425

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): May 6, 2011

VENTAS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	1-10989	61-1055020
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

111 S. Wacker Drive, Suite 4800, Chicago, Illinois	60606
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (877) 483-6827

Not Applicable

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:

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

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

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

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

Item 8.01.Other Events.

As previously announced, in October 2010, Ventas, Inc. (“Ventas”) entered into a definitive agreement to acquire substantially all of the real estate assets of Atria Senior Living Group, Inc. (“Atria”) and certain of its affiliated entities (including One Lantern Senior Living Inc (“One Lantern”)), by way of merger, including 118 private pay seniors housing communities located in markets such as the New York metropolitan area, New England and California.  Completion of the Atria transaction is subject to certain conditions.  Ventas expects the Atria transaction to occur in the first half of 2011, although there can be no assurance as to whether or when the transaction will be completed.

Also as previously announced, in February 2011, Ventas entered into a definitive agreement to acquire Nationwide Health Properties, Inc. (“NHP”) in a stock-for-stock transaction.  Completion of the NHP transaction is subject to, among other things, approval by Ventas stockholders and NHP stockholders.  Ventas expects the NHP transaction to occur in the third quarter of 2011, although there can be no assurance as to whether or when the transaction will be completed.

Additional Information about the Proposed NHP Transaction and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  In connection with the proposed NHP transaction, Ventas has filed with the SEC a registration statement on Form S-4 that includes a preliminary joint proxy statement of Ventas and NHP that also constitutes a preliminary prospectus for Ventas.  Ventas and NHP also plan to file other documents with the SEC with respect to the proposed transaction.  The registration statement has not been declared effective by the SEC, and the definitive joint proxy statement/prospectus is not currently available.

INVESTORS ARE URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND, IF AND WHEN IT BECOMES AVAILABLE, THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED NHP TRANSACTION.

Investors may obtain free copies of the registration statement, the joint proxy statement/prospectus and other relevant documents filed by Ventas and NHP with the SEC (if and when they become available) through the website maintained by the SEC at www.sec.gov.  Copies of the documents filed by Ventas with the SEC are also available free of charge on Ventas’s website at www.ventasreit.com, and copies of the documents filed by NHP with the SEC are available free of charge on NHP’s website at www.nhp-reit.com.

Ventas, NHP and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Ventas’s and NHP’s stockholders in respect of the proposed transaction.  Information regarding Ventas’s directors and executive officers can be

2

found in Ventas’s definitive proxy statement filed with the SEC on March 28, 2011.  Information regarding NHP’s directors and executive officers can be found in NHP’s Annual Report on Form 10-K for the year ended December 31, 2010, as amended.  Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed NHP transaction if and when they become available.  These documents are available free of charge on the SEC’s website and from Ventas or NHP, as applicable, using the sources indicated above.

Item 9.01.Financial Statements and Exhibits.

(a)  Financial Statements of Businesses Acquired.

The audited consolidated financial statements of Atria as of and for the years ended December 31, 2010 and 2009 were filed as Exhibit 99.1 to Ventas’s Current Report on Form 8-K, filed on April 11, 2011; and the unaudited condensed consolidated financial statements of Atria as of March 31, 2011 and for the three months ended March 31, 2011 and 2010 are filed herewith as Exhibit 99.1 and incorporated in this Item 9.01(a) by reference.

The audited consolidated financial statements of One Lantern as of and for the years ended December 31, 2010 and 2009 were filed as Exhibit 99.2 to Ventas’s Current Report on Form 8-K, filed on April 11, 2011; and the unaudited condensed consolidated financial statements of One Lantern as of March 31, 2011 and for the three months ended March 31, 2011 and 2010 are filed herewith as Exhibit 99.2 and incorporated in this Item 9.01(a) by reference.

The audited consolidated financial statements of NHP as of and for the years ended December 31, 2010 and 2009 were filed as Exhibit 99.3 to Ventas’s Current Report on Form 8-K, filed on April 11, 2011; and the unaudited condensed consolidated financial statements of NHP as of March 31, 2011 and for the three months ended March 31, 2011 and 2010 are filed herewith as Exhibit 99.3 and incorporated in this Item 9.01(a) by reference.

(b)  Pro Forma Financial Information.

The unaudited pro forma condensed consolidated financial statements of Ventas as of and for the three months ended March 31, 2011 and for the year ended December 31, 2010, giving effect to the Atria and NHP transactions, are filed herewith as Exhibit 99.4 and incorporated in this Item 9.01(b) by reference.

(c)  Shell Company Transactions.

Not applicable.

(d)Exhibits:

Exhibit Number	Description
99.1	Unaudited condensed consolidated financial statements of Atria as of March 31, 2011 and for the three months ended March 31, 2011 and 2010.

3

Exhibit Number	Description
99.2	Unaudited condensed consolidated financial statements of One Lantern as of March 31, 2011 and for the three months ended March 31, 2011 and 2010.
99.3	Unaudited condensed consolidated financial statements of NHP as of March 31, 2011 and for the three months ended March 31, 2011 and 2010.
99.4	Unaudited pro forma condensed consolidated financial statements of Ventas as of and for the three months ended March 31, 2011 and for the year ended December 31, 2010.

4

SIGNATURES

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

	VENTAS, INC.
Date: May 6, 2011	By:	/s/ T. Richard Riney
		T. Richard Riney
		Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary

5

EXHIBIT INDEX

Exhibit Number	Description
99.1	Unaudited condensed consolidated financial statements of Atria as of March 31, 2011 and for the three months ended March 31, 2011 and 2010.
99.2	Unaudited condensed consolidated financial statements of One Lantern as of March 31, 2011 and for the three months ended March 31, 2011 and 2010.
99.3	Unaudited condensed consolidated financial statements of NHP as of March 31, 2011 and for the three months ended March 31, 2011 and 2010.
99.4	Unaudited pro forma condensed consolidated financial statements of Ventas as of and for the three months ended March 31, 2011 and for the year ended December 31, 2010.

6

EX-99.1

Exhibit 99.1

Atria Senior Living Group, Inc.

Condensed Consolidated Financial Statements as of March 31, 2011 and for the Three Months Ended March 31, 2011 and 2010 (unaudited)

ATRIA SENIOR LIVING GROUP, INC.

TABLE OF CONTENTS

	Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited):
Statements of Operations	1
Balance Sheets as of March 31, 2011 and December 31, 2010	2
Statement of Stockholder’s Equity	3
Statements of Cash Flows	4–5
Notes to Condensed Consolidated Financial Statements	6–7

ATRIA SENIOR LIVING GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

(In thousands)

	March 31,			March 31,
	2011			2010
REVENUES:
Assisted and independent living revenues	$	121,703		$	115,300
Managed facility reimbursements	17,341			17,447
Management fees	2,282			2,258
Total operating revenues	141,326			135,005
OPERATING EXPENSES:
Assisted and independent living operating expenses	79,731			75,881
Managed facility reimbursed expenses	17,341			17,447
General and administrative expenses	11,788			11,525
Depreciation and amortization	13,497			12,467
Community rent expense	4,933			4,876
Loss on disposition of assets — net	829			931
Impairment and lease termination costs	380			35
Development expenses	278			746
Total operating expenses	128,777			123,908
OPERATING INCOME	12,549			11,097
OTHER INCOME (EXPENSE):
Interest expense	(17,437		)	(17,135		)
Interest income	74			30
Loss on debt extinguishment	—			(2		)
Other — net	(16		)	(22		)
LOSS BEFORE INCOME TAXES	(4,830		)	(6,032		)
INCOME TAX BENEFIT	667			1,716
NET LOSS	$	(4,163	)	$	(4,316	)

See notes to condensed consolidated financial statements.

1

ATRIA SENIOR LIVING GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2011 AND DECEMBER 31, 2010 (unaudited)

(In thousands, except share amounts)

	March 31,			December 31,
	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	134,637		$	143,833
Restricted cash — current	9,810			12,025
Resident accounts receivable — net	3,034			3,596
Due from affiliates	8,326			9,825
Deferred income taxes	3,679			3,679
Other current assets	7,972			7,248
Total current assets	167,458			180,206
PROPERTY AND EQUIPMENT — Net	1,034,546			1,037,012
LEASEHOLD INTERESTS AND OTHER INTANGIBLES — Net	16,093			16,583
GOODWILL	96,784			96,784
DEFERRED FINANCING COSTS — Net	10,657			11,384
LEASEHOLD DEPOSITS	5,127			5,127
RESTRICTED CASH	12,419			11,990
TOTAL	$	1,343,084		$	1,359,086
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	5,013		$	5,989
Accrued liabilities	54,710			60,022
Due to affiliates	95			109
Capital lease obligations due within one year	1,335			1,288
Long-term debt due within one year	19,007			18,830
Total current liabilities	80,160			86,238
CAPITAL LEASE AND DEFERRED FINANCING OBLIGATIONS	223,009			223,082
LONG-TERM DEBT	819,813			824,321
DEFERRED INCOME TAXES	27,973			28,642
OTHER LONG-TERM LIABILITIES	12,605			12,592
Total liabilities	1,163,560			1,174,875
COMMITMENTS AND CONTINGENCIES	—			—
STOCKHOLDER’S EQUITY:
Common stock, $.001 par value — authorized 2,000 shares; 1,000 issued and outstanding	—			—
Paid-in capital	997,064			997,064
Advances to affiliates	(6,314		)	(5,790		)
Accumulated deficit	(811,226		)	(807,063		)
Total stockholder’s equity	179,524			184,211
TOTAL	$	1,343,084		$	1,359,086

See notes to condensed consolidated financial statements.

2

ATRIA SENIOR LIVING GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2011 (unaudited)

(In thousands, except share amounts)

												Total
	Common Stock					Accumulated			Advances to			Stockholder’s
	Shares	Amount		Paid-In-Capital		Deficit			Affiliates			Equity
BALANCE — January 1, 2011	1,000	$	—	$	997,064	$	(807,063	)	$	(5,790	)	$	184,211
Advances to Affiliates	—	—		—		—			(524		)	(524		)
Net loss	—	—		—		(4,163		)	—			(4,163		)
BALANCE — March 31, 2011	1,000	$	—	$	997,064	$	(811,226	)	$	(6,314	)	$	179,524

See notes to condensed consolidated financial statements.

