursement included in our Annual
Report on
Form 10-K
for the year ended December 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
S-14
Risk
factors
operators or tenants ability to make lease payments
to us and, therefore, adversely impact us. See
Item 1BusinessCertain Government
RegulationsOther Related Laws included in our Annual
Report on
Form 10-K
for the year ended December 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 1BusinessCertain Government
RegulationsLicensing and Certification included in
our Annual Report on
Form 10-K
for the year ended December 31, 2010.
The American Recovery and Reinvestment Act of 2009
(ARRA), 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 (FMAP). Thus,
for a limited period of time, the share of Medicaid costs that
are paid for by the federal government will go up, and each
states share will go down. We cannot predict whether
states are, or will remain, eligible to receive the additional
federal Medicaid funding, or whether the states will have
sufficient funds for their Medicaid programs. We also cannot
predict the impact that such broad-based, far-reaching
legislation will have on the U.S. economy or our business.
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.
However, a recent report and state survey found that the
liability insurance market is beginning to stabilize in most
markets. In 2008, national average liability loss costs were
stable for the first time in nearly a decade. State-led tort
reform efforts have greatly contributed to decreasing costs. In
some markets general and professional liability insurance
coverage continues to be restricted or very costly, which in
some cases has caused operators to self-insure. These
developments 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.
S-15
Risk
factors
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 that may not
be present with other methods of ownership, including the
possibility that our partner might become insolvent, refuse to
make capital contributions when due or otherwise fail to meet
its obligations, which may result in certain liabilities to us
for guarantees and other commitments; that our partner might at
any time have economic or other business interests or goals that
are or become inconsistent with our interests or goals; that we
could become engaged in a dispute with our partner, which could
require us to expend additional resources to resolve such
disputes and could have an adverse impact on the operations and
profitability of the joint venture; 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 instances, we
and/or our
partner may 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. Our ability to acquire our
partners interest may be limited if we do not have
sufficient cash, available borrowing capacity or other capital
resources. In such event, we may be forced to sell our interest
in the joint venture when we would otherwise prefer to retain
it. Joint ventures may require us to share decision-making
authority with our partners, which could limit our ability to
control the properties in the joint ventures. Even when we have
a controlling interest, certain major decisions may require
partner approval, such as the sale, acquisition or financing of
a property.
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,
including each of our bridge loan facilities, may cause us to
become more leveraged, which could (1) require us to
dedicate a greater portion of our cash flow to the payment of
debt service, (2) make us more vulnerable to a downturn in
the economy, (3) limit our ability to obtain additional
financing, or (4) negatively affect our credit ratings or
outlook by one or more of the noted rating agencies.
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.
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Risk
factors
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 noted rating agencies could have a material adverse
impact on our cost and availability of capital, which could in
turn have a material adverse impact on our consolidated results
of operations, liquidity
and/or
financial condition.
Risk factors
related to interest rate swaps
We enter into interest rate swap agreements from time to time to
manage some of our exposure to interest rate volatility. These
swap agreements involve risks, such as the risk that
counterparties may fail to honor their obligations under these
arrangements. In addition, these arrangements may not be
effective in reducing our exposure to changes in interest rates.
When we use forward-starting interest rate swaps, there is a
risk that we will not complete the long-term borrowing against
which the swap is intended to hedge. If such events occur, our
results of operations may be adversely affected.
Risk factors
related to environmental laws
Under various federal and state laws, owners or operators of
real estate may be required to respond to the presence or
release of hazardous substances on the property and may be held
liable for property damage, personal injuries or penalties that
result from environmental contamination or exposure to hazardous
substances. We may become liable to reimburse the government for
damages and costs it incurs in connection with the
contamination. Generally, such liability attaches to a person
based on the persons relationship to the property. Our
tenants or borrowers are primarily responsible for the condition
of the property. Moreover, we review environmental site
assessments of the properties that we own or encumber prior to
taking an interest in them. Those assessments are designed to
meet the all appropriate inquiry standard, which we
believe qualifies us for the innocent purchaser defense if
environmental liabilities arise. Based upon such assessments, we
do not believe that any of our properties are subject to
material environmental contamination. However, environmental
liabilities may be present in our properties and we may incur
costs to remediate contamination, which could have a material
adverse effect on our business or financial condition or the
business or financial condition of our obligors.
Risk factors
related to facilities that require entrance fees
Certain of our senior housing facilities require the payment of
an upfront entrance fee by the resident, a portion of which may
be refundable by the operator. Some of these facilities are
subject to substantial oversight by state regulators relating to
these funds. As a result of this oversight, residents of these
facilities may have a variety of rights, including, for example,
the right to cancel their contracts within a specified period of
time and certain lien rights. The oversight and rights of
residents within these facilities may have an effect on the
revenue or operations of the operators of such facilities and
therefore may negatively impact us.
Risk factors
related to facilities under construction or
development
At any given time, we may be in the process of constructing one
or more new facilities that ultimately will require a CON and
license before they can be utilized by the operator for their
intended use. The operator also may need to obtain Medicare and
Medicaid certification and enter into Medicare and Medicaid
provider agreements
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
S-17
Risk
factors
necessary provider agreements or contracts or we can find and
contract with a new operator that is able to obtain a license to
operate the facility for its intended use and the necessary
provider agreements or contracts.
In connection with our renovation, redevelopment, development
and related construction activities, we may be unable to obtain,
or suffer delays in obtaining, necessary zoning, land-use,
building, occupancy and other required governmental permits and
authorizations. These factors could result in increased costs or
our abandonment of these projects. In addition, we may not be
able to obtain financing on favorable terms, which may render us
unable to proceed with our development activities, and we may
not be able to complete construction and
lease-up of
a property on schedule, which could result in increased debt
service expense or construction costs.
Additionally, the time frame required for development,
construction and
lease-up of
these properties means that we may have to wait years for
significant cash returns. Because we are required to make cash
distributions to our stockholders, if the cash flow from
operations or refinancing is not sufficient, we may be forced to
borrow additional money to fund such distributions. Newly
developed and acquired properties may not produce the cash flow
that we expect, which could adversely affect our overall
financial performance.
In deciding whether to acquire or develop a particular property,
we make assumptions regarding the expected future performance of
that property. In particular, we estimate the return on our
investment based on expected occupancy and rental rates. If our
financial projections with respect to a new property are
inaccurate, and the property is unable to achieve the expected
occupancy and rental rates, it may fail to perform as we
expected in analyzing our investment. Our estimate of the costs
of repositioning or redeveloping an acquired property may prove
to be inaccurate, which may result in our failure to meet our
profitability goals. Additionally, we may acquire new properties
that are not fully leased, and the cash flow from existing
operations may be insufficient to pay the operating expenses and
debt service associated with that property.
We do not know if
our tenants will renew their existing leases, and if they do
not, we may be unable to lease the properties on as favorable
terms, or at all
We cannot predict whether our tenants will renew existing leases
at the end of their lease terms, which expire at various times.
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
S-18
Risk
factors
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 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
income tax consequences that will substantially reduce the funds
available for satisfying our obligations and for distribution to
our stockholders 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 U.S. 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
U.S. federal and other income taxes owed. A reduction in
our earnings would affect the amount we could distribute to our
stockholders. If we do not qualify as a REIT, we would not be
required to make distributions to stockholders since a non-REIT
is not required, in order to maintain REIT status or avoid an
excise tax, to pay dividends to stockholders. See
Item 1BusinessTaxationFederal
Income Tax Considerations of our Annual Report on
Form 10-K
for the year ended December 31, 2010, for a discussion of
the provisions of the Internal Revenue Code that apply to us and
the effects of failure to qualify as a REIT.
In addition, if we fail to qualify as a REIT, all distributions
to stockholders would continue to be treated as dividends to the
extent of our current and accumulated earnings and profits,
although corporate stockholders may be eligible for the
dividends received deduction, and individual stockholders
S-19
Risk
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may be eligible for taxation at the rates generally applicable
to long-term capital gains (currently at a maximum rate of 15%)
with respect to distributions.
As a result of all these factors, our failure to qualify as a
REIT also could impair our ability to implement our business
strategy and would adversely affect the value of our common
stock.
Qualification as a REIT involves the application of highly
technical and complex Internal Revenue Code provisions for which
there are only limited judicial and administrative
interpretations. The determination of various factual matters
and circumstances not entirely within our control may affect our
ability to remain qualified as a REIT. Although we believe that
we qualify as a REIT, we cannot assure you that we will continue
to qualify or remain qualified as a REIT for U.S. federal
income tax purposes. See
Item 1BusinessTaxationFederal
Income Tax Considerations of our Annual Report on
Form 10-K
for the year ended December 31, 2010.
The 90% annual
distribution requirement will decrease our liquidity and may
limit our ability to engage in otherwise beneficial
transactions
To comply with the 90% distribution requirement applicable to
REITs and to avoid the nondeductible excise tax, we must make
distributions to our stockholders. See
Item 1BusinessTaxationFederal
Income Tax ConsiderationsQualification as a
REITAnnual Distribution Requirements included in our
Annual Report on
Form 10-K
for the year ended December 31, 2010. Although we
anticipate that we generally will have sufficient cash or liquid
assets to enable us to satisfy the REIT distribution
requirement, it is possible that, from time to time, we may not
have sufficient cash or other liquid assets to meet the 90%
distribution requirement, or we may decide to retain cash or
distribute such greater amount as may be necessary to avoid
income and excise taxation. This may be due to timing
differences between the actual receipt of income and actual
payment of deductible expenses, on the one hand, and the
inclusion of that income and deduction of those expenses in
arriving at our taxable income, on the other hand. In addition,
non-deductible expenses such as principal amortization or
repayments or capital expenditures in excess of non-cash
deductions may cause us to fail to have sufficient cash or
liquid assets to enable us to satisfy the 90% distribution
requirement. In the event that timing differences occur, or we
deem it appropriate to retain cash, we may borrow funds, issue
additional equity securities (although we cannot assure you that
we will be able to do so), pay taxable stock dividends, if
possible, distribute other property or securities or engage in
another transaction intended to enable us to meet the REIT
distribution requirements. This may require us to raise
additional capital to meet our obligations.
The amount of additional indebtedness we may incur is limited by
the terms of our line of credit arrangement and the indentures
governing our senior unsecured notes. In addition, adverse
economic conditions may impact the availability of additional
funds or could cause the terms on which we are able to borrow
additional funds to become unfavorable. In those circumstances,
we may be required to raise additional equity in the capital
markets. Our access to capital depends upon a number of factors
over which we have little or no control, including rising
interest rates, inflation and other general market conditions
and the markets perception of our growth potential and our
current and potential future earnings and cash distributions and
the market price of the shares of our capital stock. We cannot
assure you that we will be able to raise the capital necessary
to make future investments or to meet our obligations and
commitments as they mature.
The lease of
qualified health care properties to a taxable REIT subsidiary is
subject to special requirements
We intend to lease certain qualified health care properties we
acquire from operators to a taxable REIT subsidiary (or a
limited liability company of which the taxable REIT subsidiary
is a member), which lessee will contract with such operators (or
a related party) to operate the health care operations at
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Risk
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these properties. The rents from this taxable REIT subsidiary
lessee structure will be treated as qualifying rents from real
property if (1) they are paid pursuant to an arms-length
lease of a qualified health care property with a taxable REIT
subsidiary and (2) the operator qualifies as an eligible
independent contractor. If any of these conditions are not
satisfied, then the rents will not be qualifying rents. See
Item 1BusinessTaxationFederal
Income Tax ConsiderationsQualification as a
REITIncome Tests included in our Annual Report on
Form 10-K
for the year ended December 31, 2010.
