HRPT Properties Trust (NYSE: HRP) today announced the following
corporate actions:
Name Change:
Effective July 1, 2010, HRP will change its name to
“CommonWealth REIT”. On and after that date, the common shares of
HRP will be traded on the New York Stock Exchange, or NYSE, under a
new symbol “CWH”.
When it completed its initial public offering in 1986, HRP was
known as “Health and Rehabilitation Properties Trust” and it
primarily owned healthcare rehabilitation facilities. In 1994, HRP
expanded its investment focus to include various senior housing
facilities, and its name was changed to “Health and Retirement
Properties Trust”. In 1998, HRP changed its investment focus to
include commercial office properties, and the present name of “HRPT
Properties Trust” was adopted. Today, HRP is primarily invested in
office and industrial properties and no longer makes investments in
healthcare properties. The Board of Trustees determined that
adopting the new name “CommonWealth REIT” may be an appropriate way
to avoid any lingering confusion that the company may be a
healthcare focused real estate investment trust, or REIT.
As of March 31, 2010, HRP owned 518 properties with
approximately 66.8 million square feet in over 60 markets in 34
states and Washington, DC, representing total investments of $6.6
billion. For the three months ended March 31, 2010, 41.0% of the
company’s property net operating income (“NOI”) came from suburban
office properties, 37.3% of NOI came from central business
district, or CBD, office properties and 21.7% of NOI came from
industrial and other property investments.
Reverse Share Split:
HRP also announced that its Board has determined to implement a
common share combination by which the number of its common shares
outstanding will be reduced by three quarters: for every four
existing common shares owned, shareholders will receive one new
common share. Fractional shares will be issued where
appropriate.
At the company’s shareholders’ 2009 annual meeting, shareholders
voted to amend HRP’s declaration of trust to permit the Board to
implement a share combination in the discretion of the Board. After
studying this matter, the Board has concluded that a one for four
share combination is desirable because it may reduce the
transaction costs for shareholders who pay brokerage commissions on
the basis of the number of shares traded.
The share combination will be effective on July 1, 2010. On and
after that date, shares traded on the NYSE will be the new combined
shares and will trade under the new symbol “CWH”.
Dividend Increase:
HRP currently pays a regular quarterly dividend of $0.12/share
($0.48/share per year). After the reverse share split, HRP
currently expects to pay a regular quarterly dividend of
$0.50/share ($2.00/share per year).
The next regular quarterly dividend of $0.50/share with respect
to HRP’s performance during the quarter ended June 30, 2010 is
expected to be declared during July 2010. That dividend will be
paid to shareholders of record on a later date to be announced when
the dividend is declared.
Property Sales:
HRP has agreed to sell 15 properties to Government Properties
Income Trust (NYSE: GOV) for $231 million. All of these properties
are majority leased to government tenants.
The sales of properties announced today are expected to be
completed in phases between today and March 31, 2011. When all of
these sales are completed, HRP expects to recognize net capital
gains totaling approximately $20 million (which amount does not
include additional capital gains of approximately $10 million which
are deferred under generally accepted accounting principles, or
GAAP, because of HRP’s share ownership of GOV). Also, the cash NOI
which HRP currently receives from these properties is about $19.7
million (excluding straight line rents which are recognized under
GAAP), and the sales prices represent an approximately 8.5%
capitalization rate of that cash NOI.
GOV was formerly a 100% owned subsidiary of HRP that is now a
separately traded REIT. All of the properties to be sold to GOV
were properties for which HRP had previously granted GOV rights of
first refusal in the event that HRP determined to offer the
properties for sale. After the sales of these properties, the U.S.
Government will continue to be a large tenant for HRP. Also, HRP
currently owns 9,950,000 common shares of GOV representing
approximately 31.8% of GOV’s total common shares outstanding. In
combination, HRP’s direct rental income from the U.S. Government
and HRP’s pro rata share of GOV’s rental income from the U.S.
Government will be approximately 5.8% of HRP’s combined direct
rental income and its pro rata share of all GOV’s rental
income.