3

ATRIA SENIOR LIVING GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

(In thousands)

	March 31,			March 31,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,163	)	$	(4,316	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,497			12,467
Loss on disposition of assets	829			931
Deferred financing costs amortization	727			714
Deferred taxes	(669		)	(1,722		)
Amortization of leasehold interests	516			516
Provision for doubtful accounts	250			242
Loss on debt extinguishment	—			2
Other	(77		)	9
Change in operating assets and liabilities:
Resident accounts receivable — net	312			360
Other current assets	(746		)	419
Accounts payable and other accrued liabilities	(5,488		)	3,887
Due to/from affiliates	1,485			(1,219		)
Net cash provided by operating activities	6,473			12,290
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(12,594		)	(13,300		)
Change in restricted cash and leasehold deposits	1,779			(153		)
Net cash used in investing activities	(10,815		)	(13,453		)

(Continued)

4

ATRIA SENIOR LIVING GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

(In thousands)

	March 31,			March 31,
	2011			2010
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt	$	430		$	12,304
Repayment of principal on long-term debt and bonds	(4,760		)	(12,896		)
Advances to Affiliates	(524		)	—
Debt issuance costs	—			(640		)
Net cash used in financing activities	(4,854		)	(1,232		)
CHANGE IN CASH AND CASH EQUIVALENTS	(9,196		)	(2,395		)
CASH AND CASH EQUIVALENTS — Beginning of period	143,833			174,235
CASH AND CASH EQUIVALENTS — End of period	$	134,637		$	171,840
SUPPLEMENTAL INFORMATION:
Cash paid during the year for interest payments	$	17,229		$	16,943
Purchase of property and equipment included in liabilities	$	6,632		$	8,879

See notes to condensed consolidated financial statements. (Concluded)

5

ATRIA SENIOR LIVING GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

1.THE COMPANY AND BACKGROUND

Organization — Atria Senior Living Group, Inc. (“Atria”) and subsidiaries (the “Company”), an indirect wholly-owned subsidiary of LF Strategic Realty Investors II L.P., LFSRI II-CADIM Alternative Partnership L.P., and LFSRI II Alternative Partnership L.P. (collectively known as “LFSRI II”), is a national provider of assisted and independent living services for seniors.

Background — As of March 31, 2011, the Company owned or operated 95 communities located in 27 states with a total of 11,324 units. Of the 95 communities, 71 are owned by the Company and 24 are operated by the Company pursuant to long-term leases.  The company also managed 29 communities for Lazard Senior Housing Partners LP, a related investment fund, and one community for an unrelated third party.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying condensed consolidated financial statements include the Company’s subsidiaries and all variable interest entities where the Company is considered the primary beneficiary. Intercompany transactions have been eliminated.

In the opinion of management, these financial statements include all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company as of March 31, 2011, and for all periods presented.  Those adjustments are of a normal and recurring nature.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of the financial position or operating results for an entire year. It is suggested that these interim financial statements be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2010.

3.INCOME TAXES

The Company’s effective tax rate for the three months ended March 31, 2011 and 2010 reflected an income tax benefit of 13.9% and 28.5%, respectively.  The Company has a valuation allowance reducing its deferred tax assets to an amount that is more likely than not to be realized. The difference between the Company’s effective tax rate and the federal statutory rate is primarily due to increases in the valuation allowance.

4.CONTINGENCIES AND GUARANTEES

The Company is subject to claims and legal actions in the ordinary course of its business. The Company believes that any liability resulting from these matters, after taking into consideration its insurance coverages and amounts recorded in the consolidated financial statements, will not have a material adverse effect on its consolidated financial position, results of operations, and cash flows.

6

The Company has made certain guarantees to third parties, particularly related to communities that have been sold. These guarantees may survive the expiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of future payments to be made under these guarantees, as the triggering events are not subject to predictability. The Company believes the likelihood of any losses resulting from these guarantees, including the effect of insurance coverages that would mitigate any potential payments, is remote, and historically the Company has not been required to make payments under these guarantees.

5.VENTAS TRANSACTION

On October 21, 2010, the Company announced that it had signed a definitive agreement to merge its real estate with Ventas, Inc., a healthcare real estate investment trust. As part of this transaction, Ventas, Inc. will acquire all of the Company’s senior living communities. Subject to certain approvals, the transaction is expected to close during the second quarter of 2011.

6.SUBSEQUENT EVENTS

The Company’s financial statements are available for issue as of April 29, 2011. Any subsequent events have been evaluated through this date.

* * * * * *

7

EX-99.2

Exhibit 99.2

One Lantern Senior Living Inc and Subsidiaries

Condensed Consolidated Financial Statements as of March 31, 2011 and for the Three Months Ended March 31, 2011 and 2010 (unaudited)

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited):
Statements of Operations	1
Balance Sheets as of March 31, 2011 and December 31, 2010	2-3
Statements of Equity	4
Statements of Cash Flows	5–6
Notes to Condensed Consolidated Financial Statements	7–10

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

(In thousands)

	March 31,			March 31,
	2011			2010
REVENUES:
Assisted and independent living revenues	$	43,147		$	40,663
Management fees and other revenues	192			187
Total operating revenues	43,339			40,850
OPERATING EXPENSES:
Managed facility reimbursed expenses	16,547			15,585
Assisted and independent living operating expenses	9,884			10,098
General and administrative expenses	179			157
Depreciation and amortization	6,004			5,592
Management fees	2,298			2,291
Loss on disposition of assets — net	165			213
Development expenses	314			144
Community rent expense	43			37
Total operating expenses	35,434			34,117
OPERATING INCOME	7,905			6,733
OTHER INCOME (EXPENSE):
Interest expense	(12,022		)	(11,681		)
Loss on derivative instruments	(2,040		)	(2,345		)
Interest income	15			26
Equity earnings (loss) in joint ventures	77			(2		)
Other — net	—			(5		)
LOSS BEFORE INCOME TAXES	(6,065		)	(7,274		)
INCOME TAX EXPENSE	—			—
NET LOSS	(6,065		)	(7,274		)
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST	543			1,065
NET LOSS ATTRIBUTABLE TO ONE LANTERN SENIOR LIVING INC	$	(5,522	)	$	(6,209	)

See notes to condensed consolidated financial statements.

1

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2011 AND DECEMBER 31, 2010 (unaudited)

(In thousands, except share amounts)

	March 31,		December 31,
	2011		2010
ASSETS(1)
CURRENT ASSETS:
Cash and cash equivalents	$	24,615	$	27,858
Restricted cash — current	7,197		7,085
Resident accounts receivable — net	827		1,162
Due from affiliates	—		13
Other current assets	5,714		2,859
Total current assets	38,353		38,977
PROPERTY AND EQUIPMENT — Net	719,661		720,175
INTANGIBLE ASSETS — Net	4,072		4,418
DEFERRED FINANCING COSTS — Net	3,739		4,064
INVESTMENT IN JOINT VENTURE	1,391		1,314
RESTRICTED CASH AND OTHER NONCURRENT ASSETS	27,362		27,653
TOTAL	$	794,578	$	796,601

(Continued)

2

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2011 AND DECEMBER 31, 2010 (unaudited)

(In thousands, except share amounts)

	March 31,			December 31,
	2011			2010
LIABILITIES AND EQUITY(2)
CURRENT LIABILITIES:
Accounts payable	$	1,665		$	1,883
Accrued liabilities	21,880			18,829
Due to affiliates	2,989			3,879
Long-term debt due within one year	7,699			7,420
Bonds payable due within one year	565			565
Total current liabilities	34,798			32,576
CAPITAL LEASE OBLIGATIONS	144,079			143,618
LONG-TERM DEBT	362,347			362,878
BONDS PAYABLE	147,252			147,038
OTHER LONG-TERM LIABILITIES	28,230			26,554
Total liabilities	716,706			712,664
COMMITMENTS AND CONTINGENCIES	—			—
EQUITY:
Common stock, $.01 par value — 100 shares authorized, issued, and outstanding	—			—
Paid-in-capital	190,514			190,514
Accumulated deficit	(146,887		)	(141,365		)
Equity attributable to One Lantern Senior Living Inc	43,627			49,149
Noncontrolling interest in majority owned entities	34,245			34,788
Total equity	77,872			83,937
TOTAL	$	794,578		$	796,601

(Concluded)

(1) The following represent assets of consolidated Variable Interest Entities (“VIE”) as of March 31, 2011 and December 31, 2010 which can only be used to settle obligations of the VIE: Cash and cash equivalents - $1.8 million and $1.2 million, Restricted cash - current - $0.8 million and $0.7 million, Resident accounts receivable - $0.2 million and $0.3 million, Other current assets - $0.5 million and $0.2 million, Property and equipment $18.2 million and $18.2 million, Restricted cash and other noncurrent assets - $1.1 million and $1.1 million.

(2) The following represents liabilities of VIE as of March 31, 2011 and December 31, 2010 for which the creditors do not have recourse to the general liability of the Company: Accounts payable - $0.4 million and $0.4 million, Accrued liabilities - $5.6 million and $5.6 million, Due to affiliates - $0.4 million and $0.5 million, Long-term debt (current and noncurrent) - $8.8 million and $9.1 million, Other long-term liabilities - $0.7 million and $0.6 million.

See notes to condensed consolidated financial statements.

3

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2011 and 2010 (unaudited)

(In thousands, except share amounts)

	Common
	Stock			Paid-In		Accumulated			Noncontrolling			Total
	Shares	Amount		Capital		Deficit			Interest			Equity
BALANCE — January 1, 2010	100	$	—	$	188,429	$	(114,153	)	$	40,695		$	114,971
Net loss	—	—		—		(6,209		)	(1,065		)	(7,274		)
BALANCE — March 31, 2010	100	$	—	$	188,429	$	(120,362	)	$	39,630		$	107,697

	Common
	Stock			Paid-In		Accumulated			Noncontrolling			Total
	Shares	Amount		Capital		Deficit			Interest			Equity
BALANCE — January 1, 2011	100	$	—	$	190,514	$	(141,365	)	$	34,788		$	83,937
Net loss	—	—		—		(5,522		)	(543		)	(6,065		)
BALANCE — March 31, 2011	100	$	—	$	190,514	$	(146,887	)	$	34,245		$	77,872

4

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

(In thousands)

	March 31,			March 31,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(6,065	)	$	(7,274	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	6,004			5,592
Loss on derivative instruments	2,040			2,345
Noncash interest expense	1,125			1,229
Deferred financing costs amortization	268			265
Loss on disposition of assets — net	165			213
(Earnings) loss from joint venture — net of distributions	(77		)	2
Provision for doubtful accounts	23			1
Change in operating assets and liabilities:
Resident accounts receivable	312			286
Other current assets	(2,841		)	(2,372		)
Accounts payable and other liabilities	1,171			3,987
Net cash provided by operating activities	2,125			4,274
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(4,835		)	(4,939		)
Change in restricted cash	(21		)	(669		)
Proceeds from disposal of property and equipment	—			3
Net cash used in investing activities	(4,856		)	(5,605		)

(Continued)

5

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

(In thousands)

	March 31,			March 31,
	2011			2010
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt	$	1,229		$	1,505
Repayment of long-term debt, bonds payable, and capital lease obligations	(1,741		)	(1,262		)
Fees related to issuance of long-term debt	—			(31		)
Net cash (used in) provided by financing activities	(512		)	212
CHANGE IN CASH AND CASH EQUIVALENTS	(3,243		)	(1,119		)
CASH AND CASH EQUIVALENTS — Beginning of period	27,858			31,437
CASH AND CASH EQUIVALENTS — End of period	$	24,615		$	30,318
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest payments	$	8,609		$	8,764
Purchase of property and equipment included in liabilities	$	4,498		$	3,190
Noncash increase to property and equipment and capital lease obligations due to purchase option price adjustment and lease modification	$	—		$	469
See notes to condensed consolidated financial statements.				(Concluded)

6

ONE LANTERN SENIOR LIVING INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (unaudited)

1.THE COMPANY AND BACKGROUND

Organization — One Lantern Senior Living Inc (“OLSL INC”) and subsidiaries (the “Company”) is a wholly owned subsidiary of Lazard Senior Housing Partners LP (“LSHP”), a real estate opportunity fund formed for the purpose of making debt and/or equity investments in senior housing assets located in the United States.

