SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 23, 1997
HEALTH CARE PROPERTY INVESTORS, INC.
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(Exact name of registrant as specified in its charter)
Maryland 1-8895 33-0091377
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation Identification No.)
10990 Wilshire Boulevard, Suite 1200, Los Angeles, California 90024
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(Address of Principal Executive Offices) (Zip Code)
(310) 473-1990
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(Registrant's telephone number, including area code)
Item 5. Other Events.
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PREFERRED STOCK OFFERING
On June 18, 1997, Health Care Property Investors, Inc. (the "Company")
filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (File No. 333-29485) (the "Registration
Statement"), as amended by Amendment No. 1 to the Registration Statement filed
with the Commission on June 26, 1997, relating to the registration under the
Securities Act of 1933, as amended, of up to $385,000,000 aggregate offering
price of common stock, par value $1.00 per share, preferred stock, par value
$1.00 per share, and/or unsecured debt securities of the Company, which
Registration Statement was declared effective on June 27, 1997.
On September 23, 1997, the Company entered into a purchase agreement (the
"Purchase Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Morgan Stanley & Co. Incorporated (collectively, the
"Underwriters"), pursuant to which the Company agreed to issue and sell up to
2,760,000 shares of the Company's 7-7/8% Series A Cumulative Redeemable
Preferred Stock (the "Preferred Shares"). Each of the Purchase Agreement, the
Articles Supplementary establishing the terms of the Preferred Shares, an
opinion with respect to the legality of the Preferred Shares and an opinion with
respect to tax matters is attached hereto as an Exhibit.
RECENT HEALTH CARE LEGISLATION
On August 5, 1997, President Clinton signed into law the Balanced Budget
Act of 1997, which adopted a variety of changes to the Medicare and Medicaid
programs which may have an effect upon the revenues of the operators of
properties owned by the Company or entities to whom the Company provides
mortgage loans. These changes, which will be implemented at various times,
include (i) the adoption of the Medicare+Choice program, which expands the
Medicare beneficiaries' choices to include traditional Medicare fee-for-service,
private fee-for-service, medical savings accounts, various managed care plans,
and provider sponsored organizations, among others, (ii) the expansion and
restriction of reimbursement for various Medicare benefits, (iii) the freeze in
hospital rates in 1998 and more limited annual increases in hospital rates for
1999-2002, (iv) the adoption of a prospective pay system for skilled nursing
facilities, home health agencies, hospital outpatient departments, and
rehabilitation hospitals, (v) the repeal of the Boren amendment in Medicaid so
that states have the exclusive authority to determine provider rates and
providers have no federal right of action, (vi) the reduction in Medicare
disproportionate share payments to hospitals, and (vii) the removal of the
$150,000,000 limit on tax-exempt bonds for nonacute hospital capital projects.
In addition, the Balanced Budged Act of 1997 strengthens the anti-fraud and
abuse laws to provide for stiffer penalties for fraud and abuse violations.
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RECENT TAX LEGISLATION
On August 5, 1997, President Clinton signed into law the Taxpayer Relief
Act of 1997 (H.R. 2014), which will have the effect of modifying certain real
estate investment trust-related provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), for tax years of the Company beginning on or after
January 1, 1998. Some of the potentially significant changes contained in this
legislation include: (i) the rule disqualifying a REIT for any year in which it
fails to comply with certain regulations requiring the REIT to monitor its stock
ownership is replaced with an intermediate financial penalty; (ii) the rule
disqualifying a REIT in any year that it is "closely held" does not apply if
during such year the REIT complied with certain regulations which require the
REIT to monitor its stock ownership, and the REIT did not know or have reason to
know that it was closely held; (iii) a REIT is permitted to render a de minimis
amount of impermissible services to tenants in connection with the management of
property and still treat amounts received with respect to such property (other
than certain amounts relating to such services) as qualified rent; (iv) the
rules regarding attribution to partnerships for purposes of defining qualified
rent and independent contractors are modified so that attribution occurs only
when a partner owns a 25% or greater interest in the partnership; (v) the 30%
gross income test is repealed; (vi) any corporation wholly-owned by a REIT is
permitted to be treated as a qualified REIT subsidiary regardless of whether
such subsidiary has always been owned by the REIT; (vii) certain rules regarding
the taxation of net long-term capital gains received by REITs are modified;
(viii) the rules relating to foreclosure property are altered; (ix) the class of
excess noncash items for purposes of the REIT distribution requirements is
expanded; (x) property that is involuntarily converted is excluded from the
prohibited transaction rules; (xi) the rules regarding the treatment of hedges
are modified, and (xii) certain other Code provisions relating to REITs are
amended. Some or all of the provisions could affect both the Company's
operations and its ability to maintain its REIT status for its taxable years
beginning in 1998.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
1.1 Purchase Agreement, dated September 23, 1997, by and among the
Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated.
3.1 Articles Supplementary establishing the terms of the 7-7/8%
Series A Cumulative Redeemable Preferred Stock (incorporated by reference
herein from the Company's Form 8-A (File No. 001-08895 ) filed with the
Commission on September 25, 1997).
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5.1 Opinion re legality of 7-7/8% Series A Cumulative Redeemable
Preferred Stock.
8.1 Opinion re tax matters.
23.1 Consent of Ballard Spahr Andrews & Ingersoll (included as part of
Exhibit 5.1).
23.2 Consent of Latham & Watkins (included as part of Exhibit 8.1).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereto duly authorized.
Dated: September 25, 1997
HEALTH CARE PROPERTY INVESTORS, INC.
By: /s/ Edward J. Henning
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Name: Edward J. Henning
Title: Senior Vice President,
General Counsel and
Corporate Secretary
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EXHIBIT INDEX
1.1 Purchase Agreement, dated September 23, 1997, by and among the
Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Morgan Stanley & Co. Incorporated.
3.1 Articles Supplementary establishing the terms of the 7-7/8% Series A
Cumulative Redeemable Preferred Stock (incorporated by reference
herein from the Company's Form 8-A (File No. 001-08895) filed with the
Commission on September 25, 1997).
5.1 Opinion re legality of 7-7/8% Series A Cumulative Redeemable Preferred
Stock.
8.1 Opinion re tax matters.
23.1 Consent of Ballard Spahr Andrews & Ingersoll (included as part of
Exhibit 5.1).
23.2 Consent of Latham & Watkins (included as part of Exhibit 8.1).