Exhibit 99.6
ADVISOR FINANCIAL STATEMENTS
As of June 30, 2006 and December 31, 2005 and for the six month periods ended June 30, 2006 and 2005: |
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Unaudited Condensed Consolidated Balance Sheets | 2 |
Unaudited Condensed Consolidated Statements of Income | 3 |
Unaudited Condensed Consolidated Statements of Stockholders’ Equity | 4 |
Unaudited Condensed Consolidated Statements of Cash Flows | 5 |
Notes to Unaudited Condensed Consolidated Financial Statements | 6 |
CNL RETIREMENT CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
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| June 30, |
| December 31, |
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| 2006 |
| 2005 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 6,548,701 |
| $ | 1,492,063 |
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Due from related parties |
| 572,719 |
| 2,129,615 |
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Prepaid expenses and other assets |
| 84,981 |
| 70,057 |
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Total current assets |
| 7,206,401 |
| 3,691,735 |
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Property and equipment, net |
| 3,470,734 |
| 2,466,460 |
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Other assets, at cost |
| 247,526 |
| 245,137 |
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| $ | 10,924,661 |
| $ | 6,403,332 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
| $ | 2,479,246 |
| $ | 3,678,057 |
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Due to related parties |
| 5,706,788 |
| — |
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Total current liabilities |
| 8,186,034 |
| 3,678,057 |
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Deferred rent expense |
| 36,295 |
| 202,133 |
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Total liabilities and deferred expense |
| 8,222,329 |
| 3,880,190 |
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Stockholders’ equity |
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Class A common stock; $1 par value per share; 10,000 shares authorized; 1,000 shares issued and outstanding |
| 1,000 |
| 1,000 |
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Class B common stock; $1 par value per share; 5,000 shares authorized; 1,027 shares issued and outstanding |
| 1,027 |
| 1,027 |
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Additional paid-in capital |
| 2,521,115 |
| 2,521,115 |
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Retained earnings |
| 179,190 |
| — |
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Total stockholders’ equity |
| 2,702,332 |
| 2,523,142 |
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Total liabilities and stockholders’ equity |
| $ | 10,924,661 |
| $ | 6,403,332 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
CNL RETIREMENT CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended June 30, 2006 and 2005
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| Six Months Ended |
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| June 30, |
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| 2006 |
| 2005 |
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Revenue |
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Acquisition fees |
| $ | 2,598,793 |
| $ | 4,637,010 |
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Debt acquisition fees |
| 4,327,935 |
| 11,101,578 |
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Management fees |
| 10,408,337 |
| 9,308,906 |
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Interest and other income |
| 1,529,425 |
| 1,169,814 |
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| 18,864,490 |
| 26,217,308 |
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Expenses |
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Corporate services provided by related parties |
| 866,264 |
| 2,897,191 |
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Salaries and benefits |
| 6,491,463 |
| 4,797,668 |
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General and administrative |
| 2,061,920 |
| 1,994,579 |
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Rent |
| 705,758 |
| 448,181 |
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Depreciation and amortization |
| 406,152 |
| 295,469 |
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| 10,531,557 |
| 10,433,088 |
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Income before provision for income taxes |
| 8,332,933 |
| 15,784,220 |
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Provision for income taxes |
| (3,187,347 | ) | (5,939,602 | ) | ||
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Net income |
| $ | 5,145,586 |
| $ | 9,844,618 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CNL RETIREMENT CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Six Months Ended June 30, 2006
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| Class A |
| Class B |
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| Common Stock |
| Common Stock |
| Additional |
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| Shares |
| Par |
| Shares |
| Par |
| Paid-In |
| Retained |
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| Outstanding |
| Value |
| Outstanding |
| Value |
| Capital |
| Earnings |
| Total |
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Balance at December 31, 2005 |
| 1,000 |
| $ | 1 ,000 |
| 1,027 |
| $ | 1,027 |
| $ | 2,521,115 |
| $ | — |
| $ | 2,523,142 |
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Dividends paid |
| — |
| — |
| — |
| — |
| — |
| (4,966,396 | ) | (4,966,396 | ) | |||||
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Net income |
| — |
| — |
| — |
| — |
| — |
| 5,145,586 |
| 5,145,586 |
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Balance at June 30, 2006 |
| 1,000 |
| $ | 1,000 |
| 1,027 |
| $ | 1,027 |
| $ | 2,521,115 |
| $ | 179,190 |
| $ | 2,702,332 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CNL RETIREMENT CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2006 and 2005
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| Six Months Ended |
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| 2006 |
| 2005 |
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Cash flows from operating activities: |
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Net income |
| $ | 5,145,586 |
| $ | 9,844,618 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
| 406,152 |
| 295,469 |
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Loss on retired assets |
| 212,191 |
| — |
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Changes in operating assets and liabilities: |
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Due from related parties |
| 4,565,313 |
| 432,103 |
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Prepaid expenses and other assets |
| (17,313 | ) | 44,036 |
