Final terms and conditions |
March 10, 2010 |
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Offering Size:
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$342,394,000 | |
The Security:
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3.00% Convertible Senior Notes due 2029 | |
Issuer:
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Health Care REIT, Inc. (NYSE: HCN) | |
Joint Book-Runners:
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UBS Investment Bank, J.P. Morgan Securities Inc. | |
Coupon:
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3.00% per annum, payable semi-annually in arrears on June 1 and December 1 each year, beginning on June 1, 2010 | |
Conversion Premium:
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Approximately 17.5% | |
Initial Conversion Rate:
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19.5064 shares of common stock per $1,000 principal amount of notes | |
Initial Conversion Price:
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Approximately $51.27 | |
Maturity:
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December 1, 2029 | |
Convertible into:
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Cash and common stock of HCN (see Payment upon Conversion below) | |
Call Protection:
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Non-callable prior to December 1, 2014 except to maintain REIT status. Callable on or after December 1, 2014 at par plus accrued and unpaid interest, payable in cash | |
Investor Put Options:
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Puts on December 1, 2014, December 1, 2019, December 1, 2024 at par plus accrued and unpaid interest, payable in cash | |
Conversion Rights:
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(i) Prior to maturity or earlier redemption or repurchase, holders may surrender their notes for conversion during any calendar quarter
after the calendar quarter ending June 30, 2010, if the closing sale price of HCN common stock for each of 20 or more trading days in a
period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120% of the
conversion price in effect on the last trading day of the immediately preceding calendar quarter |
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(ii) Prior to maturity or earlier redemption or repurchase, during the five consecutive business days immediately after any five
consecutive trading day period (the note measurement period) in which the average trading price per $1,000 principal amount of notes
was equal to or less than 97% of the average conversion value of the notes during the note measurement period |
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(iii) Prior to maturity, if HCN calls the notes for redemption |
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(iv) Prior to maturity, upon occurrence of certain corporate transactions |
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(v) The
notes may be surrendered for conversion at any time from, and including, November 1, 2014 to, and including, December 1, 2014 and
at any time from, and including, November 1, 2029 until the close of business on the business day immediately preceding December 1, 2029
or earlier redemption or repurchase. |
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Payment upon Conversion:
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Upon conversion, holders will receive, per $1,000 principal amount being converted, a settlement amount that is equal to the sum of the
daily settlement amounts for each of the 20 trading days during the cash settlement averaging period. The cash settlement averaging
period with respect to any note means (i) for any note converted at any time on or after the 23rd scheduled trading day prior
to the maturity date, the 20 consecutive trading days beginning on, and including the 20th scheduled trading day prior to
maturity and (ii) in all other instances, the 20 consecutive trading days beginning on, and including, the third trading day following
the conversion date. |
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The daily settlement amount for each of the 20 trading days during the cash settlement averaging period consists of (a) cash equal to
the lesser of $50 and the daily conversion value; and (b) to the extent the daily conversion value exceeds $50, a number of shares
equal to the excess of the daily conversion value over $50 divided by the volume-weighted average price (as defined) (vwap) per share
of HCN common stock on that trading day. |
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The daily conversion value on a given trading day means 1/20 of the product of the applicable conversion rate and the vwap per share of
HCN common stock on that trading day. |
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Dividend Protection and Anti-Dilution Adjustments: |
Dividend protectionAdjustment upon quarterly cash distributions in excess of $0.68 per share to holders of HCN common stock. Anti-dilution protection also covers stock dividends, subdivisions, combinations and reclassifications of common stock, distributions of certain rights and warrants, and certain tender and exchange offers, all as described in the preliminary prospectus supplement. |
Conversion Rate Adjustment upon a Make-Whole Fundamental Change: |
If a make-whole fundamental change (as defined in the preliminary prospectus supplement) occurs prior to December 1, 2014 and a holder elects to