If certain
sale-leaseback transactions are not characterized by the IRS as
true leases, we may be subject to adverse tax
consequences
We may purchase properties and lease them back to the sellers of
such properties. We intend for any such sale-leaseback
transaction to be structured in such a manner that the lease
will be characterized as a true lease, thereby
allowing us to be treated as the owner of the property for
U.S. federal income tax purposes. However, depending on the
terms of any specific transaction, the Internal Revenue Service
(IRS) might take the position that the transaction
is not a true lease but is more properly treated in
some other manner. In the event any sale-leaseback transaction
is challenged and successfully re-characterized by the IRS, we
would not be entitled to claim the deductions for depreciation
and cost recovery generally available to an owner of property.
Furthermore, if a sale-leaseback transaction were so
re-characterized, we might fail to satisfy the REIT asset tests
or income tests and, consequently, could lose our REIT status
effective with the year of re-characterization. See
Item 1BusinessTaxationFederal
Income Tax ConsiderationsQualification as a
REITAsset Tests and Income Tests
included in our Annual Report on
Form 10-K
for the year ended December 31, 2010. Alternatively, the
amount of our REIT taxable income could be recalculated, which
may cause us to fail to meet the REIT annual distribution
requirements for a taxable year. See
Item 1BusinessTaxationFederal
Income Tax ConsiderationsQualification as a
REITAnnual Distribution Requirements included in our
Annual Report on
Form 10-K
for the year ended December 31, 2010.
Other risk
factors
We are also subject to other risks. First, our certificate of
incorporation and 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 COMMON STOCK
The share price
of our common stock could be affected by several
factors
The share price of our common stock depends upon several
factors, including, but not limited to: our financial condition,
performance and prospects; general economic and financial market
conditions; changes in estimates by analysts; the market for
similar securities issued by real estate investment trusts; and
our ability to meet analysts estimates. In addition, the
market price of our common stock may be affected by future sales
of our securities, including additional issuances of common
stock and securities convertible into common stock. These
factors, among others, could significantly depress the trading
price of our common stock.
S-21
Risk
factors
Holders of our
outstanding shares of preferred stock have, and holders of any
future outstanding shares of preferred stock will have,
liquidation, dividend and other rights that are senior to the
rights of the holders of our common stock
Since our board of directors has the authority to designate and
issue preferred stock, including the Series I preferred
stock, with liquidation, dividend and other rights that are
senior to those of our common stock, the holders of our issued
and outstanding shares of preferred stock, as well as any that
may be issued in the future, would receive, upon our voluntary
or involuntary liquidation, dissolution or winding up, before
any payment is made to holders of our common stock, their
liquidation preferences as well as any accrued and unpaid
distributions. These payments would reduce the remaining amount
of our assets, if any, available for distribution to holders of
our common stock.
Our issuance of
additional securities may reduce the market price for our
shares
The market price of our common stock may be affected by future
sales of our securities, including those made pursuant to the
separate equity distribution agreements with each of UBS
Securities LLC, RBS Securities Inc., KeyBanc Capital Markets
Inc. and Credit Agricole Securities (USA) Inc. and other
additional issuances of common stock and securities convertible
into common stock. We also are required to issue common stock to
the holders of the 4.75% Convertible Senior Notes due 2026,
the 4.75% Convertible Senior Notes due 2027, the
3.00% Convertible Senior Notes due 2029 and the
Series H Cumulative Convertible and Redeemable Preferred
Stock, and will be required to issue common stock to the holders
of the Series I preferred stock if the Preferred Stock
offering is consummated, if and when the holders exercise their
conversion rights. The number of shares of common stock that we
may issue upon conversion could be significant and dilutive to
our existing stockholders.
Our ability to
pay dividends in the future is subject to many factors
Our revolving credit facility prohibits us from paying cash
dividends on our common stock if we default under the credit
facility, and other financing agreements that we enter into in
the future also may limit our ability to pay cash dividends on
our capital stock. If we default under the revolving credit
facility or future financing agreements restrict our ability to
pay cash dividends, we will be unable to pay cash dividends on
our common stock unless we can refinance amounts outstanding
under those agreements.
Under Delaware law, cash dividends on capital stock may only be
paid from surplus or, if there is no
surplus, from the corporations net profits for
the then-current or the preceding fiscal year. Unless we operate
profitably, our ability to pay cash dividends on our common
stock would require the availability of adequate
surplus, which is defined as the excess, if any, of
our net assets (total assets less total liabilities) over our
capital. Further, even if adequate surplus is available to pay
cash dividends on our common stock, we may not have sufficient
cash to pay dividends on our common stock.
Our ability to pay dividends may be impaired if any of the risks
described in this prospectus supplement and the accompanying
prospectus or incorporated by reference herein and in the
accompanying prospectus, were to occur. In addition, payment of
our dividends depends upon our earnings, our financial
condition, maintenance of our REIT status and other factors as
our board of directors may deem relevant from time to time.
If we decide to
pay taxable stock dividends to meet the REIT distribution
requirements, your tax liability may be greater than the amount
of cash you receive
The IRS has issued Revenue Procedure
2010-12,
which provides that the IRS will treat stock dividends declared
on or before December 31, 2012, for taxable years ending
before December 31, 2011, as distributions for purposes of
satisfying the REIT distribution requirements, if each
stockholder can elect to receive the distribution in cash or
stock, even if the aggregate cash amount paid to all
stockholders is
S-22
Risk
factors
limited, provided certain requirements are met. Taxable
stockholders receiving such dividends will be required to
include the full amount of the dividend as income for federal
income tax purposes to the extent of our current and accumulated
earnings and profits. Accordingly, if we decide to pay a stock
dividend in accordance with Revenue Procedure
2010-12,
your tax liability with respect to such dividend may be
significantly greater than the amount of cash you receive. If
you decide to sell the stock received as a dividend in order to
pay this tax, the sales proceeds you receive may be less than
the amount you are required to include in income with respect to
the dividend, depending on the market price of the stock at the
time of the sale. With respect to foreign stockholders, we may
be required to withhold U.S. tax with respect to such
dividends, including in respect of all or a portion of such
dividend that is payable in stock. In addition, if a significant
number of our stockholders sell shares of stock in order to pay
taxes owed on dividends, such sales may put downward pressure on
the trading price of our stock.
We believe that
our common stock does not constitute a U.S. real
property interest and therefore we would not generally be
required to withhold from payments to
non-U.S. holders
under the Foreign Investment in Real Property Act, or FIRPTA. We
cannot assure you, however, that our common stock will not
constitute a U.S. real property interest
Although we are not currently aware of any facts that would
cause our conclusion to change, depending on the facts in
existence at the time of any sale, repurchase, conversion, or
retirement of our common stock, it is possible that our common
stock could constitute a U.S. real property interest. If
so,
non-U.S. holders
of our common stock would be subject to withholding on payments
in connection with such a sale, repurchase, conversion, or
retirement regardless of whether such
non-U.S. holders
provide certification documenting their
non-U.S. status.
See Item IBusinessTaxation of our
Annual Report on Form 10-K for the year ended
December 31, 2010.
Certain
provisions in our certificate of incorporation and by-laws may
restrict your ownership of shares of our capital stock
and/or
discourage or prevent a change in control
In order to assist us in maintaining our qualification as a REIT
for U.S. federal income tax purposes, our by-laws provide
that no person may own, or be deemed to own by virtue of the
attribution rules of the Internal Revenue Code, more than 9.8%
of the value of our outstanding capital stock, subject to
certain exceptions. For this purpose, all options, warrants,
convertible securities or other rights to acquire our common
stock will be treated as if all such rights had been exercised.
If any shares or other 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 shares or
securities as does not exceed this limit, and such issuance or
transfer will be void with respect to the excess. These and
other provisions in our certificate of incorporation, by-laws,
and Delaware law could delay, prevent or deter a transaction or
change in control, including an acquisition of us by a third
party, that might involve a premium price for our common stock
or otherwise be favorable to you as a stockholder.
S-23
This prospectus supplement, the accompanying prospectus and the
documents incorporated by reference contain
forward-looking statements as that term is defined
in the federal securities laws. These forward-looking statements
include, but are not limited to, those regarding:
|
|
Ø
|
the possible expansion of our portfolio;
|
|
Ø
|
the sale of properties;
|
|
Ø
|
the performance of our operators/tenants and properties;
|
|
Ø
|
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;
|
|
Ø
|
our occupancy rates;
|
|
Ø
|
our ability to acquire, develop
and/or
manage properties;
|
|
Ø
|
our ability to make distributions to stockholders;
|
|
Ø
|
our policies and plans regarding investments, financings and
other matters;
|
|
Ø
|
our tax status as a real estate investment trust;
|
|
Ø
|
our critical accounting policies;
|
|
Ø
|
our ability to appropriately balance the use of debt and equity;
|
|
Ø
|
our ability to access capital markets or other sources of funds;
|
|
Ø
|
our ability to meet our earnings guidance;
|
|
Ø
|
our ability to finance and complete, and the effect of, future
acquisitions, including the Acquisition, as discussed in this
prospectus supplement; and
|
|
Ø
|
our ability to complete the Preferred Stock Offering on the
terms contemplated.
|
When we use words such as may, will,
intend, should, believe,
expect, anticipate, project,
pro forma, 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-24
Assuming a public offering price per share of $50.86 (the last
reported sale price of our common stock on the NYSE on
February 25, 2011), we estimate the net proceeds from this
offering will be approximately $1.2 billion
($1.4 billion if the underwriters exercise their
overallotment option in full), after deducting underwriting
discounts and commissions and estimated offering expenses. The
net proceeds to us from the Preferred Stock Offering are
expected to be approximately $605.5 million
($696.4 million if the underwriters exercise their
overallotment option in full), after deducting underwriting
discounts and commissions and estimated offering expenses. We
intend to use the net proceeds from this offering, the Preferred
Stock Offering, cash on hand and any amounts raised in future
capital raising activities or refinancings to finance the
aggregate purchase price of the Acquisition, including the
repayment of any amounts drawn on the $2.4 billion bridge
loan facility for which we have obtained a commitment from UBS
Loan Finance LLC, UBS Securities LLC, as joint lead arranger,
Bank of America, N.A., as co-syndication agent, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as joint lead
arranger, Barclays Bank PLC, as co-syndication agent, Barclays
Capital Inc., as joint lead arranger, Deutsche Bank AG Cayman
Islands Branch, Deutsche Bank Securities Inc., as joint lead
arranger and co-documentation agent, JPMorgan Chase Bank, N.A.,
as co-syndication agent, J.P. Morgan Securities LLC, as joint
lead arranger, Wells Fargo Bank, N.A., as co-documentation
agent, Wells Fargo Securities, LLC, as joint lead arranger,
KeyBank National Association, as senior managing agent, and
KeyBanc Capital Markets Inc. See The AcquisitionThe
Financing Transactions. If the Acquisition is not
consummated, we intend to use the net proceeds from this
offering 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. The Preferred Stock Offering
may not be completed or, if completed, may not be completed for
the amount or on the terms contemplated. Accordingly, the
amounts described above may differ materially from the actual
amounts we receive. The completion of this offering of common
stock is not subject to the completion of the Preferred Stock
Offering and the completion of the Preferred Stock Offering is
not subject to the completion of this offering of common stock.
