Health Care Reit, Inc. 8-K

Table of Contents

Table of Contents

0000950152-06-000811.txt : 20060207 0000950152-06-000811.hdr.sgml : 20060207 20060207172443 ACCESSION NUMBER: 0000950152-06-000811 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060207 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060207 DATE AS OF CHANGE: 20060207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH CARE REIT INC /DE/ CENTRAL INDEX KEY: 0000766704 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341096634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08923 FILM NUMBER: 06586312 BUSINESS ADDRESS: STREET 1: ONE SEAGATE STE 1500 STREET 2: P O BOX 1475 CITY: TOLEDO STATE: OH ZIP: 43604 BUSINESS PHONE: 4192472800 8-K 1 l18379ae8vk.htm HEALTH CARE REIT, INC. 8-K Health Care Reit, Inc. 8-K

UNITED STATES 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) February 7, 2006

Health Care REIT, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation)		1-8923 (Commission File Number)		34-1096634 (IRS Employer Identification No.)


One SeaGate, Suite 1500, Toledo, Ohio (Address of principal executive offices)		43604 (Zip Code)

Registrant’s telephone number, including area code (419) 247-2800

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS


Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
SIGNATURE
Exhibit 99.1 Press Release

Item 2.02 Results of Operations and Financial Condition.

On February 7, 2006, Health Care REIT, Inc. issued a press release that announced operating results for its fourth quarter and year ended December 31, 2005. The press release is posted on the Company’s Web site (www.hcreit.com) under the heading Press Releases. A copy of the press release has been furnished as Exhibit 99.1 to this Current Report.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

None.

(b) Pro Forma Financial Information.

None.

99.1 Press release dated February 7, 2006

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant had duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


		HEALTH CARE REIT, INC.

		By:		/s/ GEORGE L. CHAPMAN

		George L. Chapman

Its: Chairman of the Board and Chief Executive Officer

Dated: February 7, 2006

EX-99.1 2 l18379aexv99w1.htm EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE


		February 7, 2006
		For more information contact:
		Ray Braun — (419) 247-2800
		Mike Crabtree — (419) 247-2800
		Scott Estes — (419) 247-2800

Health Care REIT, Inc.
Reports Fourth Quarter and Year End Results

Increases 2006 Quarterly Dividend Rate

Toledo, Ohio, February 7, 2006........Health Care REIT, Inc. (NYSE:HCN) announced today operating results for its fourth quarter and year ended December 31, 2005.

“We enjoyed a record year with $642.5 million of gross investments,” commented George L. Chapman, chief executive officer of Health Care REIT, Inc. “In addition, we generated strong FAD growth of 19% and realized improved facility payment coverages. We successfully executed our plan to enhance the overall portfolio and quality of earnings by disposing of approximately $147 million of non-core assets, reducing loans to 6% of gross real estate investments and virtually eliminating subdebt. Our dispositions resulted in the recognition of an additional $4.5 million of interest income. Based on our strengthened portfolio and FFO and FAD growth prospects, the Board of Directors approved a 3% increase in the common stock dividend to $0.64 per quarter commencing with the May 2006 dividend.”

Key Performance Indicators.


	Quarter			Quarter						Year			Year
	Ended			Ended			Percentage			Ended			Ended			Percentage
	12/31/05			12/31/04			Change			12/31/05			12/31/04			Change
Net Income Available to Common Stockholders per Diluted Share	$	0.47		$	0.30			57	%	$	1.15		$	1.39			-17	%
FFO per Diluted Share — Adjusted ⁽¹⁾	$	0.83		$	0.71			17	%	$	3.03		$	2.82			7	%
FAD per Diluted Share — Adjusted ⁽¹⁾	$	0.92		$	0.68			35	%	$	3.04		$	2.56			19	%
Common Dividends per Share	$	0.62		$	0.60			3	%	$	2.46		$	2.385			3	%
FFO Payout Ratio — Adjusted ⁽¹⁾		75	%		85	%					81	%		85	%
FAD Payout Ratio — Adjusted ⁽¹⁾		67	%		88	%					81	%		93	%


⁽¹⁾Adjusted for losses on extinguishment of debt in 2Q05 and 4Q05 and impairment of assets in 3Q04.