Each of HRP and GOV are managed by Reit Management &
Research LLC (“RMR”). Accordingly, the sales announced today have
been negotiated by special committees of the Boards of HRP and GOV
composed solely of Independent Trustees who are not also Trustees
of the counterparty. Also, the agreed sales prices are within the
ranges of market values determined by an independent third party
appraiser.
Information for Common and
Preferred Shareholders:
Common shareholders who hold in “street name” in their brokerage
accounts do not have to take any action as a result of the name
change or the share combination announced today. Their accounts
will be automatically adjusted to reflect the new company name and
the number of shares owned.
Common shareholders who own their shares in electronically
recorded registered form will have their accounts automatically
adjusted by the transfer agent, Wells Fargo Shareowner Services,
and their changed account information will be shown on their next
account statement.
A letter relating to the name change and reverse split will be
sent to record holders of certificates of common shares after these
actions become effective. Certificated common share record holders
should follow the instructions in that letter to elect to have
their ownership recorded electronically in registered form or to
have new share certificates issued.
Outstanding preferred shares will not be affected by the name
change or the reverse split announced today, except as follows:
- HRP’s Class B Preferred Shares
which currently trade under the symbol “HRP-PB” will trade under
the symbol “CWH-PB” effective on July 1, 2010.
- HRP’s Class C Preferred Shares
which currently trade under the symbol “HRP-PC” will trade under
the symbol “CWH-PC” effective on July 1, 2010.
- HRP’s Class D Convertible
Preferred Shares which currently trade under the symbol “HRP-PD”
will trade under the symbol “CWH-PD” effective on July 1, 2010.
Also, the number of common shares into which each Class D
Convertible Preferred Shares is convertible will be adjusted pro
rata for the common share combination announced above; one Class D
Convertible Preferred Share will become convertible into 0.4808
common shares of CommonWealth REIT effective on July 1, 2010.
Preferred shareholders who own their preferred shares in “street
name” in their brokerage account do not need to take any action.
Their accounts will be automatically adjusted to reflect the new
name.
Preferred shareholders who own their preferred shares in
electronically recorded registered form will have their accounts
automatically adjusted to reflect the new name of CommonWealth REIT
by the transfer agent, U.S. Bank National Association.
A letter relating to the name change and reverse split will be
sent to record holders of certificates of preferred shares after
those actions become effective. Certificated record holders of
preferred shares should follow instructions in that letter to elect
to have their preferred share ownership recorded electronically in
registered form or to have new share certificates issued.
Please note: HRP’s bylaws
currently provide and CommonWealth REIT’s bylaws will continue to
provide that shareholders who desire to make proposals or
nominations of persons to serve as trustees must present copies of
their certificates at the time they make such proposals or
nominations. Accordingly, shareholders who intend to present
proposals or nominations should request share certificates of
CommonWealth REIT.
WARNING REGARDING FORWARD LOOKING
STATEMENTS
THE FOREGOING PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 AND OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS
AND THEIR IMPLICATIONS ARE BASED UPON HRP’S PRESENT BELIEFS AND
EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT
OCCUR FOR VARIOUS REASONS, INCLUDING SOME REASONS WHICH ARE BEYOND
HRP’S CONTROL. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT
THE NEW NAME “COMMONWEALTH REIT” MAY BE AN APPROPRIATE WAY TO AVOID
ANY LINGERING CONFUSION THAT THE COMPANY MAY BE A HEALTHCARE
FOCUSED REIT. HOWEVER, THIS NAME CHANGE ITSELF MAY CAUSE SOME
CONFUSION IN THE MARKET FOR THE COMPANY’S SECURITIES. ALSO, THE
IMPLEMENTATION OF THIS NAME CHANGE WILL CAUSE THE COMPANY TO INCUR
COSTS TO PRINT AND DISTRIBUTE NEW SHARE CERTIFICATES AND OTHERWISE.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THIS NAME CHANGE WILL
BENEFIT SHAREHOLDERS.