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Accounts payable and accrued expenses |
| (604,170 | ) | (1,579,378 | ) | ||
Due to related parties |
| 2,103,730 |
| (749,485 | ) | ||
Deferred rent expense |
| (165,838 | ) | 18,950 |
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Net cash provided by operating activities |
| 11,645,651 |
| 8,306,313 |
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Cash flows from investing activities: |
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Purchases of property and equipment |
| (2,138,246 | ) | (585,331 | ) | ||
Proceeds from sale of assets |
| 515,629 |
| — |
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Net cash used in investing activities |
| (1,622,617 | ) | (585,331 | ) | ||
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Cash flow from financing activities: |
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Dividends paid to stockholders |
| (4,966,396 | ) | (12,937,569 | ) | ||
Net cash used in financing activities |
| (4,966,396 | ) | (12,937,569 | ) | ||
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Net increase (decrease) in cash and cash equivalents |
| 5,056,638 |
| (5,216,587 | ) | ||
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Cash and cash equivalents at beginning of period |
| 1,492,063 |
| 5,235,669 |
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Cash and cash equivalents at end of period |
| $ | 6,548,701 |
| $ | 19,082 |
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Supplemental disclosure of cash flow information: |
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Cash paid during the year for income taxes |
| $ | 3,187,347 |
| $ | 5,939,602 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
CNL RETIREMENT CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 And 2005
1. Organization and Nature of Business
CNL Retirement Corp. (the “Company”) and its wholly owned subsidiary, CNL Retirement Development Company, provide management, advisory and administrative services and assist in identifying and acquiring seniors’ housing and health care-related properties and obtaining financing for CNL Retirement Properties, Inc. and it’s subsidiaries (“CRP”).
2. Interim Period Financial Statements
The interim statements have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The Company’s management believes the disclosures made are adequate to make the interim financial information presented not misleading.
In the opinion of management, the accompanying interim statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2006 and the results of operations and cash flows for the six months ended June 30, 2006 and 2005. Interim results are not necessarily indicative of fiscal year performance because of seasonal and short-term variations.
Amounts included in the financial statements as of December 31, 2005, have been derived from the audited financial statements of the Company for the year then ended.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of CNL Retirement Corp. for the year ended December 31, 2005. The accompanying unaudited condensed consolidated financial statements include the accounts of CNL Retirement Corp. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated.
3. Related Party Transactions
One of the principal stockholders of the Company’s parent is a stockholder, director and officer of CRP and is also an officer and director of the Company. Additionally, the President of the Company’s parent is an officer and director of the Company as well as an officer and director of CRP.
The Company’s fee revenue is primarily earned for services provided to CRP. In addition, the Company provides accounting and administrative services to CRP and other related companies for which it receives personnel reimbursements. For the six months ended June 30, 2006 and 2005 such reimbursements amounted to $1,491,559 and $1,134,374, respectively and are included in interest and other income.
6
CNL RETIREMENT CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 And 2005
Amounts due from related parties at June 30, 2006 and December 31, 2005 consist of the following:
| June 30 |
| December 31 |
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| 2006 |
| 2005 |
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Acquisition fees |
| $ | (45,948 | ) | $ | 309,191 |
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Other |
| 618,667 |
| 1,820,424 |
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| $ | 572,719 |
| $ | 2,129,615 |
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Amounts due to related parties at June 30, 2006 and December 31, 2005 consist of the following:
| June 30 |
| December 31 |
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| 2006 |
| 2005 |
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Amounts paid by Parent on behalf of the Company and accounting and administrative services |
| $ | 3,008,416 |
| $ | — |
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Amounts due for furniture deposits paid by Parent |
| 2,698,372 |
| — |
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| $ | 5,706,788 |
| $ | — |
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Amounts due are unsecured, non-interest bearing and due on demand.
The Company maintains bank accounts in a bank in which certain officers and directors serve as directors and are stockholders. The amounts deposited with this bank were $6,548,701 and $1,492,063 as of June 30, 2006 and December 31, 2005, respectively.
4. Merger Agreement
On May 1, 2006, CRP entered into a definitive merger agreement with Health Care Property Investors, Inc. (“HCP”), under which a wholly owned subsidiary of HCP will merger with CRP. In connection with the merger with CRP, HCP has also entered into a definitive merger agreement with respect to the Company, pursuant to which all outstanding shares of the Company’s capital stock will be converted into the right to receive in the aggregate 4,378,923 shares of HCP common stock. Consummation of the merger with CRP is subject to several conditions, including the registration with the SEC of the HCP shares to be issued as consideration and the approval of the merger by the CRP stockholders. On August 4, 2006, HCP’s registration statement on Form S-4 (No. 333-135569) related to the HCP shares of common stock to be issued to stockholders of CRP was declared effective by the SEC. The special meeting of stockholders of CRP to consider and approve the merger of CRP with a subsidiary of HCP is scheduled for September 26, 2006. The proposed merger with CRP and the proposed merger with the Company are also conditioned upon the consummation of the other. The merger transaction is expected to be completed in October 2006. There can be no assurances that these transactions will be consummated.
5. Subsequent Events
In September of 2006, the Company entered into agreements with certain executives that require payments of up to $6,000,000 in connection with the merger with HCP.
7