4Q05 Earnings Discussion. The fourth quarter 2005 reported net income of $0.47 per diluted share includes $2.2 million, or $0.04 per diluted share, of losses on extinguishment of debt, net of $0.8 million of fees collected in connection with the extinguishments. Fourth quarter 2005 earnings were positively impacted by the recognition of $4.2 million, or $0.07 per diluted share, of additional interest income as a result of loans that were repaid during the quarter. These loans were either on non-accrual or partial accrual and all contractual interest was received from the borrowers. Fourth quarter 2005 adjusted FAD was higher than FFO due to the inclusion of $4.9 million, or $0.09 per diluted share, of cash receipts in excess of rental income, which includes non-recurring cash rental payments of $7.8 million, or $0.14 per diluted share. The following table reconciles the FFO and FAD adjustments:

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4Q05 FFO and FAD Reconciliation.


	Quarter		Quarter					Quarter		Quarter
	Ended		Ended					Ended		Ended
	12/31/05		12/31/04		Percentage			12/31/05		12/31/04		Percentage
	FFO		FFO		Change			FAD		FAD		Change
Per Diluted Share	$	0.79	$	0.71		11	%	$	0.88	$	0.68		29	%
Debt extinguishment charges, net	$	0.04						$	0.04
Per Diluted Share — Adjusted	$	0.83	$	0.71		17	%	$	0.92	$	0.68		35	%
Included items:
Non-recurring cash payments								$	0.14	$	0.06
Additional interest income	$	0.07						$	0.07

2005 Earnings Discussion. Reported fiscal 2005 net income of $1.15 per diluted share includes $20.7 million, or $0.38 per diluted share, of losses on extinguishment of debt, which is net of $0.8 million of fees collected in connection with the extinguishments. Additionally, 2005 earnings were positively impacted by the recognition of $4.5 million, or $0.08 per diluted share, of additional interest income as a result of loans that were repaid during the year. Fiscal 2005 adjusted FAD was higher than FFO due to the inclusion of $0.7 million, or $0.01 per diluted share, of cash receipts in excess of rental income, which includes non-recurring cash rental payments of $13.9 million, or $0.25 per diluted share. The following table reconciles the FFO and FAD adjustments:

2005 FFO and FAD Reconciliation.


	Year		Year					Year		Year
	Ended		Ended					Ended		Ended
	12/31/05		12/31/04		Percentage			12/31/05		12/31/04		Percentage
	FFO		FFO		Change			FAD		FAD		Change
Per Diluted Share	$	2.65	$	2.82		-6	%	$	2.66	$	2.55		4	%
Debt extinguishment charges, net	$	0.38						$	0.38
Impairment charge			$	0.01						$	0.01
Per Diluted Share — Adjusted	$	3.03	$	2.82		7	%	$	3.04	$	2.56		19	%
Included items:
Non-recurring cash payments								$	0.25	$	0.16
Additional interest income	$	0.08						$	0.08

Dividends for Fourth Quarter 2005. As previously announced, the Board of Directors declared a dividend for the quarter ended December 31, 2005 of $0.62 per share as compared to $0.60 per share for the same period in 2004. The dividend represents the 139^th consecutive dividend payment. The dividend will be payable February 21, 2006 to stockholders of record on January 31, 2006.

Dividends for 2006. The Board of Directors approved a new quarterly dividend rate of $0.64 per share per quarter ($2.56 per share annually), commencing with the May 2006 dividend, up 3% from $0.62 per share, the rate during 2005. The company’s dividend policy is reviewed annually during the Board of Directors’ January planning session. The declaration and payment of quarterly dividends remains subject to the review and approval of the Board of Directors.

Kindred / Commonwealth Update. The company previously announced its anticipated sale of four long-term acute care hospitals to Kindred Healthcare, Inc. for $80 million. The company now anticipates Kindred will lease these facilities under a master lease. The terms of the master lease are being negotiated. The transaction between Kindred and Commonwealth is anticipated to occur this quarter.