Background — As of March 31, 2011, the Company owned, operated, or managed 29 communities located in the Northeastern United States with a total of 2,926 units. Of the 29 communities, 16 were owned by the Company and 11 were operated by the Company pursuant to lease agreements. The Company also manages two communities in which it has a partial equity interest.

The Company owns a 72.09% interest in SG Senior Living LLC (“SGSL LLC”) as the managing member and LSHP Coinvestment Partnership I LP (“Coinvestment Partnership”) indirectly holds the remaining 27.91% membership interest. As of March 31, 2011, SGSL LLC owned and operated 12 properties.

Each of the 29 communities is managed by Atria Senior Living Group, Inc., a related entity, via various management and sub-management agreements.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying condensed consolidated financial statements include the Company’s majority-owned subsidiaries and all variable interest entities where the Company is considered the primary beneficiary. Intercompany transactions have been eliminated. Investments in entities not controlled by ownership or contractual obligations are accounted for under the equity method.

In the opinion of management, these financial statements include all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company as of March 31, 2011, and for all periods presented.  Those adjustments are of a normal and recurring nature.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of the financial position or operating results for an entire year. It is suggested that these interim financial statements be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2010.

7

3.FINANCIAL INSTRUMENTS

The Company is a party to multiple total return interest rate swap agreements which effectively convert fixed rate Bonds Payable to variable rate obligations.  The Company is also a party to two interest rate cap agreements.

The Company entered into the total return interest rate swap agreements with a notional amount of $171.7 million as of March 31, 2011 and December 31, 2010, in order to mitigate the fair value risk associated with the underlying debt. The Company entered into the interest rate cap agreements in order to mitigate interest rate risk. Under ASC Topic 815, Derivatives and Hedging, however, the Company did not qualify for hedge accounting. The fair values of the derivatives are recorded in other noncurrent assets and other long-term liabilities. Losses associated with the derivatives are recorded in loss on derivative instruments.

ASC Topic 820 defines fair value, provides a framework for measuring fair value, and expands disclosures required for fair value measurements. This guidance defines a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels. These levels, in order of highest to lowest priority, are described below:

Level 1 — Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Company’s own assumptions.

The following methods and assumptions were used in estimating fair value disclosures for financial instruments:

Interest Rate Caps — The fair value is determined with the assistance of a third party using forward yield curves and other relevant information generated by market transactions involving comparable instruments.

Interest Rate Swaps — The fair value is derived using hypothetical market transactions involving comparable instruments as well as alternative financing rates derived from market based financing rates, forward yield curves, discount rates, and the Company’s own credit risk.

The effect of derivative instruments on the condensed consolidated statements of operations as of March 31, 2011 and 2010, is as follows (in thousands):

	Amount of Loss
	Recognized in Income
	2011		2010
Interest rate swap agreements	$	2,026	$	2,176
Interest rate cap agreements	14		169
Total	$	2,040	$	2,345

8

The fair value of financial instruments as of March 31, 2011 and December 31, 2010, is as follows (in thousands):

	Carrying Amount at		Fair Value
	March 31, 2011		Level 1		Level 2		Level 3
Interest rate swap agreements	$	1,230	$	—	$	1,230	$	—
Interest rate cap agreements	6		—		6		—
Total assets	$	1,236	$	—	$	1,236	$	—
Interest rate swap agreements	$	15,089	$	—	$	15,089	$	—
Total liabilities	$	15,089	$	—	$	15,089	$	—

	Carrying Amount at		Fair Value
	December 31, 2010		Level 1		Level 2		Level 3
Interest rate swap agreements	$	1,468	$	—	$	1,468	$	—
Interest rate cap agreements	20		—		20		—
Total assets	$	1,488	$	—	$	1,488	$	—
Interest rate swap agreements	$	13,301	$	—	$	13,301	$	—
Total liabilities	$	13,301	$	—	$	13,301	$	—

At March 31, 2011 and December 31, 2010, the assets related to the fair value of interest rate swap and cap agreements were recorded in other noncurrent assets at approximately $1.2 million and $1.5 million, respectively. Liabilities related to the interest rate swap agreements were recorded in other long-term liabilities at approximately $15.1 million and $13.3 million at March 31, 2011 and December 31, 2010, respectively. A net loss on derivative financial instruments of approximately $2.0 million and $2.3 million was recorded in the condensed consolidated statements of operations for the three months ended March 31, 2011 and 2010, respectively.

4.INCOME TAXES

The Company’s effective tax rate for the three months ended March 31, 2011 and 2010 was 0.0%. The Company has a valuation allowance reducing its deferred tax assets to an amount that is more likely than not to be realized. The difference between the Company’s effective tax rate and the federal statutory rate is primarily due to increases in the valuation allowance resulting from recurring tax losses.

5.CONTINGENCIES AND GUARANTEES

The Company is subject to claims and legal actions in the ordinary course of its business. The Company believes that any liability resulting from these matters, after taking into consideration its insurance coverages and amounts recorded in the consolidated financial statements, will not have a material adverse effect on its consolidated financial position, results of operations, and cash flows.

The Company has made certain guarantees to third parties. These guarantees may survive the expiration of the term of the agreements or extend into perpetuity (unless subject to a legal statute of limitations).

9

There are no specific limitations on the maximum potential amount of future payments to be made under these guarantees, as the triggering events are not subject to predictability. The Company believes the likelihood of any losses resulting from these guarantees is remote.

The Company and certain partners have guaranteed certain obligations of Maplewood Place, an equity method investee. These guarantees include the payment of a monthly replacement reserve deposit in the amount of $3,474 if not paid by Maplewood Place. Additionally, the Company and certain partners have guaranteed to make payments in the event of certain tax credit recapture events. As of March 31, 2011 and December 31, 2010, no payments were required under these guarantees and the fair value of these guarantees was not material.

6.VENTAS TRANSACTION

On October 21, 2010, the Company announced that it had signed a definitive agreement to merge its real estate with Ventas, Inc., a healthcare real estate investment trust. As part of this transaction, Ventas, Inc. will acquire all of the Company’s senior living communities. Subject to certain approvals, the transaction is expected to close during the second quarter of 2011.

7.MARLAND PLACE TRANSACTION

The Company owns a 1% general partner interest in Marland Place Associates LP (“Marland Place”).  Marland Place owns one assisted living facility and is consolidated by the company as a Variable Interest Entity.  On March 1, 2011, the Company signed an agreement to purchase the limited partner’s interest for a price of $3.5 million. Subject to certain approvals, the transaction is expected to close during the second quarter of 2011.

8.SUBSEQUENT EVENTS

The Company’s financial statements are available for issue as of April 29, 2011. Any subsequent events have been evaluated through this date.

* * * * * *

10

EX-99.3

Exhibit 99.3

NATIONWIDE HEALTH PROPERTIES, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR

THE THREE MONTHS ENDED MARCH 31, 2011

TABLE OF CONTENTS

	Page
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Income Statements	3
Condensed Consolidated Statement of Equity	4
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	6

1

NATIONWIDE HEALTH PROPERTIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2011			December 31, 2010
	(Unaudited)
	(Dollars in thousands)
ASSETS
Investments in real estate:
Land	$	342,161		$	339,534
Buildings and improvements	3,796,893			3,679,745
Development in progress	21,866			17,827
	4,160,920			4,037,106
Less accumulated depreciation	(701,717		)	(670,601		)
	3,459,203			3,366,505
Mortgage loans receivable, net	262,675			289,187
Investments in unconsolidated joint ventures	41,875			42,582
	3,763,753			3,698,274
Cash and cash equivalents	51,207			59,591
Receivables, net	9,432			8,336
Assets held for sale	4,946			5,150
Intangible assets	155,383			163,238
Other assets	169,124			158,035
	$	4,153,845		$	4,092,624
LIABILITIES AND EQUITY
Unsecured senior credit facility	$	245,000		$	175,000
Senior notes	991,633			991,633
Notes and bonds payable	365,164			362,624
Accounts payable and accrued liabilities	147,036			151,069
Total liabilities	1,748,833			1,680,326
Redeemable OP unitholder interests	92,575			79,188
Commitments and contingencies
Equity:
NHP stockholders’ equity:
Preferred stock $1.00 par value; 5,000,000 shares authorized; none issued and outstanding	—			—
Common stock $0.10 par value; 200,000,000 shares authorized; issued and outstanding: 126,623,729 and 126,253,858 at March 31, 2011 and December 31, 2010, respectively	12,662			12,625
Capital in excess of par value	2,505,565			2,516,397
Cumulative net income	1,899,596			1,849,045
Accumulated other comprehensive income	9,840			8,614
Cumulative dividends	(2,148,141		)	(2,086,854		)
Total NHP stockholders’ equity	2,279,522			2,299,827
Noncontrolling interests	32,915			33,283
Total equity	2,312,437			2,333,110
	$	4,153,845		$	4,092,624

See accompanying notes.