As of February 25, 2011, we had an outstanding balance of
$495 million under our unsecured line of credit and a zero
balance under the $2.4 billion bridge loan facility and the
$400 million bridge loan facility for which we have
obtained a commitment from UBS Loan Finance, LLC in connection
with our purchase agreement with Benchmark Senior Living LLC.
See Prospectus supplement summaryRecent
developments. Affiliates of certain of the underwriters
are lenders under our unsecured line of credit, under our
$2.4 billion bridge loan facility and under our
$400 million bridge loan facility. If some of the net
proceeds of this offering are used to repay any borrowings under
our unsecured line of credit, our $2.4 billion bridge loan
facility or our $400 million bridge loan facility, proceeds
of this offering may be received by the underwriters or their
affiliates. See UnderwritingConflicts of
Interest.
S-25
Our common stock is traded on the New York Stock Exchange under
the symbol HCN. As of December 31, 2010, there
were 4,999 holders of record of our common stock. The following
table sets forth, for the periods shown, the high and low sale
prices of our common stock as reported by the NYSE, for the
periods indicated, and cash dividends per share. On
February 25, 2011, the last reported sale price of our
common stock as reported by the NYSE was $50.86 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price of
shares
|
|
|
Dividends
|
|
|
|
High
|
|
|
Low
|
|
|
per
share
|
|
|
|
|
Year ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
42.32
|
|
|
$
|
25.86
|
|
|
$
|
0.68
|
|
Second quarter
|
|
|
36.41
|
|
|
|
29.62
|
|
|
|
0.68
|
|
Third quarter
|
|
|
44.40
|
|
|
|
32.64
|
|
|
|
0.68
|
|
Fourth quarter
|
|
|
46.74
|
|
|
|
40.53
|
|
|
|
0.68
|
|
Year ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
46.79
|
|
|
$
|
39.82
|
|
|
$
|
0.68
|
|
Second quarter
|
|
|
46.44
|
|
|
|
38.42
|
|
|
|
0.69
|
|
Third quarter
|
|
|
48.54
|
|
|
|
40.85
|
|
|
|
0.69
|
|
Fourth quarter
|
|
|
52.06
|
|
|
|
44.07
|
|
|
|
0.69
|
|
Year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter (through February 25, 2011)
|
|
$
|
50.86
|
|
|
$
|
46.75
|
|
|
$
|
0.69
|
|
Our board of directors has approved an increase in the dividend
to $0.715 per quarter, or $2.86 per year, per share of common
stock, beginning with the quarterly dividend expected to be paid
in May 2011.
Under the real estate investment trust rules of the Internal
Revenue Code of 1986, as amended, in order to maintain our
status as a REIT, our deduction for dividends paid must be
generally equal to at least 90% of our taxable income for the
taxable year (determined without regard to the deduction for
dividends paid and excluding any net capital gain). The
declaration of dividends is at the discretion of our board of
directors and depends upon our distributable funds, financial
requirements, tax considerations and other factors. Decisions
with respect to the distribution of capital gains are made on a
case-by-case
basis. A portion of our dividends paid may be deemed either
capital gain income or a return of capital, or both, to our
stockholders. We provide our stockholders an annual statement
which designates the taxability of their dividends.
We have a dividend reinvestment and stock purchase plan under
which stockholders of record may invest all or a portion of
their dividends and up to an additional $5,000 per month to
purchase additional shares. Additionally, investors who are not
stockholders of the company may use this plan to make an initial
investment in the companys shares of up to $5,000. We have
the discretion to grant waivers for purchases in excess of
$5,000.
S-26
The table below sets forth our capitalization as of
December 31, 2010:
|
|
Ø
|
on an actual basis;
|
|
Ø
|
on an as adjusted basis to give effect to the issuance of shares
of common stock offered by this prospectus supplement (assuming
no exercise of the underwriters overallotment option) at
an assumed offering price of $50.86 per share (the last reported
sale price of our common stock on the NYSE on February 25,
2011) and application of the net proceeds;
|
|
Ø
|
on an as further adjusted basis to give effect to the Preferred
Stock Offering (assuming the consummation of the Preferred Stock
Offering at the amount and on the terms presently contemplated
with no exercise of the underwriters overallotment option)
and the application of the net proceeds;
|
|
Ø
|
on a pro forma basis to give effect to the consummation of the
Acquisition, as if it had occurred on December 31, 2010;
|
|
Ø
|
on a pro forma as adjusted basis to give effect to the issuance
of shares of common stock offered by this prospectus supplement
(assuming no exercise of the underwriters overallotment
option) and application of the net proceeds and the Acquisition,
as if they had occurred on December 31, 2010; and
|
|
Ø
|
on a pro forma as further adjusted basis to give effect to the
issuance of shares of common stock offered by this prospectus
supplement (assuming no exercise of the underwriters
overallotment option) and application of the net proceeds, the
Preferred Stock Offering (assuming no exercise of the
underwriters overallotment option) and application of the
net proceeds and the Acquisition, as if they had occurred on
December 31, 2010.
|
The table below is unaudited and should be read in conjunction
with Summary historical consolidated financial data,
The Acquisition, Use of proceeds, and
Unaudited pro forma condensed consolidated financial
statements, contained elsewhere in this prospectus
supplement, and the consolidated annual and interim financial
statements and the notes thereto included in the documents
incorporated by reference in this prospectus supplement and the
accompanying prospectus. No assurances can be given that the
information in the table below will not change depending on the
nature of our financings. In addition, no assurances can be
given that the Acquisition will be consummated in accordance
with the anticipated timing or at all, or that the Preferred
Stock Offering will be completed for the amount or on the terms
contemplated or at all. The consummation of this offering is not
conditioned upon the consummation of the Acquisition or the
Preferred Stock Offering.
S-27
Capitalization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As further
|
|
|
|
|
|
|
As
|
|
|
As further
|
|
|
|
|
|
Adjusted
|
|
|
adjusted
|
|
|
|
Actual
|
|
|
adjusted(6)
|
|
|
adjusted(6)
|
|
|
Pro
forma(7)
|
|
|
pro
forma(7)
|
|
|
pro
forma(7)
|
|
|
|
|
|
(in
thousands)
|
|
|
Cash and cash equivalents
|
|
$
|
131,570
|
|
|
$
|
1,051,070
|
|
|
$
|
1,656,570
|
|
|
$
|
60,770
|
|
|
$
|
69,916
|
|
|
$
|
74,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under unsecured line of
credit(1)
|
|
|
300,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Borrowings under $2.4 billion bridge loan
facility(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,400,000
|
|
|
|
1,180,500
|
|
|
|
575,000
|
|
Senior notes due 2012
|
|
|
76,853
|
|
|
|
76,853
|
|
|
|
76,853
|
|
|
|
76,853
|
|
|
|
76,853
|
|
|
|
76,853
|
|
Senior notes due 2013
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Senior notes due 2015
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
Senior notes due 2016
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Senior notes due 2017
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
Senior notes due 2020
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
Senior notes due 2021
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
4.75% convertible senior notes due
2026(3)
|
|
|
125,588
|
|
|
|
125,588
|
|
|
|
125,588
|
|
|
|
125,588
|
|
|
|
125,588
|
|
|
|
125,588
|
|
4.75% convertible senior notes due
2027(3)
|
|
|
168,086
|
|
|
|
168,086
|
|
|
|
168,086
|
|
|
|
168,086
|
|
|
|
168,086
|
|
|
|
168,086
|
|
3.00% convertible senior notes due
2029(3)
|
|
|
494,403
|
|
|
|
494,403
|
|
|
|
494,403
|
|
|
|
494,403
|
|
|
|
494,403
|
|
|
|
494,403
|
|
Secured debt
|
|
|
1,133,716
|
|
|
|
1,133,716
|
|
|
|
1,133,716
|
|
|
|
1,133,716
|
|
|
|
1,133,716
|
|
|
|
1,133,716
|
|
Capital lease obligation
|
|
|
8,881
|
|
|
|
8,881
|
|
|
|
8,881
|
|
|
|
85,962
|
|
|
|
85,962
|
|
|
|
85,962
|
|
Unamortized premiums/discounts and fair value adjustments
|
|
|
(37,791
|
)
|
|
|
(37,791
|
)
|
|
|
(37,791
|
)
|
|
|
(37,791
|
)
|
|
|
(37,791
|
)
|
|
|
(37,791
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
debt(4)
|
|
|
4,469,736
|
|
|
|
4,169,736
|
|
|
|
4,169,736
|
|
|
|
6,946,547
|
|
|
|
5,727,047
|
|
|
|
5,121,547
|
|
Redeemable noncontrolling interests
|
|
|
4,553
|
|
|
|
4,553
|
|
|
|
4,553
|
|
|
|
4,553
|
|
|
|
4,553
|
|
|
|
4,553
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $1.00 par value;
authorized50,000,000 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series D Cumulative Redeemable Preferred Stock;
4,000,000 shares issued and outstanding
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
100,000
|
|
Series F Cumulative Redeemable Preferred Stock;
7,000,000 shares issued and outstanding
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
175,000
|
|
Series H Cumulative Convertible and Redeemable Preferred
Stock; 349,854 shares issued and outstanding
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
16,667
|
|
Series I Cumulative Convertible Perpetual Preferred Stock;
12,500,000 shares issued and outstanding
|
|
|
0
|
|
|
|
0
|
|
|
|
625,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
625,000
|
|
Common Stock, $1.00 par value;
authorized225,000,000 shares; 147,381,191 shares
issued and 147,097,381 shares outstanding, actual;
172,381,191 shares issued and 172,097,381 shares
outstanding, as
adjusted(5)
|
|
|
147,155
|
|
|
|
172,155
|
|
|
|
172,155
|
|
|
|
147,155
|
|
|
|
172,155
|
|
|
|
172,155
|
|
Capital in excess of par value
|
|
|
4,932,468
|
|
|
|
6,126,968
|
|
|
|
6,107,468
|
|
|
|
4,932,468
|
|
|
|
6,126,968
|
|
|
|
6,107,468
|
|
Treasury stock
|
|
|
(11,352
|
)
|
|
|
(11,352
|
)
|
|
|
(11,352
|
)
|
|
|
(11,352
|
)
|
|
|
(11,352
|
)
|
|
|
(11,352
|
)
|
Cumulative net income
|
|
|
1,676,196
|
|
|
|
1,676,196
|
|
|
|
1,676,196
|
|
|
|
1,640,196
|
|
|
|
1,676,196
|
|
|
|
1,676,196
|
|
Cumulative dividends
|
|
|
(2,427,881
|
)
|
|
|
(2,427,881
|
)
|
|
|
(2,427,881
|
)
|
|
|
(2,427,881
|
)
|
|
|
(2,427,881
|
)
|
|
|
(2,427,881
|
)
|
Accumulated other comprehensive income
|
|
|
(11,099
|
)
|
|
|
(11,099
|
)
|
|
|
(11,099
|
)
|
|
|
(11,099
|
)
|
|
|
(11,099
|
)
|
|
|
(11,099
|
)
|
Other equity
|
|
|
5,697
|
|
|
|
5,697
|
|
|
|
5,697
|
|
|
|
5,697
|
|
|
|
5,697
|
|
|
|
5,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Health Care REIT, Inc. stockholders equity
|
|
|
4,602,851
|
|
|
|
5,822,351
|
|
|
|
6,427,851
|
|
|
|
4,566,851
|
|
|
|
5,786,351
|
|
|
|
6,391,851
|
|
Noncontrolling interests
|
|
|
130,249
|
|
|
|
130,249
|
|
|
|
130,249
|
|
|
|
130,249
|
|
|
|
130,249
|
|
|
|
130,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
4,733,100
|
|
|
|
5,952,600
|
|
|
|
6,558,100
|
|
|
|
4,697,100
|
|
|
|
5,916,600
|
|
|
|
6,522,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
9,207,389
|
|
|
$
|
10,126,889
|
|
|
$
|
10,732,389
|
|
|
$
|
11,648,200
|
|
|
$
|
11,648,200
|
|
|
$
|
11,648,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(footnotes on following
page)
S-28
Capitalization
|
|
|
(1) |
|
$495 million was outstanding under our unsecured line of
credit at February 25, 2011. |
|
(2) |
|
Zero amounts were outstanding under the $2.4 billion
bridge loan facility at February 28, 2011. |
|
(3) |
|
The amounts shown do not reflect original issue discount
pursuant to
ASC 470-20,
Debt with Conversion and Other Options. Under ASC 470, 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 ASC 470 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. |
|
(4) |
|
Does not include any secured indebtedness incurred in 2011 in
connection with our other acquisitions, transactions or
investments, or the $400 million bridge loan facility with
UBS Loan Finance, LLC we obtained to complete the transaction
with Benchmark Senior Living LLC. See Prospectus
supplement summaryRecent developments. |
|
(5) |
|
Excludes: (i) 1,207,372 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) 8,511,532 shares of common stock reserved for
issuance under our dividend reinvestment and stock purchase
plan; (iii) 2,655,860 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;
(iv) 3,380,411 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;
(v) 9,648,126 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;
(vi) 349,854 shares of common stock reserved for
issuance upon conversion of the Series H Cumulative
Convertible and Redeemable Preferred Stock; (vii)
10,685,770 shares of common stock reserved for issuance
upon conversion of the Series I Cumulative Convertible
Perpetual Preferred Stock assuming the consummation of the
Preferred Stock Offering at the amount and on the terms
presently contemplated and no exercise by the underwriters of
their overallotment option; and (viii) shares of common stock
that may be issued upon conversion of the convertible senior
notes or the Series I preferred stock as a make-whole
premium (or similar consideration) upon the occurrence of a
make-whole fundamental change or fundamental change (as
applicable). |
|
(6) |
|
Does not reflect the expected use of the estimated
$1.2 billion net proceeds from this offering or the
estimated $605.5 million net proceeds from the Preferred
Stock Offering. |
|
(7) |
|
See Unaudited pro forma condensed consolidated
financial statements beginning on page S-30 for a
discussion of the pro forma adjustments. |
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 Annual Report on
Form 10-K
for the year ended December 31, 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-29
The following is an excerpt of information contained in Item
8.01 and the related exhibit to our Current Report on Form 8-K
as filed with the SEC on February 28, 2011 and incorporated
herein by reference. You should read and consider the
information in the documents to which we have referred you in
Incorporation by Reference, including the foregoing
Current Report of Form 8-K, before purchasing these
securities.