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Outlook for 2006. The company is introducing its 2006 guidance and expects to report net income available to common stockholders for the full year in the range of $1.28 to $1.36 per diluted share, FFO in a range of $2.88 to $2.96 per diluted share and FAD in a range of $2.77 to $2.85 per diluted share. In preparing guidance, the company made the following assumptions:

	•		Gross investments of $450 to $550 million, including acquisitions of $300 million at an average initial yield of 8.25-8.75%.

	•		Gross investments include funded new development of $150 to $250 million with the investment balance capitalized at the company’s average cost of debt (approximately 6.50-6.75%) and recorded as a reduction in interest expense until completion.

	•		Dispositions of $100 to $150 million at an average yield of 11.0%.

	•		Net investments of $300 to $450 million.

	•		General and administrative expenses of $21 to $22 million for the full year 2006. Included in the company’s first quarter 2006 G&A estimate is approximately $1.7 million ($0.03 per diluted share) of non-cash expenses for required accelerated vesting of options and restricted stock grants pursuant to Statement of Financial Accounting Standards No. 123(R), which was adopted on January 1, 2006. This represents a $1.3 million ($0.02 per diluted share) increase compared to the amortization methodology used historically. Excluding this item, the anticipated annual increase in G&A of approximately $2.5 to $3.5 million is attributable to increases in professional services fees, compensation costs, including new hires, and marketing expenses as a result of our larger size and anticipated future growth.

	•		Straight-line rent of $7.0 million before any one-time cash payments.

	•		An anticipated reduction in leverage from year-end 2005 levels through issuance of equity from the company’s DRIP and potential secondary equity offerings.

The guidance for 2006 FFO is below 2005 FFO primarily as a result of the $4.5 million of non-recurring 2005 interest income, a $3.8 to $4.8 million increase in G&A expenses, and an approximate $4.5 million reduction in rent and interest as a result of the Kindred/Commonwealth transaction, representing a decrease of $0.21 to $0.22 per diluted share.

The company’s guidance excludes any impairments, unanticipated additions to the loan loss reserve or other additional one-time items. Please see Exhibit 15 for a reconciliation of the outlook for net income to FFO and FAD.

Supplemental Reporting Measures. The company believes that net income, as defined by U.S. generally accepted accounting principles (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers funds from operations (FFO) and funds available for distribution (FAD) to be useful supplemental measures of its operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In

Page 3 of 16

response, the National Association of Real Estate Investment Trusts (NAREIT) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means net income, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FAD represents FFO excluding the non-cash straight-line rental adjustments.

EBITDA stands for earnings before interest, taxes, depreciation and amortization. Additionally, the company excludes the non-cash provision for loan losses. The company believes that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of its operations. Additionally, restrictive covenants in the company’s long-term debt arrangements contain financial ratios based on EBITDA. The company primarily utilizes EBITDA to measure its interest coverage ratio which represents EBITDA divided by interest expense.

In October 2003, NAREIT informed its member companies that the SEC had changed its position on certain aspects of the NAREIT FFO definition, including impairment charges. Previously, the SEC accepted NAREIT’s view that impairment charges were effectively an early recognition of an expected loss on an impending sale of property and thus should be excluded from FFO similar to other gains and losses on sales. However, the SEC’s clarified interpretation is that recurring impairments taken on real property may not be added back to net income in the calculation of FFO and FAD. Although the company has adopted this recommendation, it has also disclosed FFO and FAD adjusted for the impairment charge in 2004 for enhanced clarity.

In April 2002, the Financial Accounting Standards Board issued Statement No. 145 that requires gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under Statement No. 4. The company adopted the standard effective January 1, 2003 and has properly reflected the current quarter loss on extinguishment of debt which may not be added back to net income in the calculation of FFO. Although the company has adopted this treatment, it has also disclosed FFO, FAD and EBITDA adjusted for the loss on extinguishment of debt in 2005 for enhanced clarity.

FFO, FAD and EBITDA are financial measures that are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. The company’s management uses these financial measures to facilitate internal and external comparisons to historical operating results, in making operating decisions and for budget planning purposes. Additionally, FFO and FAD are utilized by the Board of Directors to evaluate management. FFO, FAD and EBITDA do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, FFO, FAD and EBITDA, as defined by the company, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Please see Exhibits 13, 14 and 16 for reconciliations of FAD, FFO and EBITDA to net income.