convert its notes in connection with such a make-whole fundamental change, Health Care REIT will increase the applicable conversion rate
for the notes surrendered for conversion by a number of additional shares of HCN common stock. If the transaction provides the holders of
HCN common stock with the right to receive more than a single type of consideration determined based in part upon any form of stockholder
election, the holders of the notes, treated as a single class, will be given a reasonable opportunity to elect the form of such
consideration. |
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Make-Whole
Table |
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The following table sets forth the number of additional shares per $1,000 principal amount of notes that will be added to the conversion rate applicable to notes that are converted during the make-whole conversion period. The Applicable Prices set forth in the first column of the table below, and the number of additional shares, are subject to adjustment as described in the preliminary prospectus supplement for the notes. | ||||||||||||||||||||||||||
Number of additional shares (per $1,000 principal amount of notes) |
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Effective Date | ||||||||||||||||||||||||||
Applicable Price |
March 15, 2010 | December 1, 2010 | December 1, 2011 | December 1, 2012 | December 1, 2013 | December 1, 2014 | ||||||||||||||||||||
$43.63 |
3.4136 | 3.4136 | 3.4136 | 3.4136 | 3.4136 | 3.4136 | ||||||||||||||||||||
$45.00 |
3.4136 | 3.4020 | 3.2095 | 3.0997 | 2.9517 | 2.7158 | ||||||||||||||||||||
$50.00 |
2.3196 | 2.1759 | 1.9871 | 1.8338 | 1.5819 | 0.4936 | ||||||||||||||||||||
$55.00 |
1.4613 | 1.3443 | 1.1766 | 1.0208 | 0.7619 | 0.0000 | ||||||||||||||||||||
$60.00 |
0.8781 | 0.7886 | 0.6517 | 0.5193 | 0.3158 | 0.0000 | ||||||||||||||||||||
$65.00 |
0.4908 | 0.4276 | 0.3263 | 0.2313 | 0.1063 | 0.0000 | ||||||||||||||||||||
$70.00 |
0.2450 | 0.2064 | 0.1410 | 0.0854 | 0.0261 | 0.0000 | ||||||||||||||||||||
$75.00 |
0.1036 | 0.0844 | 0.0494 | 0.0236 | 0.0030 | 0.0000 | ||||||||||||||||||||
$80.00 |
0.0338 | 0.0269 | 0.0121 | 0.0032 | 0.0000 | 0.0000 | ||||||||||||||||||||
$85.00 |
0.0068 | 0.0052 | 0.0008 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
$90.00 |
0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
$95.00 |
0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
$100.00 |
0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
$105.00 |
0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
$110.00 |
0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
$115.00 |
0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
$120.00 |
0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||
If the Applicable Price is between two Applicable Prices in the table or the Effective Date is between two Effective Dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the two Applicable Prices, or for the two Effective Dates based on a 365-day year, as applicable. In addition, if the actual Applicable Price is greater than $120.00 per share (subject to adjustment), the conversion rate will not be increased in connection with that make-whole fundamental change. If the actual Applicable Price is less than $43.63 per share (subject to adjustment), the conversion rate will not be increased in connection with that make-whole fundamental change. HCN will not increase the conversion rate pursuant to the Make-Whole Table set forth above to the extent that the increase will cause the conversion rate to exceed 22.9200 shares per $1,000 principal amount of notes. HCN will adjust this maximum conversion rate in the same manner in which, and for the same events for which, HCN adjusts the conversion rate. |
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Put upon a Fundamental Change: |
If a fundamental change (as defined in the preliminary prospectus supplement) occurs, each holder will have the right, at its option, to require HCN to repurchase for cash all or any portion of the holders notes at a price equal to 100% of the principal amount of the notes, plus any accrued and unpaid interest. | |||||||||||||||||||||||||
Use of Proceeds:
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Net proceeds to HCN from this offering are expected to be approximately $335 million. HCN intends to use the net proceeds from this offering to repurchase $129,393,000 of its 4.75% convertible senior notes due 2026 and $172,725,000 of its 4.75% convertible senior notes due 2027. | |||||||||||||||||||||||||
Underwriting Discounts
and Commissions:
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2.00% per convertible note |
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Capitalization
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The following table sets forth HCNs capitalization as of December 31, 2009 on a historical basis and as-adjusted to give effect to the sale of $342,394,000 of the notes and the repurchase of $129,393,000 of its 4.75% convertible senior notes due 2026 and $172,725,000 of its 4.75% convertible senior notes due 2027. | |||||||||||||||||||||||||
December 31, 2009 | ||||||||||||||||||||||||||
Actual | As adjusted | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Cash and cash equivalents |
$ | 35,476 | $ | 28,128 | ||||||||||||||||||||||
Debt: |
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Borrowings under unsecured line of credit(1) |
140,000 | 140,000 | ||||||||||||||||||||||||