2

NATIONWIDE HEALTH PROPERTIES, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Unaudited)

	Three Months Ended March 31,
	2011		2010
	(In thousands, except per
	share amounts)
Revenue:
Triple-net lease rent	$	82,271	$	72,200
Medical office building operating rent	29,515		21,685
	111,786		93,885
Interest and other income	10,588		6,963
	122,374		100,848
Expenses:
Interest expense	22,771		23,590
Depreciation and amortization	38,674		31,290
General and administrative	7,365		6,980
Merger and acquisition costs	5,097		1,443
Medical office building operating expenses	10,358		8,647
	84,265		71,950
Operating income	38,109		28,898
Income from unconsolidated joint ventures	1,465		1,347
Gain on debt extinguishment	—		75
Income from continuing operations	39,574		30,320
Discontinued operations:
Gains on sale of facilities, net	10,607		22
Income from discontinued operations	133		897
	10,740		919
Net income	50,314		31,239
Net loss attributable to noncontrolling interests	237		190
Net income attributable to NHP common stockholders	$	50,551	$	31,429
Basic earnings per share amounts:
Income from continuing operations attributable to NHP common stockholders	$	0.31	$	0.26
Discontinued operations attributable to NHP common stockholders	0.09		0.01
Net income attributable to NHP common stockholders	$	0.40	$	0.27
Basic weighted average shares outstanding	126,474		117,048
Diluted earnings per share amounts:
Income from continuing operations attributable to NHP common stockholders	$	0.31	$	0.25
Discontinued operations attributable to NHP common stockholders	0.08		0.01
Net income attributable to NHP common stockholders	$	0.39	$	0.26
Diluted weighted average shares outstanding	128,980		119,463
Dividends declared per share	$	0.48	$	0.44

See accompanying notes.

3

NATIONWIDE HEALTH PROPERTIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

(In thousands)

	NHP Stockholders’ Equity
												Accumulated
							Capital in					other
	Preferred Stock			Common stock			excess of			Cumulative		comprehensive			Cumulative			Noncontrolling			Total
	Shares	Amount		Shares	Amount		par value			net income		income (loss)			dividends			interests			equity
Balances at December 31, 2010	—	$	—	126,254	$	12,625	$	2,516,397		$	1,849,045	$	8,614		$	(2,086,854	)	$	33,283		$	2,333,110
Comprehensive income:
Net income	—	—		—	—		—			50,551		—			—			(237		)	50,314
Gain on interest rate swap agreements	—	—		—	—		—			—		1,004			—			—			1,004
Amortization of gain on Treasury lock agreements	—	—		—	—		—			—		(135		)	—			—			(135		)
Pro rata share of accumulated other comprehensive income from unconsolidated joint venture	—	—		—	—		—			—		357			—			—			357
Comprehensive income																					51,540
Issuance of common stock, net	—	—		370	37		1,798			—		—			—			—			1,835
Amortization of stock-based compensation	—	—		—	—		1,776			—		—			—			—			1,776
Common dividends	—	—		—	—		—			—		—			(61,287		)	—			(61,287		)
Adjust redeemable OP unitholder interests to current redemption value	—	—		—	—		(14,406		)	—		—			—			—			(14,406		)
Contributions from noncontrolling interests	—	—		—	—		—			—		—			—			88			88
Distributions to noncontrolling interests	—	—		—	—		—			—		—			—			(219		)	(219		)
Balances at March 31, 2011	—	$	—	126,624	$	12,662	$	2,505,565		$	1,899,596	$	9,840		$	(2,148,141	)	$	32,915		$	2,312,437

See accompanying notes.

4

NATIONWIDE HEALTH PROPERTIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2011			2010
	(In thousands)
Cash flows from operating activities:
Net income	$	50,314		$	31,239
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	38,699			31,969
Stock-based compensation	1,776			1,594
Deferred gain recognition	(471		)	—
Gain on re-measurement of equity interest upon acquisition, net	—			(620		)
Gain on debt extinguishment	—			(75		)
Gains on sale of facilities, net	(10,607		)	(22		)
Straight-line rent	(2,446		)	(1,733		)
Amortization of above/below market lease intangibles, net	134			(62		)
Mortgage and other loan premium amortization	(148		)	—
Amortization of deferred financing costs	500			719
Equity in earnings from unconsolidated joint ventures	(264		)	(286		)
Distributions of income from unconsolidated joint ventures	311			258
Changes in operating assets and liabilities:
Receivables	(1,096		)	(1,706		)
Intangible and other assets	(6,156		)	(148		)
Accounts payable and accrued liabilities	(15,060		)	(17,394		)
Net cash provided by operating activities	55,486			43,733
Cash flows from investing activities:
Investment in real estate and related assets and liabilities	(118,163		)	(65,056		)
Proceeds from sale of real estate facilities	8,240			—
Investment in mortgage and other loans receivable	(2,648		)	(140,437		)
Principal payments on mortgage and other loans receivable	36,086			1,270
Distributions from unconsolidated joint ventures	1,017			751
Net cash used in investing activities	(75,468		)	(203,472		)
Cash flows from financing activities:
Borrowings under credit facility	115,000			—
Repayment of borrowings under credit facility	(45,000		)	—
Issuance of notes and bonds payable	4,169			—
Principal payments on notes and bonds payable	(1,629		)	(5,020		)
Redemption of preferred stock	—			(92		)
Issuance of common stock, net	1,692			45,875
Dividends paid	(61,138		)	(51,979		)
Contributions from noncontrolling interests	88			—
Distributions to noncontrolling interests	(219		)	(283		)
Distributions to redeemable OP unitholders	(1,019		)	(370		)
Payment of deferred financing costs	(346		)	(80		)
Net cash provided by (used in) financing activities	11,598			(11,949		)
Decrease in cash and cash equivalents	(8,384		)	(171,688		)
Cash and cash equivalents, beginning of period	59,591			382,278
Cash and cash equivalents, end of period	$	51,207		$	210,590
Supplemental schedule of cash flow information:
Non-cash investing activities:
Accrual of contingent purchase price obligation	$	12,018		$	—
Assumption of debt upon acquisition of real estate	$	—		$	109,514
Retirement of mortgage loan receivable upon acquisition of real estate	$	—		$	47,500
Capital contributions from noncontrolling interests upon acquisition of real estate	$	—		$	25,289
Issuance of redeemable OP units upon acquisition of real estate	$	—		$	18,986
Issuance of mortgage loan receivables upon sale of real estate	$	—		$	6,258
Non-cash financing activities:
Adjust redeemable OP unitholder interests to current redemption value	$	14,406		$	1,562
Conversion of preferred stock to common stock	$	—		$	51,272

See accompanying notes.

5

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2011

1. Organization

Nationwide Health Properties, Inc., a Maryland corporation, is a real estate investment trust (“REIT”) that invests in healthcare related real estate, primarily senior housing, long-term care properties and medical office buildings. Whenever we refer herein to “NHP” or to “us” or use the terms “we” or “our,” we are referring to Nationwide Health Properties, Inc. and its subsidiaries, unless the context otherwise requires.

We primarily make our investments by acquiring an ownership interest in senior housing and long-term care facilities and leasing them to unaffiliated tenants under “triple-net” “master” leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant. We also invest in medical office buildings which are not generally subject to “triple-net” leases and generally have multiple tenants under separate leases in each building, thus requiring active management and responsibility for many of the associated operating expenses (although many of these are, or can effectively be, passed through to the tenants). Some of the medical office buildings are subject to “triple-net” leases. In addition, but to a much lesser extent because we view the risks of this activity to be greater due to less favorable bankruptcy treatment and other factors, from time to time, we extend mortgage loans and other financing to operators.

We believe we have operated in such a manner as to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). We intend to continue to qualify as such and therefore distribute at least 90% of our REIT taxable income (computed without regard to the dividends paid deduction and excluding capital gain) to our stockholders. If we qualify for taxation as a REIT, and we distribute 100% of our taxable income to our stockholders, we will generally not be subject to U.S. federal income taxes on our income that is distributed to stockholders. Accordingly, no provision has been made for federal income taxes.

As of March 31, 2011, we had investments in 665 healthcare facilities, one land parcel, three development projects and one asset held for sale located in 42 states.

At March 31, 2011, one of our triple-net lease tenants accounted for more than 10% of our revenues, Brookdale Senior Living, Inc. (“Brookdale”), which accounted for 11.2% of our revenues.

2. Summary of Significant Accounting Policies

Basis of Presentation

We have prepared the condensed consolidated financial statements included herein without audit. These financial statements include all adjustments that are, in the opinion of management, necessary for a fair presentation of the results of operations for the three months ended March 31, 2011 and 2010 pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All such adjustments are of a normal recurring nature.

Certain items in prior period financial statements have been reclassified to conform to current year presentation, including those required by the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant and Equipment (“ASC 360”), which require the operating results of any assets with their own identifiable cash flows that are disposed of or held for sale and in which we have no continuing interest to be removed from income from continuing operations and reported as discontinued operations.

Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to these rules and regulations. Although we believe that the disclosures in the financial statements included herein are adequate to make the information presented not misleading, these condensed consolidated financial statements should be read in conjunction with our financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC. The results of operations for the three months ended March 31, 2011 and 2010 are not necessarily indicative of the results for a full year.

6

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

We have evaluated events subsequent to March 31, 2011 for their impact on our condensed consolidated financial statements (see Note 19).

Principles of Consolidation

The condensed consolidated financial statements include our accounts, the accounts of our wholly owned subsidiaries and the accounts of our joint ventures that are controlled through voting rights or other means. We apply the provisions of ASC Topic 810, Consolidation (“ASC 810”), for arrangements with variable interest entities (“VIEs”) and would consolidate those VIEs where we are the primary beneficiary. All material intercompany accounts and transactions have been eliminated.

Our judgment with respect to our level of influence or control of an entity and whether we are the primary beneficiary of a VIE involves the consideration of various factors including, but not limited to, the form of our ownership interest, our representation on the entity’s governing body, the size of our investment, estimates of future cash flows, our ability to participate in policy-making decisions and the rights of the other investors to participate in the decision-making process and to replace us as manager and/or liquidate the venture, if applicable. Our ability to correctly assess our influence or control over an entity or determine the primary beneficiary of a VIE affects the presentation of these entities in our consolidated financial statements.

As of March 31, 2011, we leased ten facilities under triple-net leases with fixed price purchase options through eight wholly owned, consolidated subsidiaries that have been identified as VIEs and for which we have been identified as the primary beneficiary. The carrying value of the facilities was $107.6 million as of March 31, 2011, and the purchase options are exercisable between 2011 and 2021.

We apply the provisions of ASC Topic 323, Investments — Equity Method and Joint Ventures (“ASC 323”), to investments in joint ventures. Investments in entities that we do not consolidate but for which we have the ability to exercise significant influence over operating and financial policies are reported under the equity method. Under the equity method of accounting, our share of the entity’s earnings or losses is included in our operating results.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

Segment Reporting

We report our consolidated financial statements in accordance with the provisions of ASC Topic 280, Segment Reporting. We operate in two segments based on our investment and leasing activities: triple-net leases and multi-tenant leases (see Note 17).

Revenue Recognition

We derive the majority of our revenue from leases related to our real estate investments and a much smaller portion of our revenue from mortgage loans, other financing activities and other miscellaneous income. Revenue is recognized when it is realized or is realizable and earned.