Conference Call Information. The company has scheduled a conference call on February 8, 2006, at 9:00 a.m. Eastern time to discuss its fourth quarter and year end results, industry trends, portfolio performance and outlook for 2006. To participate in the webcast, log on to www.hcreit.com or www.earnings.com 15 minutes before the call to download the necessary software. Replays will be available for 90 days through the same Web sites. This earnings release is posted on the company’s Web site under the heading Press Releases.

Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care and senior housing properties. At December 31, 2005, the company had

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investments in 442 facilities in 36 states with 54 operators and had total assets of approximately $3.0 billion. The portfolio included 195 assisted living facilities, 203 skilled nursing facilities, 31 independent living/continuing care retirement communities and 13 specialty care facilities. More information is available on the Internet at www.hcreit.com.

This document may contain “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern and are based upon, among other things, the possible expansion of the company’s portfolio; the sale of properties; the performance of its operators and properties; its ability to enter into agreements with new viable tenants for properties that we take back from financially troubled tenants, if any; its ability to make distributions; its policies and plans regarding investments, financings and other matters; its tax status as a real estate investment trust; its ability to appropriately balance the use of debt and equity; its ability to access capital markets or other sources of funds; and its ability to meet its earnings guidance. When the company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “estimate” or similar expressions, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The company’s expected results may not be achieved, and actual results may differ materially from 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 prevailing interest rates; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies and operators’ difficulty in obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and senior housing industries; negative developments in the operating results or financial condition of operators, including, but not limited to, their ability to pay rent and repay loans; the company’s ability to transition or sell facilities with a profitable result; the failure of closings to occur as and when anticipated; acts of God affecting our properties; the company’s ability to reinvest sale proceeds at similar rates to assets sold; operator bankruptcies or insolvencies; government regulations affecting Medicare and Medicaid reimbursement rates; liability claims and insurance costs for operators; unanticipated difficulties and/or expenditures relating to future acquisitions; environmental laws affecting the company’s properties; delays in reinvestment of sale proceeds; changes in rules or practices governing the company’s financial reporting; and structure related factors, including real estate investment trust qualification, anti-takeover provisions and key management personnel. Finally, the company assumes 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.

FINANCIAL SCHEDULES FOLLOW

#####

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HEALTH CARE REIT, INC.
Financial Supplement

CONSOLIDATED BALANCE SHEETS (unaudited)

(In thousands)


	December 31
	2005			2004
Assets
Real estate investments:
Real property owned
Land	$	261,236		$	208,173
Buildings & improvements		2,659,746			2,176,327
Real property held for sale, net of accumulated depreciation		11,912			0
Construction in progress		3,906			25,463

		2,936,800			2,409,963
Less accumulated depreciation		(274,875	)		(219,536	)

Total real property owned		2,661,925			2,190,427

Loans receivable		194,054			256,806
Less allowance for losses on loans receivable		(6,461	)		(5,261	)

		187,593			251,545

Net real estate investments		2,849,518			2,441,972

Other assets:
Equity investments		2,970			3,298
Deferred loan expenses		12,228			9,486
Cash and cash equivalents		36,237			19,763
Receivables and other assets		71,211			77,652

		122,646			110,199

Total assets	$	2,972,164		$	2,552,171


Liabilities and stockholders’ equity
Liabilities:
Borrowings under unsecured lines of credit arrangements	$	195,000		$	151,000
Senior unsecured notes		1,198,278			881,733
Secured debt		107,540			160,225
Accrued expenses and other liabilities		40,590			23,934

Total liabilities		1,541,408			1,216,892

Stockholders’ equity:
Preferred stock		276,875			283,751
Common stock		58,050			52,860
Capital in excess of par value		1,306,471			1,139,723
Treasury stock		(2,054	)		(1,286	)
Cumulative net income		830,103			745,817
Cumulative dividends		(1,039,032	)		(884,890	)
Accumulated other comprehensive income		0			1
Other equity		343			(697	)

Total stockholders’ equity		1,430,756			1,335,279


Total liabilities and stockholders’ equity	$	2,972,164		$	2,552,171

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CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except per share data)