The accompanying unaudited pro forma condensed consolidated
financial statements presented below have been prepared based on
certain pro forma adjustments to the historical consolidated
financial statements of Health Care REIT, Inc. (the
Company) as of and for the year ended
December 31, 2010 and FC-GEN Acquisition Holding, LLC
(Acquisition Holding) as of September 30, 2010
and the twelve months ended September 30, 2010. The
historical consolidated financial statements of the Company are
contained in its Annual Report on
Form 10-K
for the year ended December 31, 2010. The historical
consolidated financial statements of Acquisition Holding are
included as Exhibits 99.2 and 99.3 to this Current Report
on
Form 8-K.
The accompanying unaudited pro forma condensed consolidated
financial statements give effect to (i) the proposed
acquisition by the Company of 100% of the equity interests in
Acquisition Holding, which indirectly owns (1) 140 senior
housing and care facilities (137 of fee simple and three
pursuant to ground leases) and (2) the leasehold interests
in and options to purchase seven senior housing and care
facilities, for approximately $2.4 billion (collectively,
the Acquisition) and (ii) the proposed lease by
the Company to Genesis Operations, LLC (Tenant)
under which the Tenant will operate the acquired facilities (the
Master Lease). Prior to closing, FC-GEN Operations
Investment, LLC (OpCo) will be a direct subsidiary
of Acquisition Holding. Prior to the closing date, Acquisition
Holding will contribute the assets, liabilities and equity
interests relating to (i) the business of operating and
managing senior housing and care facilities, (ii) joint
venture entities and (iii) other ancillary businesses to
OpCo and then distribute all of the equity interests in OpCo to
FC-GEN Investment, LLC (FC-GEN). Tenant is a
wholly-owned subsidiary of OpCo. All obligations under the
Master Lease will be guaranteed by OpCo. In addition, in
conjunction with the Acquisition, Company will have the option
to acquire a 9.9% ownership interest in OpCo for a fixed price
equal to $47 million at any time during the initial term of
the Master Lease. The unaudited pro forma condensed consolidated
balance sheet as of December 31, 2010 has been prepared as
if the Acquisition had occurred as of that date. The unaudited
pro forma condensed consolidated statement of income for the
year ended December 31, 2010 has been prepared as if the
Acquisition had occurred as of January 1, 2010. Such
statements also give effect to certain capital transactions
undertaken by the Company in order to finance part of the
Acquisition.
The allocation of the purchase price of Acquisition Holding
reflected in these unaudited pro forma condensed consolidated
financial statements has been based upon preliminary estimates
of the fair value of assets ultimately acquired and liabilities
ultimately assumed. A final determination of the fair values of
Acquisition Holdings assets and liabilities, which cannot
be made prior to the completion of the Acquisition, will be
based on the actual valuation of the tangible and intangible
assets and liabilities of Acquisition Holding that exist as of
the date of completion of the Acquisition. Consequently, amounts
preliminarily allocated to identifiable tangible and intangible
assets and liabilities could change significantly from those
used in the pro forma condensed consolidated financial
statements presented below and could result in a material change
in amortization of tangible and intangible assets and
liabilities. Additionally, the common and preferred stock
proceeds assumed in the pro forma as adjusted columns are
predicated on anticipated sales of equity securities by the
Company. There can be no assurance that such sales will occur on
the terms estimated or at all.
S-30
Unaudited pro
forma condensed consolidated financial statements
In the opinion of the Companys management, the pro forma
condensed consolidated financial statements include all
significant necessary adjustments that can be factually
supported to reflect the effects of the Acquisition. The
unaudited pro forma condensed consolidated financial statements
are provided for informational purposes only. The unaudited pro
forma condensed consolidated financial statements are not
necessarily and should not be assumed to be an indication of the
results that would have been achieved had the Acquisition been
completed as of the dates indicated or that may be achieved in
the future. The completion of the valuation, the allocation of
the purchase price, the impact of ongoing integration
activities, the timing of completion of the Acquisition and
other changes in Acquisition Holding tangible and intangible
assets and liabilities that occur prior to completion of the
Acquisition could cause material differences in the information
presented. Furthermore, following consummation of the
Acquisition, the Company expects to apply its own methodologies
and judgments in accounting for the assets and liabilities
acquired in the Acquisition, which may differ from those
reflected in Acquisition Holdings historical consolidated
financial statements and the pro forma condensed consolidated
financial statements.
S-31
Health Care Reit,
Inc.
Pro
forma condensed consolidated balance sheet
December 31,
2010
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Holding
|
|
|
Pro Forma
|
|
|
Company
|
|
|
Pro Forma
|
|
|
|
Historical
|
|
|
Historical(A)
|
|
|
Adjustments(B)
|
|
|
Pro
Forma
|
|
|
As
Adjusted(N)
|
|
|
|
|
|
(in
thousands)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real property, net
|
|
$
|
8,155,529
|
|
|
$
|
1,753,406
|
|
|
$
|
723,405
|
(D)
|
|
$
|
10,632,340
|
|
|
$
|
10,632,340
|
|
Real estate loans receivable, net
|
|
|
435,304
|
|
|
|
|
|
|
|
|
|
|
|
435,304
|
|
|
|
435,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net real estate investments
|
|
|
8,590,833
|
|
|
|
1,753,406
|
|
|
|
723,405
|
|
|
|
11,067,644
|
|
|
|
11,067,644
|
|
Goodwill
|
|
|
51,207
|
|
|
|
119,090
|
|
|
|
(119,090
|
)(C)
|
|
|
51,207
|
|
|
|
51,207
|
|
Deferred loan expenses
|
|
|
32,960
|
|
|
|
12,545
|
|
|
|
(467
|
)(C)
|
|
|
67,760
|
|
|
|
54,073
|
(N)
|
|
|
|
|
|
|
|
|
|
|
|
22,722
|
(E)
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
131,570
|
|
|
|
113,152
|
|
|
|
(113,152
|
)(C)
|
|
|
60,770
|
|
|
|
74,457
|
(N)
|
|
|
|
|
|
|
|
|
|
|
|
(70,800
|
)(B)
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
645,164
|
|
|
|
629,848
|
|
|
|
(587,855
|
)(C)
|
|
|
645,164
|
|
|
|
645,164
|
|
|
|
|
|
|
|
|
|
|
|
|
(41,993
|
)(F)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
9,451,734
|
|
|
$
|
2,628,041
|
|
|
$
|
(187,230
|
)
|
|
$
|
11,892,545
|
|
|
$
|
11,892,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under unsecured line of credit arrangement
|
|
$
|
300,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Bridge loan
|
|
|
|
|
|
|
|
|
|
|
2,400,000
|
(G)
|
|
|
2,400,000
|
|
|
|
575,000
|
(N)
|
Senior unsecured notes
|
|
|
3,034,949
|
|
|
|
|
|
|
|
|
|
|
|
3,034,949
|
|
|
|
3,034,949
|
|
Secured debt
|
|
|
1,125,906
|
|
|
|
1,713,920
|
|
|
|
(43,357
|
)(C)
|
|
|
1,125,906
|
|
|
|
1,125,906
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,670,563
|
)(G)
|
|
|
|
|
|
|
|
|
Capital lease obligations
|
|
|
8,881
|
|
|
|
160,820
|
|
|
|
(84,454
|
)(C)
|
|
|
85,692
|
|
|
|
85,692
|
|
|
|
|
|
|
|
|
|
|
|
|
445
|
(H)
|
|
|
|
|
|
|
|
|
Accrued expenses and other liabilities
|
|
|
244,345
|
|
|
|
735,827
|
|
|
|
(487,868
|
)(C)
|
|
|
244,345
|
|
|
|
244,345
|
|
|
|
|
|
|
|
|
|
|
|
|
(247,959
|
)(F)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,714,081
|
|
|
|
2,610,567
|
|
|
|
(133,756
|
)
|
|
|
7,190,892
|
|
|
|
5,365,892
|
|
Redeemable noncontrolling interests
|
|
|
4,553
|
|
|
|
|
|
|
|
|
|
|
|
4,553
|
|
|
|
4,553
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
291,667
|
|
|
|
|
|
|
|
|
|
|
|
291,667
|
|
|
|
916,667
|
(N)
|
Common stock
|
|
|
147,155
|
|
|
|
|
|
|
|
|
|
|
|
147,155
|
|
|
|
172,155
|
(N)
|
Capital in excess of par value
|
|
|
4,932,468
|
|
|
|
|
|
|
|
|
|
|
|
4,932,468
|
|
|
|
6,107,468
|
(N)
|
Other equity
|
|
|
(768,439
|
)
|
|
|
|
|
|
|
(36,000
|
)(B)
|
|
|
(804,439
|
)
|
|
|
(804,439
|
)
|
Total members equity (deficit)
|
|
|
|
|
|
|
10,613
|
|
|
|
(10,613
|
)(I)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company stockholders equity
|
|
|
4,602,851
|
|
|
|
10,613
|
|
|
|
(46,613
|
)
|
|
|
4,566,851
|
|
|
|
6,391,851
|
|
Noncontrolling interests
|
|
|
130,249
|
|
|
|
6,861
|
|
|
|
(6,861
|
)(C)
|
|
|
130,249
|
|
|
|
130,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
4,733,100
|
|
|
|
17,474
|
|
|
|
(53,474
|
)
|
|
|
4,697,100
|
|
|
|
6,522,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
9,451,734
|
|
|
$
|
2,628,041
|
|
|
$
|
(187,230
|
)
|
|
$
|
11,892,545
|
|
|
$
|
11,892,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of these unaudited pro forma condensed
consolidated financial statements.