Rental income from operating leases is recognized in accordance with the provisions of ASC Topic 840, Leases, and ASC Topic 605, Revenue Recognition. Our leases generally contain annual rent escalators. Many of our leases contain non-contingent rent escalators for which we recognize income on a straight-line basis over the lease term. Recognizing income on a straight-line basis requires us to calculate the total non-contingent rent to be paid over the life of a lease and to recognize the revenue evenly over that life. This method results in rental income in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset included in the caption “Other assets” on our consolidated balance sheets. At some point during the lease, depending on its terms, the cash rent payments eventually exceed the straight-line rent which results in the straight-line rent

7

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

receivable asset decreasing to zero over the remainder of the lease term. Certain leases contain rent escalators contingent on revenues or other factors, including increases based on changes in the Consumer Price Index. Such revenue increases are recognized as the related contingencies are met.

We assess the collectability of straight-line rent in accordance with the applicable accounting standards and our reserve policy and defer recognition of straight-line rent if its collectability is not reasonably assured. Our assessment of the collectability of straight-line rent is based on several factors, including the financial strength of the tenant and any guarantors, the historical operations and operating trends of the facility, the historical payment pattern of the tenant and the type of facility, among others. If our evaluation of these factors indicates we may not receive the rent payments due in the future, we defer recognition of the straight-line rental income and, depending on the circumstances, we will provide a reserve against the previously recognized straight-line rent receivable asset for a portion, up to its full value, that we estimate may not be recoverable. If we change our assumptions or estimates regarding the collectability of future rent payments required by a lease, we may adjust our reserve to increase or reduce the rental revenue recognized, and/or to increase or reduce the reserve against the existing straight-line rent receivable balance.

We recorded $2.4 million and $1.7 million of revenues in excess of cash received during the three months ended March 31, 2011 and 2010, respectively. We had straight-line rent receivables, net of reserves, recorded under the caption “Other assets” on our consolidated balance sheets of $41.8 million at March 31, 2011 and $39.3 million at December 31, 2010, net of reserves of $120.3 million and $114.7 million, respectively. We evaluate the collectability of the straight-line rent receivable balances on an ongoing basis and provide reserves against receivables we believe may not be fully recoverable. The ultimate amount of straight-line rent we realize could vary from the amounts currently recorded.

Interest income from loans, including discounts and premiums, is recognized using the effective interest method when collectability is reasonably assured. The effective interest method is applied on a loan-by-loan basis, and discounts and premiums are recognized as yield adjustments over the term of the related loans. We recognize interest income on impaired loans to the extent our estimate of the fair value of the collateral is sufficient to support the balance of the loans, other receivables and all related accrued interest. Once the total of the loans, other receivables and all related accrued interest is equal to our estimate of the fair value of the collateral, we recognize interest income on a cash basis. We provide reserves against impaired loans to the extent our total investment exceeds our estimate of the fair value of the loan collateral.

We recognize sales of facilities upon closing. Payments received from purchasers prior to closing are recorded as deposits. Gains on facilities sold are recognized using the full accrual method upon closing when the requirements of gain recognition on sale of real estate under the provisions of ASC 360 are met, including: the collectability of the sales price is reasonably assured; we have received adequate initial investment from the buyer; we are not obligated to perform significant activities after the sale to earn the gain; and other profit recognition criteria have been satisfied. Gains may be deferred in whole or in part until the sales satisfy these requirements. We had $15.1 million and $20.3 million of deferred gains included in the caption “Mortgage loans receivable, net” at March 31, 2011 and December 31, 2010, respectively.

Gains on facilities sold to unconsolidated joint ventures in which we maintain an ownership interest are included in income from continuing operations, and the portion of the gain representing our retained ownership interest in the joint venture is deferred and included in the caption “Accounts payable and accrued liabilities” on our consolidated balance sheets. We had $15.3 million of such deferred gains at March 31, 2011 and December 31, 2010. All other gains are included in discontinued operations.

Investments in Real Estate

We record properties at cost and use the straight-line method of depreciation for buildings and improvements over their estimated remaining useful lives of up to 40 years, generally 20 to 40 years depending on factors including building type, age, quality and location. We review and adjust useful lives periodically. Depreciation expense from continuing operations was $33.9 million and $27.1 million for the three months ended March 31, 2011 and 2010, respectively.

8

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

We allocate purchase prices of properties in accordance with the provisions of ASC Topic 805, Business Combinations (“ASC 805”), which require that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. ASC 805 also establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree. During the three months ended March 31, 2011 and 2010, we incurred $5.1 million and $1.4 million, respectively, of merger and acquisition costs that are included on our consolidated income statements.

The allocation of the cost between land, building and, if applicable, equipment and intangible assets and liabilities, and the determination of the useful life of a property are based on management’s estimates, which are based in part on independent appraisals or other consultants’ reports. For our triple-net leased facilities, the allocation is made as if the property was vacant, and a significant portion of the cost of each property is allocated to buildings. This amount generally approximates 90% of the total property value. Historically, we have generally acquired properties and simultaneously entered into a new market rate lease for the entire property with one tenant. For our multi-tenant medical office buildings, the percentage allocated to buildings may be substantially lower as allocations are made to assets such as lease-up intangible assets, above market tenant and ground lease intangible assets and in-place lease intangible assets (collectively, “Intangible assets”) included on our consolidated balance sheets and/or below market tenant and ground lease intangible liabilities included in the caption “Accounts payable and accrued liabilities” on our consolidated balance sheets.

We calculate depreciation and amortization on equipment and lease costs using the straight-line method based on estimated useful lives of up to five years or the lease term, whichever is appropriate. We amortize intangible assets and liabilities over the remaining lease terms of the respective leases to real estate amortization expense or medical office building operating rent, as appropriate. We review and adjust useful lives periodically.

We capitalize direct costs, including interest costs, associated with the development and construction of real estate assets while substantive activities are ongoing to prepare the assets for their intended use.

Asset Impairment

We review our long-lived assets individually on a quarterly basis to determine if there are indicators of impairment in accordance with the provisions of ASC 360. Indicators may include, among others, a tenant’s inability to make rent payments, operating losses or negative operating trends at the facility level, notification by a tenant that it will not renew its lease, or a decision to dispose of an asset or adverse changes in the fair value of any of our properties. For operating assets, if indicators of impairment exist, we compare the undiscounted cash flows from the expected use of the property to its net book value to determine if impairment exists. The evaluation of the undiscounted cash flows from the related lease agreement and expected use of the property is highly subjective and is based in part on various factors and assumptions, including, but not limited to, historical operating results, available market information and known trends and market/economic conditions that may affect the property, as well as estimates of future operating income, occupancy, rental rates, leasing demand and competition. If the sum of the future estimated undiscounted cash flows is higher than the current net book value, we conclude no impairment exists. If the sum of the future estimated undiscounted cash flows is lower than its current net book value, we recognize an impairment loss for the difference between the net book value of the asset and its estimated fair value. To the extent we decide to sell an asset, we recognize an impairment loss if the current net book value of the asset exceeds its fair value less selling costs.

We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying value of our investment in an unconsolidated joint venture may exceed the fair value. If it is determined that a decline in the fair value of our investment in an unconsolidated joint venture is other-than-temporary, and if such reduced fair value is below its carrying value, an impairment is recorded. The determination of the fair value of investments in unconsolidated joint ventures involves significant judgment. Our estimates consider all available evidence including, as appropriate, the present value of the expected future cash flows discounted at market rates, general economic conditions and trends and other relevant factors.

The above analyses require us to determine whether there are indicators of impairment for individual assets or investments in unconsolidated joint ventures, to estimate the most likely stream of cash flows from operating

9

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

assets and to determine the fair value of assets that are impaired or held for sale. If our assumptions, projections or estimates regarding an asset change in the future, we may have to record an impairment charge to reduce or further reduce the net book value of such individual asset or investment in unconsolidated joint venture.

No impairment charges were recorded during the three months ended March 31, 2011 or 2010.

Collectability of Receivables

We evaluate the collectability of our rent, mortgage and other loans and other receivables on a regular basis based on factors including, among others, payment history, the financial strength of the borrower and any guarantors, the value of the underlying collateral, the operations and operating trends of the underlying collateral, if any, the asset type and current economic conditions. If our evaluation of these factors indicates we may not recover the full value of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. This analysis requires us to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected. We had reserves included in the caption “Receivables, net” on our consolidated balance sheets of $13.7 million as of March 31, 2011 and $14.9 million as of December 31, 2010.

For our mortgage loans, the evaluation emphasizes the operations, operating trends, financial performance and value of the underlying collateral, and for our other loans, the evaluation emphasizes the financial strength of the borrower and any guarantors. Our quarter-end evaluation was performed using operating and financial information as of February 28, 2011, and based on this evaluation, our mortgage and other loans are grouped into three classes — good standing, watch list and special monitoring. For loans classified as good standing, the likelihood of loss is remote, and while borrowers may be current on all required payments for loans classified as watch list or special monitoring, there are other factors considered in our evaluation which cause the likelihood of loss to be reasonably possible. Our analysis did not identify any mortgage loans for which we believe we may not recover the full value of the receivable, and as such, no reserves for mortgage loans receivable have been recorded as of March 31, 2011. Our analysis identified certain other loans for which we believe we may not recover the full value of the receivable, and we have recorded $5.9 million of reserves for other loans receivable as of March 31, 2011. The balances of mortgage and other loans by class as of March 31, 2011 were as follow:

			Deferred Gains					Carrying
	Principal		and Discounts			Reserves		Amount
	(In thousands)
Mortgage loans receivable:
Good standing	$	248,097	$	(14,725	)	$	—	$	233,372
Watch list	23,846		(1,139		)	—		22,707
Special monitoring	6,596		—			—		6,596
	$	278,539	$	(15,864	)	$	—	$	262,675

						Carrying
	Principal		Reserves			Amount
	(In thousands)
Other loans receivable:
Good standing	$	62,623	$	—		$	62,623
Watch list	5,000		(1,406		)	3,594
Special monitoring	4,846		(4,446		)	400
	$	72,469	$	(5,852	)	$	66,617

The following table summarizes the changes in reserves for other loans receivable during the three months ended March 31, 2011:

10

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

	Reserves
	(In thousands)
Balance at January 1, 2011	$	(6,057	)
Reversal of reserves	205
Balance at March 31, 2011	$	(5,852	)

Cash and Cash Equivalents

Cash and cash equivalents include short-term investments with original maturities of three months or less when purchased.

Capital Raising Costs

Deferred financing costs are included in the caption “Other assets” on our consolidated balance sheets and are amortized as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield. Deferred financing cost amortization is included in the caption “Interest expense” on our consolidated income statements. Costs incurred in connection with the issuance of common stock are recorded as a reduction of capital in excess of par value.