	Three Months Ended					Year Ended
	December 31					December 31
	2005		2004			2005		2004
Revenues:
Rental income	$	67,417	$	59,739		$	253,306	$	213,755
Interest income		8,744		5,622			23,993		22,818
Transaction fees and other income		1,806		558			4,548		2,432
Prepayment fees		0		50			0		50

Gross revenues		77,967		65,969			281,847		239,055

Expenses:
Interest expense		21,058		17,900			80,050		68,567
Provision for depreciation		21,107		18,620			80,000		66,897
General and administrative		4,254		6,247			17,249		16,585
Loan expense		502		825			2,710		3,393
Impairment of assets		0		0			0		314
Loss on extinguishment of debt		3,036		0			21,484		0
Provision for loan losses		300		300			1,200		1,200

Total expenses		50,257		43,892			202,693		156,956


Income from continuing operations		27,710		22,077			79,154		82,099

Discontinued operations:
Gain (loss) on sales of properties		3,361		(1,272	)		3,227		(143	)
Income (loss) from discontinued operations, net		850		404			1,905		3,415

		4,211		(868	)		5,132		3,272

Net income		31,921		21,209			84,286		85,371

Preferred dividends		5,334		5,442			21,594		12,737


Net income available to common stockholders	$	26,587	$	15,767		$	62,692	$	72,634


Average number of common shares outstanding:
Basic		55,992		52,326			54,110		51,544
Diluted		56,368		52,784			54,499		52,082

Net income available to common stockholders per share:
Basic	$	0.47	$	0.30		$	1.16	$	1.41
Diluted		0.47		0.30			1.15		1.39

Common dividends per share	$	0.62	$	0.60		$	2.46	$	2.385

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HEALTH CARE REIT, INC.
Financial Supplement — December 31, 2005



Portfolio Composition ($000’s)		Exhibit 1


	# Properties		# Beds/Units		Balance		% Balance
Balance Sheet Data
Real Property		425		42,998	$	2,661,925		93	%
Loans Receivable (1)		17		2,208		194,054		7	%

Total Investments		442		45,206	$	2,855,979		100	%


	# Properties		# Beds/Units		Investment (2)		% Investment
Investment Data
Assisted Living Facilities		195		11,746	$	962,620		34	%
Skilled Nursing Facilities		203		27,748		1,266,196		44	%
Independent/CCRCs		31		4,400		425,845		15	%
Specialty Care Facilities		13		1,312		203,768		7	%

Real Estate Investments		442		45,206	$	2,858,429		100	%



Revenue Composition ($000’s)		Exhibit 2


	Three Months Ended				Year Ended
	December 31, 2005				December 31, 2005
Revenue by Investment Type (1)
Real Property	$	69,756	88	%	$	265,941	91	%
Loans Receivable		9,620	12	%		25,213	9	%

Total	$	79,376	100	%	$	291,154	100	%

Revenue by Facility Type (1)
Assisted Living Facilities	$	36,395	46	%	$	132,935	46	%
Skilled Nursing Facilities		32,876	41	%		121,986	42	%
Independent/CCRCs		5,012	6	%		17,725	6	%
Specialty Care Facilities		5,093	7	%		18,508	6	%

Total	$	79,376	100	%	$	291,154	100	%

Notes: (1) Revenues include gross revenues and revenues from discontinued operations.

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Operator Concentration ($000’s)		Exhibit 3


	# Properties		Investment		% Investment
Concentration by Investment
Emeritus Corporation		50	$	362,832		13	%
Merrill Gardens L.L.C.		13		204,907		7	%
Southern Assisted Living, Inc.		43		195,794		7	%
Life Care Centers of America, Inc.		23		195,129		7	%
Commonwealth Communities Management LLC		13		191,335		7	%
Remaining operators (49)		300		1,708,432		59	%

Total		442	$	2,858,429		100	%



Geographic Concentration ($000’s)		Exhibit 4


	# Properties		Investment		% Investment
Concentration by Region
South		272	$	1,495,446		52	%
Northeast		63		521,929		18	%
West		62		482,426		17	%
Midwest		45		358,628		13	%

Total		442	$	2,858,429		100	%


	# Properties		Investment		% Investment
Concentration by State
Florida		62	$	409,750		14	%
Massachusetts		37		360,191		13	%
Texas		49		218,450		8	%
North Carolina		44		215,514		8	%
California		17		202,416		7	%
Remaining States (31)		233		1,452,108		50	%