S-32
Health Care Reit,
Inc.
Pro
forma condensed consolidated statement of income
Year ended
December 31, 2010
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Holding
|
|
|
Pro Forma
|
|
|
Company
|
|
|
Pro Forma
|
|
|
|
Historical
|
|
|
Historical(J)
|
|
|
Adjustments(B)
|
|
|
Pro
Forma
|
|
|
As
Adjusted(N)
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
581,424
|
|
|
$
|
|
|
|
$
|
222,429
|
(K)
|
|
$
|
803,853
|
|
|
$
|
803,853
|
|
Resident fees and services
|
|
|
51,006
|
|
|
|
2,460,737
|
|
|
|
(2,460,737
|
)(C)
|
|
|
51,006
|
|
|
|
51,006
|
|
Interest income
|
|
|
40,855
|
|
|
|
|
|
|
|
|
|
|
|
40,855
|
|
|
|
40,855
|
|
Other income
|
|
|
7,245
|
|
|
|
2,340
|
|
|
|
(2,340
|
)(C)
|
|
|
7,245
|
|
|
|
7,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
680,530
|
|
|
|
2,463,077
|
|
|
|
(2,240,648
|
)
|
|
|
902,959
|
|
|
|
902,959
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
157,108
|
|
|
|
142,296
|
|
|
|
(11,555
|
)(C)
|
|
|
341,404
|
|
|
|
217,063
|
(O)
|
|
|
|
|
|
|
|
|
|
|
|
53,555
|
(L)
|
|
|
|
|
|
|
|
|
Property operating expenses
|
|
|
83,120
|
|
|
|
2,080,426
|
|
|
|
(2,080,426
|
)(C)
|
|
|
83,120
|
|
|
|
83,120
|
|
Depreciation and amortization
|
|
|
197,118
|
|
|
|
86,668
|
|
|
|
(24,844
|
)(C)
|
|
|
260,651
|
|
|
|
260,651
|
|
|
|
|
|
|
|
|
|
|
|
|
1,709
|
(M)
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
54,626
|
|
|
|
118,543
|
|
|
|
(118,543
|
)(C)
|
|
|
54,626
|
|
|
|
54,626
|
|
Transaction costs
|
|
|
46,660
|
|
|
|
|
|
|
|
|
|
|
|
46,660
|
|
|
|
46,660
|
|
Impairment of assets
|
|
|
|
|
|
|
14,492
|
|
|
|
(14,492
|
)(C)
|
|
|
|
|
|
|
|
|
Loss (gain) on extinguishment of debt
|
|
|
34,171
|
|
|
|
(1,057
|
)
|
|
|
1,057
|
(C)
|
|
|
34,171
|
|
|
|
34,171
|
|
Provision for loan losses
|
|
|
29,684
|
|
|
|
|
|
|
|
|
|
|
|
29,684
|
|
|
|
29,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
602,487
|
|
|
|
2,441,368
|
|
|
|
(2,193,539
|
)
|
|
|
850,316
|
|
|
|
725,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and income
from unconsolidated joint ventures
|
|
|
78,043
|
|
|
|
21,709
|
|
|
|
(47,109
|
)
|
|
|
52,643
|
|
|
|
176,984
|
|
Income tax (expense) benefit
|
|
|
(364
|
)
|
|
|
(8,113
|
)
|
|
|
8,113
|
(F)
|
|
|
(364
|
)
|
|
|
(364
|
)
|
Income from unconsolidated joint ventures
|
|
|
6,673
|
|
|
|
(219
|
)
|
|
|
219
|
(C)
|
|
|
6,673
|
|
|
|
6,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
84,352
|
|
|
|
13,377
|
|
|
|
(38,777
|
)
|
|
|
58,952
|
|
|
|
183,293
|
|
Less: Preferred stock dividends
|
|
|
21,645
|
|
|
|
|
|
|
|
|
|
|
|
21,645
|
|
|
|
63,833
|
(P)
|
Net income (loss) attributable to noncontrolling interests
|
|
|
357
|
|
|
|
3,066
|
|
|
|
(3,066
|
)(C)
|
|
|
357
|
|
|
|
357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common
stockholders
|
|
$
|
62,350
|
|
|
$
|
10,311
|
|
|
$
|
(35,711
|
)
|
|
$
|
36,950
|
|
|
$
|
119,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
127,656
|
|
|
|
|
|
|
|
|
|
|
|
127,656
|
|
|
|
152,656
|
(Q)
|
Diluted
|
|
|
128,208
|
|
|
|
|
|
|
|
|
|
|
|
128,208
|
|
|
|
153,208
|
(Q)
|
Income from continuing operations attributable to common
stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
$
|
0.29
|
|
|
$
|
0.78
|
(Q)
|
Diluted
|
|
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
0.29
|
|
|
|
0.78
|
(Q)
|
The accompanying notes are an
integral part of these unaudited pro forma condensed
consolidated financial statements.
S-33
Health Care Reit,
Inc.
The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the respective
historical financial statements and the notes thereto of the
Company for the year ended December 31, 2010 and of
Acquisition Holding as of September 30, 2010 and for the
nine months ended September 30, 2010 and September 30,
2009 included herein.
(A) As of the date of this Current Report on
Form 8-K,
Acquisition Holding, a private company, has not completed its
audit for the year ended December 31, 2010. As such, the
Company has elected to use the historical unaudited condensed
consolidated financial statements of Acquisition Holding as of
September 30, 2010 which have been presented based on the
financial statement classifications utilized by the Company.
(B) On February 28, 2011, the Company entered
into a definitive agreement to acquire Acquisition Holding for a
total cash purchase price of $2,400,000,000. The total purchase
price of $2,476,811,000 is comprised of the cash consideration
and the fair value of capital lease obligations totaling
$76,811,000 (see Note H). Immediately after the
Acquisition, Tenant will lease the facilities acquired from
Acquisition Holding from the Company pursuant to the Master
Lease (see Note K). All obligations under the lease will be
guaranteed by OpCo. In connection with the Acquisition, the
Company estimates it will pay approximately $70,800,000 of fees
and costs including advisory fees ($6,000,000), legal fees
($2,000,000), due diligence and other closing costs
($28,000,000) and fees associated with bridge loan financing
($34,800,000). Fees associated with bridge loan financing will
be deferred and amortized over the term of the loan. The other
$36,000,000 of costs are directly attributable to the
Acquisition and represent non-recurring costs; therefore, the
anticipated impact on the results of operations was excluded
from the pro forma condensed consolidated statement of income.
(C) Prior to closing, OpCo will be a direct
subsidiary of Acquisition Holding. Immediately before the
closing date, certain subsidiaries of Acquisition Holding will
transfer the assets, liabilities and equity interests relating
to (i) the business of operating and managing senior
housing and care facilities, (ii) joint venture entities
and (iii) other ancillary businesses to OpCo and then
distribute all of the equity interests in OpCo to FC-GEN. The
parties intend that under no circumstances shall the Company be
deemed the owner of, or otherwise have control over, OpCo its
subsidiaries or the assets, liabilities and equity thereof for
any period of time. As such, all relevant amounts relating to
OpCo have been eliminated from Acquisition Holding. Adjustments
identified represent assets, liabilities, revenues and expenses
of OpCo that were not retained in the Acquisition. Subsequent to
the Acquisition, the Company will have primarily acquired 140
senior housing and care facilities and the leasehold interests
in and options to purchase seven other senior housing and care
facilities.
(D) Adjustments to real property follow (in
thousands):
|
|
|
|
|
Real property not acquired:(1)
|
|
|
|
|
Land and land improvements
|
|
$
|
(16,342
|
)
|
Buildings and improvements
|
|
|
(275,830
|
)
|
Construction in progress
|
|
|
(2,565
|
)
|
Accumulated depreciation and amortization
|
|
|
72,684
|
|
|
|
|
|
|
Total real property not acquired
|
|
|
(222,053
|
)
|
Fair value adjustments:(2)
|
|
|
|
|
Land and land improvements
|
|
|
(97,578
|
)
|
Buildings and improvements
|
|
|
859,810
|
|
Construction in progress
|
|
|
(2,409
|
)
|
Accumulated depreciation and amortization
|
|
|
185,635
|
|
|
|
|
|
|
Total real property fair value adjustments
|
|
|
945,458
|
|
|
|
|
|
|
Net real property asset adjustments
|
|
$
|
723,405
|
|
|
|
|
|
|
S-34
Health Care Reit,
Inc.
|
|
|
(1) |
|
See Note C. |
|
(2) |
|
Acquisition Holdings real property assets have been
adjusted to their preliminary estimated fair values and the
related historical balances of accumulated depreciation and
construction in progress are eliminated when in-service real
property assets are recorded at fair value. |
(E) Adjustments represent the deferral of $34,800,000
of fees associated with bridge financing (see
Note B) offset by the elimination of Acquisition
Holdings deferred loan costs of $12,078,000.
(F) Adjustments represent elimination of deferred tax
assets and liabilities of Acquisition Holding. As a result of
the Acquisition, we are subject to corporate level taxes for any
asset acquired in the Acquisition and subsequently sold for a
period of 10 years subsequent to closing (built-in
gains tax). The amount of income potentially subject to
this special corporate level tax is generally equal to
(i) the excess of the fair value of the asset as of the
date of closing over its adjusted tax basis as of the date of
closing, or (ii) the actual amount of gain, whichever of
(i) and (ii) is lower. We have not recorded a deferred
tax liability as a result of the potential built-in gains tax
based on our intentions with respect to such assets and
available tax planning strategies. Additionally, at the closing
of the Acquisition, 100% of the real estate of Acquisition
Holding will be acquired by a subsidiary of the Company;
accordingly, assuming the Acquisition was effective
January 1, 2010, all of the amounts of the income tax
expense would then be eliminated.