Derivatives

In the normal course of business, we are exposed to financial market risks, including interest rate risk on our interest-bearing liabilities. We endeavor to limit these risks by following established risk management policies, procedures and strategies, including, on occasion, the use of derivative instruments. We do not use derivative instruments for trading or speculative purposes.

Derivative instruments are recorded on our consolidated balance sheets as assets or liabilities based on each instrument’s fair value. Changes in the fair value of derivative instruments are recognized currently in earnings, unless the derivative instrument meets the criteria for hedge accounting contained in ASC Topic 815, Derivatives and Hedging (“ASC 815”). If the derivative instruments meet the criteria for a cash flow hedge, the gains and losses recognized upon changes in the fair value of the derivative instrument are recorded in other comprehensive income. Gains and losses on a cash flow hedge are reclassified into earnings when the forecasted transaction affects earnings. A contract that is designated as a hedge of an anticipated transaction which is no longer likely to occur is immediately recognized in earnings.

For investments in entities reported under the equity method of accounting, we record our pro rata share of the entity’s derivative instruments’ fair value, other comprehensive income or loss and gains and losses determined in accordance with ASC 323 and ASC 815 as applicable.

Redeemable Limited Partnership Unitholders

NHP/PMB L.P. (“NHP/PMB”) is a limited partnership that we formed in February 2008 to acquire properties from entities affiliated with Pacific Medical Buildings LLC. We consolidate NHP/PMB consistent with the provisions of ASC 810, as our wholly owned subsidiary is the general partner and exercises control. As of March 31, 2011 and December 31, 2010, third party investors owned 2,176,700 Class A limited partnership units in NHP/PMB (“OP Units”), which represented 32.0% of the total units outstanding at March 31, 2011 and December 31, 2010. As of March 31, 2011 and December 31, 2010, 4,619,330 Class B limited partnership units in NHP/PMB were outstanding, respectively, all of which were held by our subsidiaries.

After a one year holding period, the OP Units are exchangeable for cash or, at our option, shares of our common stock equal to the “REIT Shares Amount” per OP Unit. As of March 31, 2011, the REIT Shares Amount was 1.000. We have entered into a registration rights agreement with the holders of the OP Units which, subject to the terms and conditions set forth therein, obligates us to register the shares of common stock that we may issue in exchange for such OP Units. As registration rights are outside of our control, the redeemable OP unitholder interests

11

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

are classified outside of permanent equity on our consolidated balance sheets. As of March 31, 2011, the OP Units had been outstanding for one year or longer and were exchangeable for cash of $92.6 million.

We applied the provisions of ASC Topic 480, Distinguishing Liabilities from Equity, to reflect the redeemable OP unitholder interests at the greater of cost or fair value. As of March 31, 2011, the fair value of the OP Units exceeded the cost basis by $31.2 million, and the adjustment was recorded through capital in excess of par value. The value of the OP Units held by redeemable OP unitholder interests was $92.6 million and $79.2 million at March 31, 2011 and December 31, 2010, respectively.

Noncontrolling Interests

We have four consolidated joint ventures in which we have equity interests, ranging from 71% to 95%, in nine multi-tenant medical office buildings and one development project.

NHP/PMB has equity interests, ranging from 50% to 69%, in three joint ventures which each own one multi-tenant medical office building. The joint ventures are consolidated by NHP/PMB, and we consolidate NHP/PMB in our consolidated financial statements.

We also have six partnerships in which we have equity interests, ranging from 51% to 96%, in 18 triple-net leased facilities. We consolidate the partnerships in our consolidated financial statements.

Stock-Based Compensation

We account for stock-based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation, which require stock-based compensation awards to be valued at the fair value on the date of grant and amortized as an expense over the vesting period and require any dividend equivalents earned to be treated as dividends for financial reporting purposes. Net income reflects stock-based compensation expense of $1.8 million and $1.6 million for the three months ended March 31, 2011 and 2010, respectively.

Income Taxes

We intend to continue to qualify as a REIT under Sections 856 through 860 of the Code, and accordingly, no provision has been made for federal income taxes. However, we are subject to certain state and local taxes on our income and/or property, and these amounts are included in the expense caption “General and administrative” on our consolidated income statements.

As part of the process of preparing our consolidated financial statements, significant management judgment is required to estimate our compliance with REIT requirements. Our determinations are based on interpretation of tax laws, and our conclusions may have an impact on the income tax expense recognized. Adjustments to income tax expense may be required as a result of i) audits conducted by federal and state tax authorities; ii) our ability to qualify as a REIT; iii) the potential for built-in-gain recognized related to prior-tax-free acquisitions of C corporations; and iv) changes in tax laws. Adjustments required in any given period are included in income, other than adjustments to income tax liabilities acquired in business combinations, which would be adjusted through goodwill.

Earnings per Share (EPS)

Basic EPS is computed by dividing income from continuing operations available to common stockholders by the weighted average common shares outstanding. Income from continuing operations available to common stockholders is calculated by deducting amounts attributable to noncontrolling interests, amounts attributable to participating securities and dividends declared on preferred stock from income from continuing operations.

We apply the provisions of ASC Topic 260, Earnings per Share, which require that the two-class method of computing basic earnings per share be applied when there are unvested share-based payment awards that contain rights to nonforfeitable dividends outstanding during a reporting period. These participating securities share in undistributed earnings with common stockholders for purposes of calculating basic earnings per share.

12

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

Diluted EPS includes the effect of any potential shares outstanding, which for us is comprised of dilutive stock options, other share-settled compensation plans and, if the effect is dilutive, our 7.75% Series B Cumulative Convertible Preferred Stock (“Series B Preferred Stock”), which was redeemed on January 18, 2010, and/or OP Units. The dilutive effect of stock options and other share-settled compensation plans that do not contain rights to nonforfeitable dividends is calculated using the treasury stock method with an offset from expected proceeds upon exercise of the stock options and unrecognized compensation expense.

Fair Value

We apply the provisions of ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) to our financial assets and liabilities measured at fair value on a recurring basis and to our nonfinancial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 also specifies a three-level hierarchy of valuation techniques based upon whether the inputs reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect our own assumptions of market participant valuation (unobservable inputs) and requires the use of observable inputs if such data is available without undue cost and effort. The hierarchy is as follows:

·Level 1 — quoted prices for identical instruments in active markets.

·Level 2 — observable inputs other than Level 1 inputs, including quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and other derived valuations with significant inputs or value drivers that are observable or can be corroborated by observable inputs in active markets.

·Level 3 — unobservable inputs or derived valuations with significant inputs or value drivers that are unobservable.

Fair value measurements at March 31, 2011 are as follows:

	Fair Value			Level 1			Level 2		Level 3
	(In thousands)
Financial assets	$	5,549		$	5,549		$	—	$	—
Financial liabilities	(5,549		)	(5,549		)	—		—
Interest rate swaps	12,161			—			12,161		—
Redeemable OP unitholder interests	92,575			—			92,575		—
	$	104,736		$	—		$	104,736	$	—

Amounts related to our deferred compensation plan are invested in various financial assets, and the fair value of the corresponding assets and liabilities is based on market quotes. Interest rate swaps are valued using standard derivative pricing models that consider forward yield curves and discount rates. OP Units are exchangeable for cash or, at our option, shares of our common stock equal to the REIT Shares Amount. As such, the fair value of OP Units outstanding at March 31, 2011 is based on the closing price of our common stock on March 31, 2011, which was $42.53 per share.

The provisions of ASC Topic 825, Financial Instruments, provide companies with an option to report selected financial assets and liabilities at fair value and establish presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. We have not elected to apply the fair value option to any specific financial assets or liabilities.

The carrying amount of cash and cash equivalents approximates fair value because of the short maturities of these instruments. The fair value of mortgage and other loans receivable are based upon the estimates of

13

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

management and on rates currently prevailing for comparable loans. The fair value of long-term debt is estimated based on discounting future cash flows utilizing current rates offered to us for debt of a similar type and remaining maturity.

The table below details the book value and fair value for mortgage and other loans receivable and the components of long-term debt at March 31, 2011. These fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition of these financial instruments.

	Book Value		Fair Value
	(In thousands)
Mortgage loans receivable	$	278,538	$	280,786
Other loans receivable	$	72,469	$	65,191
Unsecured senior credit facility	$	245,000	$	245,000
Senior notes	$	991,633	$	1,084,862
Notes and bonds payable	$	365,164	$	357,188

Impact of New Accounting Standards Updates

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, Improving Disclosures About Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 adds new requirements for disclosures of significant transfers into and out of Levels 1, 2 and 3 of the fair value hierarchy, the reasons for the transfers and the policy for determining when transfers are recognized. ASU 2010-06 also adds new requirements for disclosures about purchases, sales, issuances and settlements on a gross rather than net basis relating to the reconciliation of the beginning and ending balances of Level 3 recurring fair value measurements. It also clarifies the level of disaggregation to require disclosures by “class” rather than by “major category of assets and liabilities” and clarifies that a description of inputs and valuation techniques used to measure fair value is required for both recurring and nonrecurring fair value measurements classified as Level 2 or 3. ASU 2010-06 became effective January 1, 2010 except for the requirements to provide the Level 3 activity of purchases, sales, issuances and settlements on a gross basis which became effective January 1, 2011. The adoption of ASU 2010-06 did not have a material impact on our results of operations or financial position.

In July 2010, the FASB issued ASU 2010-20, Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses (“ASU 2010-20”). ASU 2010-20 amends ASC Topic 310, Receivables, to require additional disclosures regarding credit quality and the allowance for credit losses related to financing receivables, including credit quality indicators and past due and modification information. Disclosures must be disaggregated by segment and class. The disclosures as of the end of a reporting period became effective December 31, 2010, and the disclosures about activity that occurs during a reporting period became effective January 1, 2011. The adoption of ASU 2010-20 did not have a material impact on our results of operations or financial position.

3. Real Estate Properties

As of March 31, 2011, we had investments in the following consolidated facilities:

Assisted and independent living facilities	268
Skilled nursing facilities	183
Continuing care retirement communities	10
Specialty hospitals	7
Triple-net medical office buildings	24
Multi-tenant medical office buildings, including 21 owned by consolidated joint ventures (see Note 5)	84
	576

We lease our owned senior housing and long-term care facilities and certain medical office buildings to single tenants under “triple-net,” and in most cases, “master” leases that are accounted for as operating leases. These leases generally have an initial term of up to 20 years and generally have two or more multiple-year renewal options.