Total		442	$	2,858,429		100	%

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Committed Investment Balances ($000’s except Investment per Bed/Unit)		Exhibit 5


					Committed		Investment
	# Properties		# Beds/Units		Balance (1)		per Bed/Unit

Assisted Living Facilities		195		11,746	$	975,696	$	83,066
Skilled Nursing Facilities		203		27,748		1,271,647		45,828
Independent/CCRCs		31		4,400		443,837		100,872
Specialty Care Facilities		13		1,312		203,768		155,311

Total		442		45,206	$	2,894,948	-na-


Notes:			(1	)		Committed Balance includes gross real estate investments, credit enhancements and unfunded construction commitments for which initial funding had commenced.



Selected Facility Data		Exhibit 6


													Coverage Data
				% Payor Mix									Before		After
	Census			Private			Medicare			Medicaid			Mgt. Fees		Mgt. Fees

Assisted Living Facilities		88	%		84	%		0	%		16	%		1.52x		1.30x
Skilled Nursing Facilities		86	%		17	%		15	%		68	%		2.18x		1.61x
Independent/CCRCs		92	%		97	%		1	%		2	%		1.43x		1.21x
Specialty Care Facilities		68	%		20	%		59	%		21	%		3.36x		2.77x

							Weighted Averages							1.92x		1.53x

Notes: Data as of September 30, 2005.



		Exhibit 7


Current Capitalization ($000’s except share price)						Leverage & Performance Ratios
	Balance		% Balance
Borrowings Under Bank Lines	$	195,000		6	%	Debt/Total Book Cap	51 %
Long-Term Debt Obligations		1,305,818		45	%	Debt/Undepreciated Book Cap	47 %
Stockholders’ Equity		1,430,756		49	%	Debt/Total Market Cap	40 %

Total Book Capitalization	$	2,931,574		100	%
						Interest Coverage	3.54x 4th Qtr.
Common Shares Outstanding (000’s)		58,125					3.10x YTD
Period-End Share Price	$	33.90				Interest Coverage	3.64x 4th Qtr.
Common Stock Market Value	$	1,970,438		53	%	- adjusted	3.35x YTD
Preferred Stock		276,875		7	%	Fixed Charge Coverage	2.83x 4th Qtr.
Borrowings Under Bank Lines		195,000		5	%		2.47x YTD
Long-Term Debt Obligations		1,305,818		35	%	Fixed Charge Coverage	2.91x 4th Qtr.

Total Market Capitalization	$	3,748,131		100	%	- adjusted	2.66x YTD

Page 10 of 16



Revenue Maturities ($000’s)		Exhibit 8

Operating Lease Expirations & Loan Maturities


	Current Lease		Current Interest		Lease and
Year	Revenue (1)		Revenue (1)		Interest Revenue		% of Total

2006	$	22,209	$	4,223	$	26,432		8	%
2007		0		358		358		0	%
2008		0		2,878		2,878		1	%
2009		906		2,003		2,909		1	%
2010		1,726		1,922		3,648		1	%
Thereafter		270,515		5,420		275,935		89	%

Total	$	295,356	$	16,804	$	312,160		100	%

Notes: (1) Revenue impact by year, annualized.



Debt Maturities and Principal Payments ($000’s)		Exhibit 9


Year	Lines of Credit (1)		Senior Notes (2)		Secured Debt		Total

2006	$	40,000	$	0	$	2,596	$	42,596
2007		0		52,500		14,544		67,044
2008		500,000		42,330		9,725		552,055
2009		0		0		33,207		33,207
2010		0		0		8,094		8,094
2011		0		0		19,791		19,791
2012		0		250,000		14,126		264,126
Thereafter		0		850,000		5,457		855,457

Total	$	540,000	$	1,194,830	$	107,540	$	1,842,370

Page 11 of 16


Investment Activity ($000’s)		Exhibit 10


	Three Months Ended				Year Ended
	December 31, 2005				December 31, 2005

Funding by Investment Type
Real Property	$	374,153	100	%	$	622,547	97	%
Loans Receivable		481	0	%		19,936	3	%