(G) The Company expects to fund $2,400,000,000 of
cash consideration and other associated costs of the Acquisition
primarily with short-term financing and available cash. The
Company has obtained a commitment for a
364-day
bridge loan of $2,400,000,000. Although the Company intends to
finance the Acquisition through the current offerings of common
and preferred stock, cash on hand and future capital raising
activities or refinancings, for purposes of these unaudited pro
forma consolidated financial statements we have initially
assumed a drawdown of $2,400,000,000 under the bridge loan at
the closing of the Acquisition. Any draw downs under the bridge
loan are expected to be repaid after the Acquisition with
proceeds from the issuance of new securities (see Note N).
Approximately $1,670,563,000 of Acquisition Holdings
long-term debt is expected to be settled or repaid at closing.
(H) At closing, Company will assume existing leases
at seven properties. Acquisition Holding has historically
recognized these leases as capital leases due to bargain
purchase options. Company has adjusted the capital lease
obligations to estimated fair values.
(I) Adjustment to the total members equity
represents the elimination of such balance of Acquisition
Holding.
(J) As discussed in Note A, Acquisition Holding
has not completed its audit for the year ended December 31,
2010. As such, the following represents Acquisition
Holdings unaudited condensed consolidated results from
continuing operations for the twelve months ended
September 30, 2010 as
S-35
Health Care Reit,
Inc.
derived from the audited and unaudited condensed consolidated
financial statements of Acquisition Holding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
|
|
|
Add:
|
|
|
Twelve
|
|
|
|
Year
|
|
|
Months
|
|
|
Nine Months
|
|
|
Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resident fees and services
|
|
$
|
2,376,967
|
|
|
$
|
1,766,127
|
|
|
$
|
1,849,897
|
|
|
$
|
2,460,737
|
|
Other income
|
|
|
2,145
|
|
|
|
2,026
|
|
|
|
2,221
|
|
|
|
2,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
2,379,112
|
|
|
|
1,768,153
|
|
|
|
1,852,118
|
|
|
|
2,463,077
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
138,008
|
|
|
|
99,973
|
|
|
|
104,261
|
|
|
|
142,296
|
|
Property operating expenses
|
|
|
2,003,989
|
|
|
|
1,478,145
|
|
|
|
1,554,582
|
|
|
|
2,080,426
|
|
Depreciation and amortization
|
|
|
85,151
|
|
|
|
63,488
|
|
|
|
65,005
|
|
|
|
86,668
|
|
General and administrative
|
|
|
117,742
|
|
|
|
88,959
|
|
|
|
89,760
|
|
|
|
118,543
|
|
Impairment of assets
|
|
|
17,358
|
|
|
|
17,358
|
|
|
|
14,492
|
|
|
|
14,492
|
|
Loss (gain) on extinguishment of debt
|
|
|
12,306
|
|
|
|
12,956
|
|
|
|
(407
|
)
|
|
|
(1,057
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
2,374,554
|
|
|
|
1,760,879
|
|
|
|
1,827,693
|
|
|
|
2,441,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and income
from unconsolidated joint ventures
|
|
|
4,558
|
|
|
|
7,274
|
|
|
|
24,425
|
|
|
|
21,709
|
|
Income tax expense
|
|
|
(17,105
|
)
|
|
|
(18,469
|
)
|
|
|
(9,477
|
)
|
|
|
(8,113
|
)
|
Income from unconsolidated joint ventures
|
|
|
435
|
|
|
|
332
|
|
|
|
(322
|
)
|
|
|
(219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(12,112
|
)
|
|
|
(10,863
|
)
|
|
|
14,626
|
|
|
|
13,377
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
1,367
|
|
|
|
1,100
|
|
|
|
2,799
|
|
|
|
3,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common
stockholders
|
|
$
|
(13,479
|
)
|
|
$
|
(11,963
|
)
|
|
$
|
11,827
|
|
|
$
|
10,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(K) Immediately after the closing of the Acquisition,
a subsidiary of the Company will lease the acquired facilities
to Tenant pursuant to the Master Lease. In addition to rent, the
triple net Master Lease requires Tenant to pay all operating
costs, utilities, real estate taxes, insurance, building
repairs, maintenance costs and all obligations under the ground
leases. All obligations under the Master Lease will be
guaranteed by OpCo. The initial term will be fifteen years.
Tenant will have one option to renew for an additional term of
fifteen years. The Master Lease will provide that the base rent
for the first year will be $198,000,000 and will increase at
least 1.75% but no more than 3.50% (subject to CPI changes) for
each of the years two through six during the initial term and at
least 1.50% but no more than 3.00% per year thereafter (subject
to CPI changes). The adjustment to rental income represents the
estimated straight-line rent the Company expects to recognize
based on the minimum rent escalators during the initial term.
(L) The pro forma increase in interest expense as a
result of the bridge loan financing in the Acquisition is
calculated using market rates management believes would have
been available to the Company for the borrowings assumed to have
been issued as of February 25, 2011 (the last business date
before the date that the definitive agreement was executed to
acquire Acquisition Holding) pursuant to the bridge loan
commitment. The all-in cost of bridge financing is estimated to
be 7.51%.
S-36
Health Care Reit,
Inc.
Each
1/8
of 1% increase in the annual interest rate assumed with respect
to the debt would increase pro forma interest expense by
$3,000,000 for the year ended December 31, 2010.
Adjustments to interest expense are as follows (in thousands):
|
|
|
|
|
Elimination of Acquisition Holdings interest expense
|
|
$
|
(130,741
|
)
|
Interest expense and fees associated with bridge loan
|
|
|
145,518
|
|
Amortization of deferred fees associated with bridge loan
(Note B)
|
|
|
34,800
|
|
Interest expense on capital lease obligations (Note H)
|
|
|
3,978
|
|
|
|
|
|
|
Total
|
|
$
|
53,555
|
|
|
|
|
|
|
(M) Adjustments to depreciation and amortization
represent the elimination of Acquisition Holdings
historical depreciation ($61,824,000) offset by depreciation
expense as a result of the recording of Acquisition
Holdings real property at its estimated fair value
($63,533,000). Estimated useful lives of 40 years and
15 years were assumed to compute depreciation for buildings
and improvements, respectively, on a straight-line basis.
(N) Adjustments represent the anticipated issuance of
25,000,000 shares of Company common stock and
12,500,000 shares of Company cumulative convertible
perpetual preferred stock with an assumed dividend rate of 6.75%
and the application of the estimated proceeds therefrom of
$1,825,000,000 to reduce the funds necessary to draw under the
bridge loan. Further, as a result of reduced bridge financing,
the Company would only pay bridge fees of $21,113,000 rather
than $34,800,000. The common and preferred stock proceeds
assumed are predicated on anticipated sales of equity securities
by the Company. There can be no assurance that such sales will
occur on the terms estimated herein or at all. The shares of
Company common and preferred stock assumed to be issued are
valued as follows (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Preferred
|
|
|
|
|
Number of shares issued
|
|
|
25,000
|
|
|
|
12,500
|
|
Assumed price(1)
|
|
$
|
50.86
|
|
|
$
|
50.00
|
|
|
|
|
|
|
|
|
|
|
Gross value of shares issued
|
|
|
1,271,500
|
|
|
|
625,000
|
|
Less: Underwriting discounts
|
|
|
(50,860
|
)
|
|
|
(18,750
|
)
|
Less: Share registration and issuance costs
|
|
|
(1,140
|
)
|
|
|
(750
|
)
|
|
|
|
|
|
|
|
|
|
Total value of shares issued
|
|
$
|
1,219,500
|
|
|
$
|
605,500
|
|
|
|
|
|
|
|
|
|
|
The total value of the shares issued is presented as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock: Par value, $1.00 per share
|
|
$
|
25,000
|
|
|
|
|
|
Preferred Stock: Liquidation preference, $50.00 per share
|
|
|
|
|
|
$
|
625,000
|
|
Capital in excess of par value
|
|
|
1,194,500
|
|
|
|
(19,500
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,219,500
|
|
|
$
|
605,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Common stock price based on the last reported sale price of
the Companys common stock on February 25, 2011.
Preferred stock price represents liquidation value per share. |
(O) Adjustments to interest expense represent
$124,341,000 reduction in interest and fees associated with the
bridge loan resulting from the use of proceeds as discussed in
Note N. See Note L for a discussion of the interest
rate assumptions. Assuming a bridge loan balance of
$575,000,000, the all-in rate is approximately 9.74% and each
1/8 of 1%
increase in the annual interest rate assumed with respect to the
debt would increase adjusted pro forma interest expense by
$719,000 for the year ended December 31, 2010.
S-37
(P) Adjustment represents the dividend on the
issuance of 12,500,000 shares of the Companys
cumulative convertible perpetual preferred stock (see
Note N) with an assumed dividend rate of 6.75%.
(Q) The calculations of basic and diluted earnings
per share are as follows (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
|
Historical
|
|
|
Pro
forma
|
|
|
as
adjusted
|
|
|
|
Income from continuing operations
|
|
$
|
84,352
|
|
|
$
|
58,952
|
|
|
$
|
183,293
|
|
Preferred stock dividends
|
|
|
(21,645
|
)
|
|
|
(21,645
|
)
|
|
|
(63,833
|
)
|
Net income attributable to noncontrolling interests
|
|
|
(357
|
)
|
|
|
(357
|
)
|
|
|
(357
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common
stockholders
|
|
$
|
62,350
|
|
|
$
|
36,950
|
|
|
$
|
119,103
|
|
Weighted-average shares used to calculate earnings per common
share Basic(1)
|
|
|
127,656
|
|
|
|
127,656
|
|
|
|
152,656
|
|
Effect of dilutive securities
|
|
|
552
|
|
|
|
552
|
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted-average shares used to calculate earnings per
common share Diluted
|
|
|
128,208
|
|
|
|
128,208
|
|
|
|
153,208
|
|
Income from continuing operations attributable to common
stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
|
$
|
0.29
|
|
|
$
|
0.78
|
|
Diluted
|
|
|
0.49
|
|
|
|
0.29
|
|
|
|
0.78
|
|
|
|
|
(1) |
|
The pro forma as adjusted weighted-average shares outstanding
are the historical weighted-average shares of the Company
adjusted for the assumed issuance of 25,000,000 shares of
Company common stock (see Note N). The convertible
preferred stock discussed in Note N were excluded as the
effect of the conversion would be anti-dilutive. |
S-38
On February 28, 2011, the Company obtained a commitment from UBS
Loan Finance LLC, UBS Securities LLC, as joint lead arranger,
Bank of America, N.A., as co-syndication agent, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as joint lead
arranger, Barclays Bank PLC, as co-syndication agent, Barclays
Capital Inc., as joint lead arranger, Deutsche Bank AG Cayman
Islands Branch, Deutsche Bank Securities Inc., as joint lead
arranger and co-documentation agent, JPMorgan Chase Bank, N.A.,
as co-syndication agent, J.P. Morgan Securities LLC, as joint
lead arranger, Wells Fargo Bank, N.A., as co-documentation
agent, Wells Fargo Securities, LLC, as joint lead arranger,
KeyBank National Association, as senior managing agent, and
KeyBanc Capital Markets Inc. to provide a bridge loan facility
to the Company in an aggregate amount of up to $2.4 billion
subject to the terms and conditions set forth therein. The $2.4
billion bridge loan facility is undrawn as of the date of this
prospectus supplement, and the commitments thereunder are
available until May 31, 2011. Proceeds from the borrowings
under the $2.4 billion bridge loan facility, if made, will be
used to fund all or part of the consideration for the
Acquisition and to pay related fees and expenses. However, we
currently anticipate using the proceeds of this offering, the
Preferred Stock Offering, cash on hand and any amounts raised in
future capital raising activities or refinancings in lieu of
some of or all borrowings available under the $2.4 billion
bridge loan facility.