14

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

As of March 31, 2011, approximately 87% of these facilities were leased under master leases. In addition, the majority of these leases contain cross-collateralization and cross-default provisions tied to other leases with the same tenant, as well as grouped lease renewals and grouped purchase options. As of March 31, 2011, leases covering 431 triple-net leased facilities were backed by security deposits consisting of irrevocable letters of credit or cash totaling $89.3 million. Under the terms of the leases, the tenant is responsible for all maintenance, repairs, taxes, insurance and capital expenditures on the leased properties. As of March 31, 2011, leases covering 399 facilities contained provisions for property tax impounds, and leases covering 284 facilities contained provisions for capital expenditure impounds. We generally lease medical office buildings to multiple tenants under separate non-triple-net leases, where we are responsible for many of the associated operating expenses (although many of these are, or can effectively be, passed through to the tenants). However, some of the medical office buildings are subject to triple-net leases, where the lessees are responsible for the associated operating expenses.

During the three months ended March 31, 2011, we acquired six skilled nursing facilities and one assisted and independent living facility subject to triple-net leases and one multi-tenant medical office building in three separate transactions for an aggregate investment of $121.4 million, including a $12.0 million contingent purchase price obligation which is included in the caption “Accounts payable and accrued liabilities” on our consolidated balance sheets as of March 31, 2011.

As of March 31, 2011, we had entered into agreements to develop two assisted and independent living facilities. Costs of $2.2 million were incurred during the three months ended March 31, 2011 and are included in the caption “Development in progress on our consolidated balance sheets.

During the three months ended March 31, 2011, we funded $3.3 million in expansions, construction and capital improvements at certain facilities in our triple-net leases segment in accordance with existing lease provisions. Such expansions, construction and capital improvements generally result in an increase in the minimum rents earned by us on these facilities either at the time of funding or upon completion of the project. As of March 31, 2011, we had committed to fund additional expansions, construction and capital improvements of $10.9 million. During the three months ended March 31, 2011, we also funded $0.3 million in capital and tenant improvements at certain multi-tenant medical office buildings.

During the three months ended March 31, 2011, we sold one skilled nursing facility not previously transferred to assets held for sale for net cash proceeds of $7.5 million that resulted in a gain of $5.4 million which is included the caption “Gain on sale of facilities, net” in “Discontinued operations” on our consolidated income statements.

No impairment charges were recorded on our real estate properties during three months ended March 31, 2011 or 2010.

Hearthstone Senior Living

In February 2011, our tenant, Hearthstone Senior Services, L.P. (“Hearthstone”), notified us that it would be unable to pay the rent then due under its leases with us, and asked us to amend certain terms of the leases to make rents achievable. In order to substantially increase the ability of Hearthstone to meet its future obligations, and thereby protecting our interest, we agreed to certain modifications of the terms of our leases with Hearthstone that include, among other things, a reduction in the aggregate rent payable by $7.4 million for the lease year ending February 2012, and by $6.4 million for subsequent lease years through 2021. After giving effect to these reductions, the aggregate rent payable by Hearthstone is $31.7 million for the first lease year, $33.7 million for the second lease year and increases by 3% each year thereafter. In connection with the lease modifications, we also obtained the right to terminate any and all of our leases with Hearthstone at any time without cause. We hold a $6.0 million letter of credit that secures Hearthstone’s payment obligations to us. However, it is possible that the letter of credit may not be sufficient to compensate us for any future losses or expenses that may arise if Hearthstone defaults under its leases with us. Other terms of our modified arrangements with Hearthstone include:

·We have eliminated supplemental rent obligations, except for supplemental rent accrued prior to February 1, 2011, which totals $6.0 million and becomes payable (i) in full upon an event of default by

15

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

Hearthstone for which NHP chooses to exercise its remedies, (ii) in full upon a sale of Hearthstone and (iii) in part, if we exercise our right to terminate the leases with Hearthstone without cause.

·We will be entitled to receive revenue participation rent, payable monthly and calculated as 20% of incremental gross revenue over the base month of February 2011, commencing February 1, 2012 and capped in any one year at $6.4 million (subject to annual increases of 3%).

·Upon exercise of our right to terminate the leases without cause, Hearthstone must enter into an operations transfer agreement with a successor operator to allow for an efficient transfer of operations to our designee.

·If we exercise the right to terminate the Hearthstone leases without cause, upon transition of the facilities to a licensed replacement operator we must release to Hearthstone a portion of the $6.0 million letter of credit. The amount released is $3.0 million if the transition occurs prior to September 1, 2011, and increases by $1 million for every six month period thereafter.

·The Chief Executive Officer of Hearthstone has executed a guaranty in our favor that would obligate him to reimburse us the amount of any (i) distributions in excess of permitted amounts, (ii) compensation paid to him in excess of permitted amounts, and (iii) losses arising from customary “bad boy” acts such as fraud, or misappropriation of funds, rents or insurance proceeds.

4. Mortgage Loans Receivable

As of March 31, 2011, we held 19 mortgage loans receivable secured by:

Multi-tenant medical office buildings	27
Skilled nursing facilities	20
Assisted and independent living facilities	7
Continuing care retirement communities	1
Land parcel	1
	56

As of March 31, 2011, the mortgage loans receivable had an aggregate principal balance of $278.5 million and are reflected in our consolidated balance sheets net of aggregate deferred gains and discounts totaling $15.9 million, with individual outstanding principal balances ranging from $0.7 million to $83.1 million and maturities ranging from 2010 to 2031. We had a $6.6 million mortgage loan which matured during 2010 and is expected to be repaid in full during the second quarter of 2011. The borrower was current on all interest payments as of March 31, 2011.

In connection with the funding of a mortgage loan secured by a skilled nursing facility during 2010, we agreed to fund up to $10.9 million to expand the facility. During the three months ended March 31, 2011, we funded $1.3 million under the agreement.

During the three months ended March 31, 2011, we also funded $0.1 million on other existing loans.

During the three months ended March 31, 2011, one mortgage loan to Brookdale secured by five assisted and independent living facilities with a carrying value of $28.3 million (net of a deferred gain of $4.7 million) was prepaid. The deferred gain was recognized and included in the caption “Gain on sale of facilities, net” in “Discontinued operations” on our consolidated income statements.

During the three months ended March 31, 2011, we also recognized a deferred gain on sale of $0.5 million under the installment method for facilities previously sold to the tenants for which we provided a mortgage loan that matures in 2013. The gain is included in the caption “Interest and other income” on our consolidated income statements.

16

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

5. Medical Office Building Joint Ventures

As of March 31, 2011, NHP/PMB owned 12 multi-tenant medical office buildings, three of which are owned through consolidated joint ventures. During the three months ended March 31, 2011, NHP/PMB funded $49,000 in capital and tenant improvements at certain facilities, and cash distributions of $1.0 million and $2.6 million were made to Class A and Class B unitholders, respectively.

As of March 31, 2011, we owned nine multi-tenant medical office buildings through consolidated joint ventures. During the three months ended March 31, 2011, the joint ventures funded $0.5 million in capital and tenant improvements at certain facilities. During the three months ended March 31, 2011, operating cash distributions from the joint ventures of $0.1 million were made to us.

As of March 31, 2011, we owned one development project through a consolidated joint venture. During the three months ended March 31, 2011, the joint venture incurred costs of $1.9 million which are included in the caption “Development in progress” on our consolidated balance sheets. During the three months ended March 31, 2011, the joint venture obtained a $36.5 million construction loan under which $4.2 million has been drawn and remains outstanding at March 31, 2011. No cash distributions were made during the three months ended March 31, 2011.

All intercompany balances with our consolidated joint ventures have been eliminated for purposes of our consolidated financial statements.

6. Investment in Unconsolidated Joint Ventures

The following table sets forth the amounts from our unconsolidated joint ventures included in the caption “Income from unconsolidated joint ventures” on our consolidated income statements for the periods presented:

	Three months ended
	March 31,
	2011			2010
	(In thousands)
Management fees:
State pension fund investor	$	1,201		$	1,061
NHP share of net income (loss):
State pension fund investor	311			246
PMB Real Estate Services LLC	(47		)	28
PMB SB 399-401 East Highland LLC	—			12
	$	1,465		$	1,347

State Pension Fund Investor

As of March 31, 2011, we owned interests in 34 triple-net leased facilities through a joint venture with a state pension fund investor. During the three months ended March 31, 2011, we received distributions of $1.0 million from the joint venture.

PMB Real Estate Services LLC

In 2008, we entered into an agreement with Pacific Medical Buildings LLC to acquire a 50% interest in PMB Real Estate Services LLC (“PMBRES”), a full service property management company. An additional payment equal to six times the Normalized Net Operating Profit, as defined, of PMBRES for 2010 was to be made on or before March 31, 2011. During 2010, PMBRES had a net operating loss, and as such, no additional payment was made on or before March 31, 2011. PMBRES provides property management services for 33 multi-tenant medical office buildings that we own or in which we have an ownership interest.

17

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

PMB SB 399-401 East Highland LLC

In 2008, we acquired a noncontrolling interest in PMB SB 399-401 East Highland LLC (“PMB SB”), an entity that owned two multi-tenant medical office buildings, and as of March 1, 2010, we acquired the remaining interest in PMB SB. In connection with the acquisition, we re-measured our previously held equity interest at the acquisition date fair value based on an independent consultant’s report and recognized a net gain on the re-measurement of $0.6 million which is included in the caption “Interest and other income” on our consolidated income statements.

7. Assets Held for Sale

During 2010, we transferred one skilled nursing facility and one medical office building to assets held for sale. The skilled nursing facility was sold in January 2011 for net cash proceeds of $0.8 million, resulting in a gain of $0.5 million which is included in the caption “Gain on sale of facilities, net” in “Discontinued operations” on our consolidated income statements. The tenant of the medical office building has filed bankruptcy, and an impairment charge of $15.0 million was recognized during 2010 in discontinued operations based on broker estimates of fair value, comparable sales in the local submarket and an unsolicited cash offer received during 2010. We intend to sell the medical office building within one year.