Senior notes due 2012 |
76,853 | 76,853 | ||||||||||||||||||||||||
Senior notes due 2013 |
300,000 | 300,000 | ||||||||||||||||||||||||
Senior notes due 2015 |
250,000 | 250,000 | ||||||||||||||||||||||||
Senior notes due 2016 |
300,000 | 300,000 | ||||||||||||||||||||||||
4.75% convertible senior notes due 2026(2) |
340,000 | 210,607 | ||||||||||||||||||||||||
4.75% convertible senior notes due 2027(2) |
395,000 | 222,275 | ||||||||||||||||||||||||
3.00% convertible senior notes due 2029(2) |
0 | 342,394 | ||||||||||||||||||||||||
Secured debt(3) |
623,046 | 623,046 | ||||||||||||||||||||||||
Unamortized premiums/discounts and fair value adjustments |
(10,877 | ) | (33,637 | ) | ||||||||||||||||||||||
Total debt |
2,414,022 | 2,431,538 | ||||||||||||||||||||||||
Stockholders equity: |
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Preferred Stock, $1.00 par value;
authorized50,000,000 shares |
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Series D Cumulative Redeemable Preferred Stock;
4,000,000 shares issued and outstanding |
100,000 | 100,000 | ||||||||||||||||||||||||
Series E Cumulative Convertible and Redeemable
Preferred Stock; 74,380 shares issued and
outstanding |
1,860 | 1,860 | ||||||||||||||||||||||||
Series F Cumulative Redeemable Preferred Stock;
7,000,000 shares issued and outstanding |
175,000 | 175,000 | ||||||||||||||||||||||||
Series G Cumulative Convertible Preferred Stock;
399,713 shares issued and outstanding |
11,823 | 11,823 | ||||||||||||||||||||||||
Common Stock, $1.00 par value;
authorized225,000,000 shares; 123,583,242 shares
issued and 123,385,317 shares outstanding(4)
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123,385 | 123,385 | ||||||||||||||||||||||||
Capital in excess of par value |
3,900,666 | 3,898,110 | ||||||||||||||||||||||||
Treasury stock |
(7,619 | ) | (7,619 | ) | ||||||||||||||||||||||
Cumulative net income |
1,547,669 | 1,529,314 | ||||||||||||||||||||||||
Cumulative dividends |
(2,057,658 | ) | (2,057,658 | ) | ||||||||||||||||||||||
Accumulated other comprehensive income |
(2,891 | ) | (2,891 | ) | ||||||||||||||||||||||
Other equity |
4,804 | 4,804 | ||||||||||||||||||||||||
Total Health Care REIT, Inc. stockholders equity |
3,797,039 | 3,776,128 | ||||||||||||||||||||||||
Noncontrolling interests |
10,412 | 10,412 | ||||||||||||||||||||||||
Total equity |
3,807,451 | 3,786,540 | ||||||||||||||||||||||||
Total capitalization |
$ | 6,221,473 | $ | 6,218,078 | ||||||||||||||||||||||
(1) $425 million was outstanding under HCNs unsecured line of credit at March 9, 2010. |
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(2) The amounts shown do not reflect original issue discount pursuant to FASB Staff Position No. APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement). Under FSP APB 14-1, an
entity must separately account for the liability and equity components of the convertible debt instruments (such as the notes) that may
be settled entirely or partially in cash upon conversion in a manner that reflects the issuers economic interest cost. The effect of
FSP APB 14-1 on the accounting for the convertible senior notes is that the equity component is included in the capital in excess of par
value section of stockholders equity on HCNs 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 notes. The original issue discount for the notes is included in Unamortized premiums/discounts and fair value adjustments.
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(3) Excludes: (i) $106 million of secured debt assumed in connection with the Aurora Health Care transaction; and (ii) $320
million of secured debt assumed by the joint venture between HCN and Forest City Enterprises, of which HCN owns a 49% interest. |
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(4) Excludes: (i) 1,062,220 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) 6,526,797 shares of common stock reserved for issuance under HCNs dividend reinvestment and stock purchase
plan; (iii) 56,935 shares of common stock reserved for issuance that relate to the Series E Cumulative Convertible and Redeemable
Preferred Stock; (iv) 286,136 shares of common stock reserved for issuance that relate to the Series G Cumulative Convertible Preferred
Stock; (v) 7,148,160 shares of common stock reserved for issuance that relate to the $340 million aggregate principal amount of 4.75%
convertible senior notes due 2026; and (vi) 7,919,039 shares of common stock reserved for issuance that relate to the $395 million
aggregate principal amount of 4.75% convertible senior notes due 2027. |
Ranking:
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Senior Unsecured | |
Listing:
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The notes will not be listed on any securities exchange or quoted in any automated quotation system. | |
Form:
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Registered Global Securities | |
Denomination:
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$1,000 and integral multiples thereof | |
Settlement:
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DTC | |
Pricing Date:
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March 10, 2010, before market open | |
Trade Date:
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March 10, 2010 | |
Settlement Date:
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March 15, 2010 | |
Security Code:
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CUSIP: 42217K AR7 ISIN: US42217KAR77 |