Total	$	374,634	100	%	$	642,483	100	%

Funding by Facility Type
Assisted Living Facilities	$	3,073	1	%	$	52,971	8	%
Skilled Nursing Facilities		138,883	37	%		281,278	44	%
Independent/CCRCs		232,055	62	%		246,356	38	%
Specialty Care Facilities		623	0	%		61,878	10	%

Total	$	374,634	100	%	$	642,483	100	%



Disposition Activity ($000’s)		Exhibit 11


	Three Months Ended				Year Ended
	December 31, 2005				December 31, 2005
Dispositions by Investment Type
Real Property	$	78,064	75	%	$	88,098	60	%
Loans Receivable		26,412	25	%		58,923	40	%

Total	$	104,476	100	%	$	147,021	100	%

Dispositions by Facility Type
Assisted Living Facilities	$	104,476	100	%	$	146,042	99	%
Skilled Nursing Facilities			0	%			0	%
Independent/CCRCs			0	%			0	%
Specialty Care Facilities			0	%		979	1	%

Total	$	104,476	100	%	$	147,021	100	%



Discontinued Operations ($000’s)		Exhibit 12


	Three Months Ended				Year Ended
	December 31				December 31
	2005		2004		2005		2004
Revenues
Rental income	$	1,409	$	2,936	$	9,307	$	14,522

Expenses
Interest expense		311		842		2,574		3,989
Provision for depreciation		248		1,690		4,828		7,118


Income (loss) from discontinued operations, net	$	850	$	404	$	1,905	$	3,415

Page 12 of 16



Funds Available For Distribution Reconciliation (Amounts in 000’s except per share data)		Exhibit 13


	Three Months Ended						Year Ended
	December 31						December 31
	2005			2004			2005			2004
Net income available to common stockholders	$	26,587		$	15,767		$	62,692		$	72,634
Provision for depreciation (1)		21,355			20,310			84,828			74,015
Loss (gain) on sales of properties		(3,361	)		1,272			(3,227	)		143
Prepayment fees		0			(50	)		0			(50	)
Rental income less than (in excess of) cash received		4,876			(1,657	)		727			(13,792	)

Funds available for distribution		49,457			35,642			145,020			132,950
Impairment of assets		0			0			0			314
Loss on extinguishment of debt, net (2)		2,214			0			20,662			0

Funds available for distribution — adjusted	$	51,671		$	35,642		$	165,682		$	133,264
Average common shares outstanding:
Basic		55,992			52,326			54,110			51,544
Diluted		56,368			52,784			54,499			52,082

Per share data:
Net income available to common stockholders
Basic	$	0.47		$	0.30		$	1.16		$	1.41
Diluted		0.47			0.30			1.15			1.39

Funds available for distribution
Basic	$	0.88		$	0.68		$	2.68		$	2.58
Diluted		0.88			0.68			2.66			2.55

Funds available for distribution — adjusted
Basic	$	0.92		$	0.68		$	3.06		$	2.59
Diluted		0.92			0.68			3.04			2.56

FAD Payout Ratio
Dividends per share	$	0.62		$	0.60		$	2.46		$	2.385
FAD per diluted share	$	0.88		$	0.68		$	2.66		$	2.55

FAD payout ratio		70	%		88	%		92	%		94	%

FAD Payout Ratio — Adjusted
Dividends per share	$	0.62		$	0.60		$	2.46		$	2.385
FAD per diluted share — adjusted	$	0.92		$	0.68		$	3.04		$	2.56

FAD payout ratio — adjusted		67	%		88	%		81	%		93	%

Page 13 of 16



Funds From Operations Reconciliation (Amounts in 000’s except per share data)		Exhibit 14


	Three Months Ended						Year Ended
	December 31						December 31
	2005			2004			2005			2004
Net income available to common stockholders	$	26,587		$	15,767		$	62,692		$	72,634
Provision for depreciation (1)		21,355			20,310			84,828			74,015
Loss (gain) on sales of properties		(3,361	)		1,272			(3,227	)		143
Prepayment fees		0			(50	)		0			(50	)