Availability under the $2.4 billion bridge loan facility is
subject to the satisfaction of certain conditions precedent
including, but not limited to, (i) the absence of any
continuing default or event of default, (ii) the accuracy
of all representations and warranties customary for transactions
of this type, (iii) receipt of a customary borrowing
notice, and (iv) there being no legal bar to the lenders
making the loan or the issuance. Loans outstanding under the
bridge loan facility will bear interest at a rate per annum
equal to LIBOR plus a margin ranging from 2.0% to 4.0%.
The Companys obligations under the $2.4 billion bridge
loan facility are senior unsecured obligations, ranking pari
passu with other unsecured, unsubordinated general obligations
of the Company.
S-39
Underwriting
UBS Securities LLC, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Barclays Capital Inc., Deutsche Bank
Securities Inc., J.P. Morgan Securities LLC and Wells Fargo
Securities, LLC 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, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Barclays Capital
Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities
LLC and Wells Fargo Securities, LLC have severally agreed to
purchase from us the number of shares of common stock set forth
opposite the underwriters name at the public offering
price less the underwriting discounts and commissions set forth
on the cover page of this prospectus supplement.
|
|
|
|
|
|
|
Number of
|
|
Underwriter
|
|
shares
|
|
|
|
|
UBS Securities LLC
|
|
|
|
|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
|
|
|
|
|
Barclays Capital Inc.
|
|
|
|
|
Deutsche Bank Securities Inc.
|
|
|
|
|
J.P. Morgan Securities LLC
|
|
|
|
|
Wells Fargo Securities, LLC
|
|
|
|
|
KeyBanc Capital Markets Inc.
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
25,000,000
|
|
The underwriting agreement provides that the obligations of the
several underwriters to purchase the shares of common stock
offered hereby are subject to certain conditions precedent and
that the underwriters will purchase all of the shares of common
stock offered by this prospectus supplement, other than those
covered by the overallotment option described below, if any of
these shares are purchased.
We have been advised by the representatives of the underwriters
that the underwriters propose to offer the shares of common
stock to the public at the public offering price set forth on
the cover of this prospectus supplement and to dealers at a
price that represents a concession not in excess of
$ per share under the public
offering price. After the initial offering of the shares of
common stock, the representatives of the underwriters may change
the public offering price and other selling terms. Sales of
shares of common stock made outside the United States may be
made by affiliates of the underwriters.
Our common stock is traded on the New York Stock Exchange under
the symbol HCN.
We have granted to the underwriters an option, exercisable not
later than 30 days after the date of this prospectus
supplement, to purchase up to 3,750,000 additional shares of
common stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this
prospectus supplement. The underwriters may exercise this option
only to cover overallotments made in connection with the sale of
the common stock offered by this prospectus supplement. To the
extent that the underwriters exercise this option, each of the
underwriters will become obligated, subject to conditions, to
purchase approximately the same percentage of these additional
shares of common stock as the number of shares of common stock
to be purchased by it in the above table bears to the total
number of shares of common stock offered by this prospectus
supplement. We will be obligated, pursuant to the option, to
sell these additional shares of common stock to the underwriters
to the extent the option is exercised. If any additional shares
of common stock are purchased, the underwriters will offer the
additional shares on the same terms as those on which the shares
are being offered.
S-40
Underwriting
The underwriting discounts and commissions per share are equal
to the public offering price per share of common stock less the
amount paid by the underwriters to us per share of common stock.
The underwriting discounts and commissions
are % of the public offering price.
We have agreed to pay the underwriters the following discounts
and commissions, assuming either no exercise or full exercise by
the underwriters of the underwriters overallotment option:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without exercise
of
|
|
|
With full
exercise
|
|
|
|
Fee
|
|
|
overallotment
|
|
|
of
overallotment
|
|
|
|
per
share
|
|
|
option
|
|
|
option
|
|
|
|
|
Discounts and commissions paid by us
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
We estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will
be approximately $1,140,000.
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.
We and each of our executive officers have agreed not to offer,
sell or otherwise dispose of any shares of our common stock or
any securities that the executive officers have, or will have,
the right to acquire through the exercise of options, warrants,
subscription or other rights for a period of 30 days after
the date of this prospectus supplement without the prior written
consent of UBS Securities LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Barclays Capital Inc.,
Deutsche Bank Securities Inc., J.P. Morgan Securities LLC
and Wells Fargo Securities, LLC, subject to limited exceptions.
This consent may be given at any time without public notice.
In connection with the offering, the underwriters may purchase
and sell shares of our common stock in the open market. 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
number of shares than they are required to purchase in the
offering. Covered short sales are sales made in an amount not
greater than the underwriters option to purchase
additional shares of common stock from us in the offering. The
underwriters may close out any covered short position by either
exercising their option to purchase additional shares or
purchasing shares in the open market.
Naked short sales are any sales in excess of the overallotment
option. The underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position
is more likely to be created if the underwriters are concerned
that there may be downward pressure on the price of the shares
in the open market prior to the completion of the offering. In
determining the source of shares to close out the covered short
position, the underwriters will consider, among other things,
the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through
the overallotment option.
Stabilizing transactions consist of various bids for or
purchases of our common stock made by the underwriters in the
open market prior to the completion of the offering.
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 shares 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 our common stock. Additionally, these purchases,
along with the imposition of a penalty bid, may stabilize,
maintain or otherwise affect the market price of our common
stock. As a result, the price of our common stock may be higher
than the price that might
S-41
Underwriting
otherwise exist in the open market. These transactions may be
effected on the New York Stock Exchange or otherwise and may be
discontinued at any time.
A prospectus supplement in electronic format may be made
available on Internet websites maintained by one or more of the
lead underwriters of this offering and may be made available on
websites maintained by other underwriters. Other than the
prospectus supplement in electronic format, the information on
any underwriters website and any information contained in
any other website maintained by an underwriter is not part of
the prospectus supplement or the registration statement of which
the prospectus supplement forms a part.
Conflicts
of Interest
The underwriters
and/or their
affiliates have provided and in the future may provide
investment banking, commercial banking
and/or
advisory services to us from time to time for which they have
received and in the future may receive customary fees and
expenses and may have entered into and in the future may enter
into other transactions with us. Certain affiliates of UBS
Securities LLC, J.P. Morgan Securities LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Deutsche Bank
Securities Inc., Barclays Capital Inc., Wells Fargo Securities,
LLC and KeyBanc Capital Markets Inc. are lenders under our
Fourth Amended and Restated Loan Agreement dated August 6,
2007. Also, UBS Securities LLC, JPMorgan Chase Bank, N.A., Bank
of America, N.A. and Barclays Bank PLC are documentation agents
under such agreement and KeyBank National Association and
Deutsche Bank Securities Inc. are the administrative and the
syndication agents, respectively, under such agreement. In
addition, an affiliate of UBS Securities LLC has committed to be
a lender under our $400 million bridge loan facility and
UBS Securities LLC, J.P. Morgan Securities LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Deutsche Bank
Securities Inc., Barclays Capital Inc., Wells Fargo Securities,
LLC and KeyBanc Capital Markets Inc.
and/or their
affiliates, have committed to be lenders under our
$2.4 billion bridge loan facility. To the extent that any
portion of the net proceeds from this offering is applied to
repay borrowings under our Fourth Amended and Restated Loan
Agreement
and/or
either of our bridge loan facilities, certain of the
underwriters
and/or their
respective affiliates will receive a portion of the net proceeds
so applied through the repayment of borrowings under our Fourth
Amended and Restated Loan Agreement
and/or
either of our bridge loan facilities. If some of the net
proceeds of this offering are used to repay borrowings under our
Fourth Amended and Restated Loan Agreement
and/or
either of our bridge loan facilities, it is possible that more
than 5% of the proceeds of this offering (not including
underwriting discounts and commissions) may be received by any
one underwriter or its affiliates. Nonetheless, in accordance
with the FINRA Rule 5121(f), the appointment of a qualified
independent underwriter is not necessary in connection with this
offering because we, the issuer of the securities in this
offering, are a real estate investment trust. UBS Securities LLC
has acted as our financial advisor in connection with the
Acquisition. Merrill Lynch, Pierce, Fenner & Smith
Incorporated has acted as financial advisor to FC-GEN in
connection with the Acquisition.
S-42
NOTICE TO
PROSPECTIVE INVESTORS IN EUROPEAN ECONOMIC AREA
In relation to each member state of the European Economic Area
that has implemented the Prospectus Directive (each, a relevant
member state), other than Germany, with effect from and
including the date on which the Prospectus Directive is
implemented in that relevant member state (the relevant
implementation date), an offer of securities described in this
prospectus may not be made to the public in that relevant member
state other than:
|
|
Ø
|
to any legal entity which is a qualified investor as defined in
the Prospectus Directive;
|
|
Ø
|
by the Bookrunners to fewer than 100, or, if the Relevant Member
State has implemented the relevant provisions of the 2010 PD
Amending Directive, 150, natural or legal persons (other than
qualified investors as defined in the Prospectus Directive), as
permitted under the Prospectus Directive, subject to obtaining
the prior consent of the Bookrunners for any such offer; or
|
|
Ø
|
in any other circumstances falling within Article 3(2) of
the Prospectus Directive.
|
provided that no such offer of securities shall require us or
any underwriter to publish a prospectus pursuant to
Article 3 of the Prospectus Directive.
For purposes of this provision, the expression an offer of
securities to the public 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 the
securities to be offered so as to enable an investor to decide
to purchase or subscribe for the securities, as the expression
may be varied in that member state by any measure implementing
the Prospectus Directive in that member state, and the
expression Prospectus Directive means Directive
2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive, to the extent implemented in the Relevant
Member State), and includes any relevant implementing measure in
the Relevant Member State, and includes any relevant
implementing measure in each relevant member state. The
expression 2010 PD Amending Directive means Directive 2010/73/EU.
We have not authorized and do not authorize the making of any
offer of securities through any financial intermediary on their
behalf, other than offers made by the underwriters with a view
to the final placement of the securities as contemplated in this
prospectus. Accordingly, no purchaser of the securities, other
than the underwriters, is authorized to make any further offer
of the securities on behalf of us or the underwriters.
The EEA selling restriction is in addition to any other selling
restrictions set out in this prospectus.
NOTICE TO
PROSPECTIVE INVESTORS IN UNITED KINGDOM
The Issuer constitutes a collective investment
scheme as defined by section 235 of the Financial
Services and Markets Act 2000 (the FSMA). It has not
been authorized or otherwise approved and, as an unregulated
scheme, it cannot be marketed in the United Kingdom to the
general public, except in accordance with section 238 of
the FSMA. Accordingly, this prospectus is only being distributed
in the United Kingdom to, and are only directed at,
(a) investment professionals falling within both
Article 14(5) of the Financial Services and Markets Act
2000 (Promotion of Collective Investment Schemes) Order 2001, as
amended (the CIS Promotion Order) and
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005, as amended (the
General Promotion Order), and (b) high net
worth companies and other persons falling within both
Article 22(2)(a) to (d) of the CIS Promotion Order and
Article 49(2)(a) to (d) of the General Promotion Order
(all such persons together being referred to as relevant
persons). The shares are only available to, and any
invitation, offer or agreement to subscribe, purchase or
otherwise acquire such securities
S-43
Notice to
investors
will be engaged in only with, relevant persons. Any person who
is not a relevant person should not act or rely on this document
or any of its contents.