- THIS PRESS RELEASE STATES THAT
HRP SHAREHOLDERS VOTED TO AMEND HRP’S DECLARATION OF TRUST TO
PERMIT THE BOARD OF TRUSTEES TO IMPLEMENT A SHARE COMBINATION AND
THAT THE ONE FOR FOUR SHARE COMBINATION MAY REDUCE THE TRANSACTION
COSTS FOR SHAREHOLDERS WHO PAY BROKERAGE COMMISSIONS ON THE BASIS
OF THE NUMBER OF SHARES TRADED. AN IMPLICATION OF THESE STATEMENTS
MAY BE THAT THE SHARE COMBINATION WILL BENEFIT SHAREHOLDERS. IN
FACT, COMBINATIONS OF PUBLICLY TRADED SHARES INTO A LESSER NUMBER
OF SHARES HISTORICALLY HAVE OFTEN RESULTED IN MARKET PRICES WHICH
ARE LESS THAN THE HISTORICAL AGGREGATE MARKET PRICES OF THE
COMBINING SHARES. HRP CAN PROVIDE NO ASSURANCE THAT THE MARKET
PRICE OF ITS COMBINED SHARES WILL EQUAL AT LEAST FOUR TIMES THE
PRICE OF ITS SHARES BEFORE THE COMBINATION OR THAT THE SHARE
COMBINATION WILL BENEFIT SHAREHOLDERS.
- THIS PRESS RELEASE STATES THAT
HRP CURRENTLY EXPECTS TO PAY A REGULAR QUARTERLY DIVIDEND OF
$0.50/SHARE BEGINNING WITH THE DIVIDEND TO BE DECLARED IN JULY
2010. DIVIDENDS ARE DECLARED BY THE BOARD OF TRUSTEES IN ITS
DISCRETION. AMONG THE FACTORS CONSIDERED BY THE BOARD IN SETTING
DIVIDENDS ARE: HISTORICAL AND EXPECTED EARNINGS, FUNDS FROM
OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION; EXPECTED CASH NEEDS
AND FUNDING SOURCES; TAX LAW REQUIREMENTS TO RETAIN REIT STATUS;
COVENANTS IN DEBT AGREEMENTS AND PREFERRED SHARE INDENTURES; AND
VARIOUS OTHER FACTORS, INCLUDING SOME BEYOND HRP’S CONTROL, SUCH AS
MARKET CONDITIONS. IN THE PAST, HRP’S DIVIDEND HAS BEEN REDUCED.
THE RATE AT WHICH FUTURE DIVIDENDS MAY BE PAID IS NOT ASSURED.
FUTURE DIVIDENDS MAY BE PAID AT REDUCED RATES OR EVEN
ELIMINATED.
- THIS PRESS RELEASE STATES THAT
HRP HAS AGREED TO SELL 15 PROPERTIES TO GOV FOR $231 MILLION. THESE
SALES ARE SUBJECT TO VARIOUS CONTRACTUAL CONTINGENCIES TYPICAL OF
LARGE COMMERCIAL PROPERTY TRANSACTIONS. THESE CONTINGENCIES MAY
RESULT IN CANCELLATION OF SOME OR ALL OF THESE SALES OR PRICE
ADJUSTMENTS.
- THIS PRESS RELEASE STATES THAT
THE SALES OF PROPERTIES TO GOV ARE EXPECTED TO BE COMPLETED IN
PHASES BETWEEN TODAY AND MARCH 31, 2011. BECAUSE THE SALE OF EACH
PROPERTY IS SUBJECT TO VARIOUS CONTINGENCIES, SOME OF THESE SALES
MAY BE ACCELERATED, SOME MAY BE DELAYED BEYOND MARCH 31, 2011 AND
SOME MAY NOT OCCUR.