Funds from operations		44,581			37,299			144,293			146,742
Impairment of assets		0			0			0			314
Loss on extinguishment of debt, net (2)		2,214			0			20,662			0

Funds from operations — adjusted	$	46,795		$	37,299		$	164,955		$	147,056

Average common shares outstanding:
Basic		55,992			52,326			54,110			51,544
Diluted		56,368			52,784			54,499			52,082

Per share data:
Net income available to common stockholders
Basic	$	0.47		$	0.30		$	1.16		$	1.41
Diluted		0.47			0.30			1.15			1.39

Funds from operations
Basic	$	0.80		$	0.71		$	2.67		$	2.85
Diluted		0.79			0.71			2.65			2.82

Funds from operations — adjusted
Basic	$	0.84		$	0.71		$	3.05		$	2.85
Diluted		0.83			0.71			3.03			2.82

FFO Payout Ratio
Dividends per share	$	0.62		$	0.60		$	2.46		$	2.385
FFO per diluted share	$	0.79		$	0.71		$	2.65		$	2.82

FFO payout ratio		78	%		85	%		93	%		85	%

FFO Payout Ratio — Adjusted
Dividends per share	$	0.62		$	0.60		$	2.46		$	2.385
FFO per diluted share — adjusted	$	0.83		$	0.71		$	3.03		$	2.82

FFO payout ratio — adjusted		75	%		85	%		81	%		85	%

Page 14 of 16



Outlook Reconciliation (Amounts in 000’s except per share data)		Exhibit 15


	Year Ended
	December 31, 2006
	Low			High
Net income available to common stockholders	$	78,200		$	83,100
Provision for depreciation (1)		97,500			97,500

Funds from operations		175,700			180,600
Rental income less than (in excess of ) cash received		(7,000	)		(7,000	)

Funds available for distribution	$	168,700		$	173,600

Average common shares outstanding (diluted)		61,000			61,000

Per share data (diluted):
Net income available to common stockholders	$	1.28		$	1.36
Funds from operations		2.88			2.96
Funds available for distribution		2.77			2.85

Notes: (1) Provision for depreciation includes provision for depreciation from discontinued operations.

Page 15 of 16



EBITDA Reconciliation ($000’s)		Exhibit 16


	Three Months Ended						Year Ended
	December 31						December 31
	2005			2004			2005			2004
Net income	$	31,921		$	21,209		$	84,286		$	85,371
Provision for depreciation (1)		21,355			20,310			84,828			74,015
Interest expense (1)		21,369			18,742			82,624			72,556
Capitalized interest		39			285			665			875
Amortization (2)		708			1,016			4,975			4,247
Provision for loan losses		300			300			1,200			1,200

EBITDA		75,692			61,862			258,578			238,264
Loss on extinguishment of debt, net (3)		2,214			0			20,662			0

EBITDA — adjusted	$	77,906		$	61,862		$	279,240		$	238,264

Interest Coverage Ratio
Interest expense (1)	$	21,369		$	18,742		$	82,624		$	72,556
Capitalized interest		39			285			665			875

Total interest		21,408			19,027			83,289			73,431
EBITDA	$	75,692		$	61,862		$	258,578		$	238,264

Interest coverage ratio		3.54	x		3.25	x		3.10	x		3.24	x


EBITDA — adjusted	$	77,906		$	61,862		$	279,240		$	238,264

Interest coverage ratio — adjusted		3.64	x		3.25	x		3.35	x		3.24	x

Fixed Charge Coverage Ratio
Total interest (1)	$	21,408		$	19,027		$	83,289		$	73,431
Preferred dividends		5,334			5,442			21,594			12,737

Total fixed charges		26,742			24,469			104,883			86,168
EBITDA	$	75,692		$	61,862		$	258,578		$	238,264

Fixed charge coverage ratio		2.83	x		2.53	x		2.47	x		2.77	x

EBITDA — adjusted	$	77,906		$	61,862		$	279,240		$	238,264

Fixed charge coverage ratio — adjusted		2.91	x		2.53	x		2.66	x		2.77	x

Page 16 of 16

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Notes:

Includes $16,770,000 of loans on non-accrual.

Real Estate Investments include gross real estate investments and credit enhancements which amounted to $2,855,979,000 and $2,450,000, respectively.