NOTICE TO
PROSPECTIVE INVESTORS IN AUSTRALIA
This offering memorandum is not a formal disclosure document and
has not been, nor will be, lodged with the Australian Securities
and Investments Commission. It does not purport to contain all
information that an investor or their professional advisers
would expect to find in a prospectus or other disclosure
document (as defined in the Corporations Act 2001 (Australia))
for the purposes of Part 6D.2 of the Corporations Act 2001
(Australia) or in a product disclosure statement for the
purposes of Part 7.9 of the Corporations Act 2001
(Australia), in either case, in relation to the securities.
The securities are not being offered in Australia to
retail clients as defined in sections 761G and
761GA of the Corporations Act 2001 (Australia). This offering is
being made in Australia solely to wholesale clients
for the purposes of section 761G of the Corporations Act
2001 (Australia) and, as such, no prospectus, product disclosure
statement or other disclosure document in relation to the
securities has been, or will be, prepared.
This offering memorandum does not constitute an offer in
Australia other than to wholesale clients. By submitting an
application for our securities, you represent and warrant to us
that you are a wholesale client for the purposes of
section 761G of the Corporations Act 2001 (Australia). If
any recipient of this offering memorandum is not a wholesale
client, no offer of, or invitation to apply for, our securities
shall be deemed to be made to such recipient and no applications
for our securities will be accepted from such recipient. Any
offer to a recipient in Australia, and any agreement arising
from acceptance of such offer, is personal and may only be
accepted by the recipient. In addition, by applying for our
securities you undertake to us that, for a period of
12 months from the date of issue of the securities, you
will not transfer any interest in the securities to any person
in Australia other than to a wholesale client.
NOTICE TO
PROSPECTIVE INVESTORS IN HONG KONG
Our securities may not be offered or sold in Hong Kong, by means
of this prospectus or any document other than (i) to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap.571, Laws of Hong Kong)
and any rules made thereunder, or (ii) in circumstances
which do not constitute an offer to the public within the
meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong),
or (iii) in other circumstances which do not result in the
document being a prospectus within the meaning of
the Companies Ordinance (Cap.32, Laws of Hong Kong). No
advertisement, invitation or document relating to our securities
may be issued or may be in the possession of any person for the
purpose of issue (in each case whether in Hong Kong or
elsewhere) which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong Kong
(except if permitted to do so under the securities laws of Hong
Kong) other than with respect to the securities which are or are
intended to be disposed of only to persons outside Hong Kong or
only to professional investors within the meaning of
the Securities and Futures Ordinance (Cap. 571, Laws of Hong
Kong) and any rules made thereunder.
NOTICE TO
PROSPECTIVE INVESTORS IN JAPAN
Our securities have not been and will not be registered under
the Financial Instruments and Exchange Law of Japan (the
Financial Instruments and Exchange Law) and our securities will
not be offered or sold, directly or indirectly, in Japan, or to,
or for the benefit of, any resident of Japan (which term as used
herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan),
or to others for re-offering or resale, directly or indirectly,
in Japan, or to a resident of Japan, except pursuant to an
exemption from the registration requirements of, and otherwise
S-44
Notice to
investors
in compliance with, the Financial Instruments and Exchange Law
and any other applicable laws, regulations and ministerial
guidelines of Japan.
NOTICE TO
PROSPECTIVE INVESTORS IN SINGAPORE
The offer or invitation of the securities (the
Securities) of fund name (the Fund),
which is the subject of this Prospectus, does not relate to a
collective investment scheme which is authorized under
Section 286 of the Securities and Futures Act,
Chapter 289 of Singapore (the SFA) or
recognised under Section 287 of the SFA. The Fund is not
authorized or recognized by the Monetary Authority of Singapore
(the MAS) and the Securities are not allowed to be
offered to the retail public. This Prospectus and any other
document or material issued in connection with the offer or sale
is not a prospectus as defined in the SFA. Accordingly,
statutory liability under the SFA in relation to the content of
prospectuses would not apply. You should consider carefully
whether the investment is suitable for you.
This Prospectus has not been registered as a prospectus with the
MAS. Accordingly, this Prospectus and any other document or
material in connection with the offer or sale, or invitation for
subscription or purchase, of Securities may not be circulated or
distributed, nor may Securities be offered or sold, or be made
the subject of an invitation for subscription or purchase,
whether directly or indirectly, to persons in Singapore other
than (i) to an institutional investor under
Section 304 of the SFA, (ii) to a relevant person
pursuant to Section 305(1), or any person pursuant to
Section 305(2), and in accordance with the conditions
specified in Section 305, of the SFA, or
(iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
Where Securities are subscribed or purchased under
Section 305 by a relevant person which is:
(a) a corporation (which is not an accredited
investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited
investor) whose sole purpose is to hold investments and each
beneficiary of the trust is an individual who is an accredited
investor,
securities (as defined in Section 239(1) of the SFA) of
that corporation or the beneficiaries rights and interest
(howsoever described) in that trust shall not be transferred
within six months after that corporation or that trust has
acquired the Securities pursuant to an offer made under
Section 305 except:
(1) to an institutional investor or to a relevant
person defined in Section 305(5) of the SFA, or to any
person arising from an offer referred to in Section 275(1A)
or Section 305A(3)(i)(B) of the SFA;
(2) where no consideration is or will be given for
the transfer;
(3) where the transfer is by operation of law; or
(4) as specified in Section 305A(5) of the SFA.
NOTICE TO
PROSPECTIVE INVESTORS IN SWITZERLAND
The shares may not be publicly offered, distributed or
re-distributed on a professional basis in or from Switzerland
and neither this document nor any other solicitation for
investments in the shares may be communicated or distributed in
Switzerland in any way that could constitute a public offering
within the meaning of Articles 1156/652a of the Swiss Code
of Obligations (CO). This document may not be
copied, reproduced, distributed or passed on to others without
the Offerors prior written consent. This document is not a
prospectus within the meaning of Articles 1156/652a CO and
the shares will not be listed on the SIX Swiss Exchange.
Therefore, this document may not comply with the disclosure
S-45
Notice to
investors
standards of the CO
and/or the
listing rules (including any prospectus schemes) of the SIX
Swiss Exchange. In addition, it cannot be excluded that the
Offeror could qualify as a foreign collective investment scheme
pursuant to Article 119 para. 2 Swiss Federal Act on
Collective Investment Schemes (CISA). The shares
will not be licensed for public distribution in and from
Switzerland. Therefore, the shares may only be offered and sold
to so-called qualified investors in accordance with
the private placement exemptions pursuant to applicable Swiss
law (in particular, Article 10 para. 3 CISA and
Article 6 of the implementing ordinance to the CISA). The
Offeror has not been licensed and is not subject to the
supervision of the Swiss Financial Market Supervisory Authority
(FINMA). Therefore, investors in the shares do not
benefit from the specific investor protection provided by CISA
and the supervision of the FINMA.
NOTICE TO
PROSPECTIVE INVESTORS IN THE DUBAI INTERNATIONAL FINANCIAL
CENTRE
This prospectus relates to an Exempt Offer in accordance with
the Offered Securities Rules of the Dubai Financial Services
Authority (DFSA). This prospectus is intended for
distribution only to persons of a type specified in the Offered
Securities Rules of the DFSA. It must not be delivered to, or
relied on by, any other person. The DFSA has no responsibility
for reviewing or verifying any documents in connection with
Exempt Offers. The DFSA has not approved this prospectus nor
taken steps to verify the information set forth herein and has
no responsibility for the prospectus. The securities to which
this prospectus relates may be illiquid
and/or
subject to restrictions on their resale. Prospective purchasers
of the securities offered should conduct their own due diligence
on the securities. If you do not understand the contents of this
prospectus you should consult an authorized financial advisor.
S-46
Certain legal matters regarding the shares of common stock
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.
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedules included in our Annual Report on
Form 10-K
for the year ended December 31, 2010, and the effectiveness
of our internal control over financial reporting as of
December 31, 2010, included in our Annual Report on
Form 10-K
for the year ended December 31, 2010, 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.
The consolidated financial statements of
FC-GEN
Acquisition Holding, LLC and subsidiaries (the
company) (formerly FC-GEN Acquisition, Inc. and
subsidiaries) (Successor) as of December 31,
2009 and 2008, and for the years ended December 31, 2009
and 2008 and for the period from July 14, 2007 to
December 31, 2007 (Successor Periods) and the
consolidated financial statements of Genesis HealthCare
Corporation and subsidiaries (Predecessor) for the
period from January 1, 2007 to July 13, 2007
(Predecessor Periods), have been incorporated by
reference herein in reliance upon the report of KPMG LLP,
independent auditors, incorporated by reference herein, and upon
the authority of said firm as experts in accounting and
auditing. KPMG LLPs report on the December 31, 2009
consolidated financial statements contains explanatory
paragraphs that state: effective July 14, 2007, FC-GEN
Acquisition, Inc. acquired all of the outstanding stock of
Genesis HealthCare Corporation in a business combination
accounted for as a purchase (the Merger). As a
result of the Merger, the consolidated financial information for
the periods after the Merger is presented on a different cost
basis than that for the periods before the Merger and,
therefore, is not comparable; the company has changed its method
of accounting for uncertainty in income taxes on January 1,
2009 due to the adoption of Accounting Standard Codification
Topic 740, Income Taxes; the company has changed its
method of accounting for noncontrolling interests on
January 1, 2009 due to the adoption of Accounting Standard
Codification Topic 810, Consolidation; and the company
has changed its method of accounting for fair value measurements
for recurring financial assets and liabilities on
January 1, 2008 and for nonfinancial assets and liabilities
that are not required or permitted to be measured at fair value
on a recurring basis on January 1, 2009 due to the adoption
of Accounting Standard Codification Topic 820, Fair Value
Measurements.
S-47
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 this
prospectus supplement. 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. 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
supplement;
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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
supplement.
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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, 2010;
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Current Reports on
Form 8-K
filed on January 11, 2011 (including the description
therein of our 6% Series H Cumulative Convertible and
Redeemable Preferred Stock) and February 28, 2011 (except
that the information furnished pursuant to Item 7.01 of
Form 8-K
and the exhibits relating to such information are not
incorporated into this prospectus supplement);
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Ø
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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; and
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S-48
Where you can
find more information
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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; 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.
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This prospectus supplement and the accompanying prospectus
summarizes material provisions of contracts and other documents
to which we refer. Since this prospectus supplement and the
accompanying 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 supplement and the accompanying prospectus a
free copy, without exhibits, of any or all documents
incorporated by reference into this prospectus supplement and
the accompanying prospectus. You may direct such requests to:
Erin C. Ibele
Senior Vice PresidentAdministration and Corporate Secretary
Health Care REIT, Inc.
4500 Dorr Street
Toledo, Ohio 43615
(419) 247-2800
S-49
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.
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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.
18
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.
19
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.
20
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.
23
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.
24
25,000,000 Shares
Common
Stock
PROSPECTUS SUPPLEMENT
,
2011
UBS
Investment Bank
BofA
Merrill Lynch
Barclays
Capital
Deutsche
Bank Securities
J.P. Morgan
Wells
Fargo Securities
KeyBanc
Capital Markets