- THIS PRESS RELEASE STATES THAT
HRP EXPECTS THAT IT WILL RECOGNIZE NET CAPITAL GAINS OF
APPROXIMATELY $20 MILLION WHEN THE SALES OF ALL 15 PROPERTIES TO
GOV ARE COMPLETED. THE SALES OF PROPERTIES TO GOV ARE EXPECTED TO
BE COMPLETED IN PHASES. HRP MAY RECOGNIZE NO CAPITAL GAINS OR
CAPITAL LOSSES AT THE TIME CERTAIN OF THESE SALES ARE COMPLETED.
ALSO, AS NOTED ABOVE, EACH OF THESE TRANSACTIONS IS SUBJECT TO
CONTINGENCIES AND SOME SALES MAY NOT OCCUR. ACCORDINGLY, IT IS
POSSIBLE THAT THE NET CAPITAL GAINS RECOGNIZED BY HRP WHEN THE
SALES OF THESE PROPERTIES ARE COMPLETED OR CANCELLED MAY BE MORE OR
LESS THAN $20 MILLION OR EVEN THAT HRP WILL RECOGNIZE A NET CAPITAL
LOSS.
- THIS PRESS RELEASE STATES THAT
HRP’S AGREEMENTS TO SELL PROPERTIES TO GOV WERE NEGOTIATED BY
SPECIAL COMMITTEES OF THE BOARDS OF HRP AND GOV COMPOSED SOLELY OF
INDEPENDENT TRUSTEES WHO ARE NOT ALSO TRUSTEES OF THE COUNTERPARTY
AND THAT THE SALES PRICES ARE WITHIN THE RANGES OF MARKET VALUES
DETERMINED BY AN INDEPENDENT THIRD PARTY APPRAISER. AN IMPLICATION
OF THESE STATEMENTS MAY BE THAT THESE SALES ARE ARMS LENGTH
TRANSACTIONS. IN FACT, BOTH HRP AND GOV ARE MANAGED BY RMR AND HAVE
COMMON MANAGING TRUSTEES. ACCORDINGLY, THIRD PARTIES SEEKING TO
CONTEST THESE SALES MAY ALLEGE THAT THEY ARE NOT EQUIVALENT TO ARMS
LENGTH TRANSACTIONS AND THE SALES PRICES MAY BE DIFFERENT THAN THE
PRICES WHICH COULD HAVE BEEN ACHIEVED IN ARMS LENGTH TRANSACTIONS
WHICH WERE FULLY MARKETED. FOR MORE INFORMATION ABOUT THE
RELATIONSHIPS AMONG HRP, GOV AND RMR AND THE RISKS WHICH ARISE FROM
THESE RELATIONSHIPS, SEE HRP’S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2009 (THE “ANNUAL REPORT”) AND ITS OTHER
FILINGS MADE WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
“SEC”), AND IN PARTICULAR THE SECTION CAPTIONED “RISK FACTORS” IN
THE ANNUAL REPORT, THE SECTION CAPTIONED “MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS –
RELATED PERSON TRANSACTIONS” IN THE ANNUAL REPORT AND THE SECTION
CAPTIONED “RELATED PERSON TRANSACTIONS AND COMPANY REVIEW OF SUCH
TRANSACTIONS” IN THE HRP PROXY STATEMENT DATED FEBRUARY 23, 2010
RELATED TO ITS 2010 ANNUAL SHAREHOLDERS MEETING. ALL OF THESE
DOCUMENTS ARE AVAILABLE AT THE SEC WEBSITE AT WWW.SEC.GOV AND ON
HRP’S WEBSITE AT WWW.HRPREIT.COM.
FOR THESE AND OTHER REASONS, INVESTORS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS
RELEASE.
BY MAKING FORWARD LOOKING STATEMENTS HRP (A/K/A COMMONWEALTH
REIT) DOES NOT INTEND TO IMPLY THAT IT IS UNDERTAKING TO PROVIDE
UPDATES AS A RESULT OF CHANGED CIRCUMSTANCES OR NEW INFORMATION,
EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW.
A Maryland Real Estate Investment
Trust with transferable shares of beneficial interest listed on the
New York Stock Exchange. No shareholder, Trustee or officer is
personally liable for any act or obligation of the Trust.
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