8. Intangible Assets and Liabilities

Intangible assets include items such as lease-up intangible assets, above market tenant and ground lease intangible assets and in-place lease intangible assets. Intangible liabilities include below market tenant and ground lease intangible liabilities and are included in the caption “Accounts payable and accrued liabilities” on our consolidated balance sheets. As of March 31, 2011 and December 31, 2010, intangible assets and liabilities consisted of:

	March 31,			December 31,
	2011			2010
	(In thousands)
Gross intangible assets	$	202,673		$	211,134
Accumulated amortization	(47,290		)	(47,896		)
	$	155,383		$	163,238
Gross intangible liabilities	$	18,227		$	18,643
Accumulated amortization	(5,461		)	(5,398		)
	$	12,766		$	13,245

The amortization of above/below market lease intangibles is included in the caption “Medical office building operating rent” on our consolidated income statements. The amortization of other intangible assets and liabilities is included in the caption “Depreciation and amortization” on our consolidated income statements. The following table sets forth amounts included on our consolidated income statements related to the amortization of intangible assets and liabilities for the periods presented:

	Three months ended
	March 31,
	2011		2010
	(In thousands)
Amortization:
Above/below market lease intangibles	$	134	$	(62	)
Other intangible assets and liabilities	4,529		4,008
	$	4,663	$	3,946

18

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

9. Other Assets

As of March 31, 2011 and December 31, 2010, other assets consisted of:

	March 31,		December 31,
	2011		2010
	(In thousands)
Other receivables, net of reserves of $5.9 million and $6.1 million at March 31, 2011 and December 31, 2010, respectively	$	66,617	$	68,200
Straight-line rent receivables, net of reserves of $120.3 million and $114.7 million at March 31, 2011 and December 31, 2010, respectively	41,771		39,331
Prepaid ground leases	12,741		12,804
Investments and restricted funds	12,741		12,567
Interest rate swaps	12,161		11,157
Deferred financing costs	8,138		8,566
Capitalized lease and loan origination costs	6,932		1,910
Other	8,023		3,500
	$	169,124	$	158,035

Included in other receivables at both March 31, 2011 and December 31, 2010, are two unsecured loans to Emeritus Corporation in the amount of $21.4 million and $30.0 million. The loans mature in March 2017.

10. Debt

Unsecured Senior Credit Facility

As of March 31, 2011 and December 31, 2010, we had $245.0 million and $175.0 million, respectively, outstanding on our $700.0 million revolving unsecured senior credit facility. At our option, borrowings under the credit facility bear interest at the prime rate (3.25% at March 31, 2011) or applicable LIBOR plus 0.70% (0.95% at March 31, 2011). We pay a facility fee of 0.15% per annum on the total commitment under the agreement. The credit facility matures on December 15, 2011. As of March 31, 2011, we were in compliance with all covenants under the credit facility.

Senior Notes

The aggregate principal amount of notes outstanding at each of March 31, 2011 and December 31, 2010 was $991.6 million, and the weighted average interest rate on the notes was 6.47%. The weighted average maturity was 3.7 years and 4.0 years as of March 31, 2011 and December 31, 2010, respectively.

Notes and Bonds Payable

The aggregate principal amount of notes and bonds payable at March 31, 2011 was $365.2 million. Notes and bonds payable are due through the year 2036, at interest rates ranging from 0.83% to 8.63% and are secured by real estate properties with an aggregate net book value as of March 31, 2011 of $527.6 million. As of March 31, 2011, the weighted average interest rate on the notes and bonds payable was 5.53% and the weighted average maturity was 7.0 years. As of December 31, 2010, the aggregate amount of notes and bonds payable was $362.6 million, and the notes and bonds payable had a weighted average interest rate of 5.59% and a weighted average maturity of 7.2 years.

During the three months ended March 31, 2011, our consolidated joint venture which owns a development project obtained a $36.5 million construction loan under which $4.2 million has been drawn and remains outstanding at March 31, 2011.

19

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

Debt Maturities

The principal balances of our debt as of March 31, 2011 mature as follows:

Year	Credit Facility		Senior Notes		Notes and Bonds Payable		Total
	(In thousands)
2011	$	245,000	$	339,040	$	—	$	584,040
2012	—		72,950		38,128		111,078
2013	—		269,850		41,961		311,811
2014	—		—		37,383		37,383
2015	—		234,420		35,115		269,535
Thereafter (1)	—		75,373		212,577		287,950
	$	245,000	$	991,633	$	365,164	$	1,601,797

(1)There are $52.4 million of senior notes due in 2037 which may be put back to us at their face amount at the option of the holder on October 1 of any of the following years: 2012, 2017 or 2027. There are $23.0 million of senior notes due in 2038 which may be put back to us at their face amount at the option of the holder on July 7 of any of the following years: 2013, 2018, 2023 or 2028.

11.Stockholders’ Equity

Common Stock

We have entered into sales agreements from time to time with agents to sell shares of our common stock through an at-the-market equity offering program. As of March 31, 2011, approximately 1,322,000 shares of common stock were available to be sold pursuant to our at-the-market equity offering program. However, under the terms of the February 27, 2011 merger agreement with Ventas, Inc. (see Note 18), we are not allowed to issue any shares of common stock, including any shares sold through our at-the-market equity offering program, during the pendency of the merger. No shares were issued through our at-the-market equity offering program during the three months ended March 31, 2011.

Prior to March 31, 2011, we sponsored a dividend reinvestment plan that enabled existing stockholders to purchase additional shares of common stock by automatically reinvesting all or part of the cash dividends paid on their shares of common stock at a discount ranging from 0% to 5%, determined by us from time to time in accordance with the plan. During the period from January 1, 2011 to March 31, 2011, we issued approximately 153,000 shares of common stock, at an average price of $39.89 per share, resulting in proceeds of approximately $6.1 million. Effective as of March 31, 2011, the dividend reinvestment plan was suspended in accordance with its terms.

12. Earnings Per Share (EPS)

Certain of our share-based payment awards are considered participating securities which requires the use of the two-class method for the computation of basic and diluted EPS.

Diluted EPS also includes the effect of any potential shares outstanding, which for us is comprised of dilutive stock options, other share-settled compensation plans and, if the effect is dilutive, Series B Preferred Stock, which was redeemed on January 18, 2010, and/or OP Units. The Series B Preferred Stock was not dilutive for the three months ended March 31, 2010. There were 150,700 and 270,100 stock options that would not be dilutive for the three months ended March 31, 2011 and 2010, respectively. The calculation below excludes 81,181 restricted stock units that would not be dilutive for the three months ended March 31, 2011. The calculation below excludes 27,000 restricted stock units, 8,700 shares of restricted stock and 6,900 stock appreciation rights that would not be dilutive for the three months ended March 31, 2010. The following table sets forth the components of the basic and diluted EPS calculations:

20

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

	Three months ended
	March 31,
	2011			2010
	(In thousands, except per share amounts)
Numerator:
Income from continuing operations	$	39,574		$	30,320
Net loss attributable to noncontrolling interests	237			190
Net income attributable to participating securities	(442		)	(326		)
Numerator for Basic and Diluted EPS from continuing operations	$	39,369		$	30,184
Numerator for Basic and Diluted EPS from discontinued operations	$	10,740		$	919
Denominator:
Basic weighted average shares outstanding	126,474			117,048
Effect of dilutive securities:
Stock options	—			67
Other share-settled compensation plans	329			426
OP Units	2,177			1,922
Diluted weighted average shares outstanding	128,980			119,463
Basic earnings per share amounts:
Income from continuing operations attributable to NHP common stockholders	$	0.31		$	0.26
Discontinued operations attributable to NHP common stockholders	0.09			0.01
Net income attributable to NHP common stockholders	$	0.40		$	0.27
Diluted earnings per share amounts:
Income from continuing operations attributable to NHP common stockholders	$	0.31		$	0.25
Discontinued operations attributable to NHP common stockholders	0.08			0.01
Net income attributable to NHP common stockholders	$	0.39		$	0.26

13. Discontinued Operations

ASC 360 requires the operating results of any assets with their own identifiable cash flows that are disposed of or held for sale and in which we have no continuing interest be removed from income from continuing operations and reported as discontinued operations. The operating results for any such assets for any prior periods presented must also be reclassified as discontinued operations. If we have a continuing involvement, as in the sales to our unconsolidated joint venture, the operating results remain in continuing operations. The following table details the operating results reclassified to discontinued operations for the periods presented:

21

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

	Three months ended
	March 31,
	2011		2010
	(In thousands)
Rental income	$	157	$	1,580
Interest and other income	2		—
	159		1,580
Expenses:
Depreciation and amortization	26		679
General and administrative	—		4
	26		683
Income from discontinued operations	$	133	$	897

14. Derivatives

During August 2010, we entered into six 12-month forward-starting interest rate swap agreements for an aggregate notional amount of $250.0 million at a weighted average rate of 3.16%. We entered into these swap agreements in order to hedge the expected interest payments associated with fixed rate debt forecasted to be issued in 2011. The swap agreements each have an effective date of August 1, 2011 and a termination date of August 1, 2021. We expect to settle the swap agreements when the forecasted debt is issued. We assessed the effectiveness of these swap agreements as hedges at inception and on March 31, 2011 and consider these swap agreements to be highly effective cash flow hedges. The swap agreements are recorded under the caption “Other assets” on our consolidated balance sheets at their aggregate estimated fair value of $12.2 million and $11.2 million at March 31, 2011 and December 31, 2010, respectively.

During 2006 and 2007, we entered into and settled Treasury lock agreements to hedge the expected interest payments associated with a portion of our senior notes. The settlement amounts were recorded as other comprehensive income and are being amortized over the life of the debt as a yield reduction. We expect to record $0.4 million of amortization during the next 12 months.

The following table sets forth amounts included on our consolidated income statements related to the amortization of the Treasury lock agreements for the periods presented: 

	Three months ended
	March 31,
	2011		2010
	(In thousands)
Amortization:
2007 Treasury lock agreements	$	68	$	64
2006 Treasury lock agreements	67		62
	$	135	$	126

During 2008, the unconsolidated joint venture we have with a state pension fund investor entered into an interest rate swap contract. The fair value of this contract at March 31, 2011 and December 31, 2010 was $11.4 million and $12.8 million, respectively, which is included as a liability on the joint venture’s balance sheets. As of March 31, 2011, we had recorded our pro rata share of the unconsolidated joint venture’s accumulated other comprehensive loss related to this contract of $2.8 million.

22

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

15. Comprehensive Income

The following table sets forth the computation of comprehensive income for the periods presented:

	Three months ended
	March 31,
	2011			2010
	(In thousands)
Net income	$	50,314		$	31,239
Other comprehensive income:
Gain on interest rate swap agreements	1,004			—
Amortization of gains on Treasury lock agreements	(135		)	(126		)
Pro rata share of accumulated other comprehensive income (loss) from unconsolidated joint venture	357			(436		)
Comprehensive income	51,540			30,677
Comprehensive loss attributable to noncontrolling interests	237			190
	$	51,777		$	30,867

16. Income Taxes

The provisions of ASC Topic 740, Income Taxes, which clarify the accounting for uncertainty in income taxes recognized in financial statements and prescribe a recognition threshold and measurement attribute of tax positions taken or expected to be taken on a tax return became effective January 1, 2007. No amounts have been recorded for unrecognized tax benefits or related interest expense and penalties. The taxable periods ending December 31, 2005 through December 31, 2010 remain open to examination by the Internal Revenue Service and the tax authorities of the significant jurisdictions in which we do business.

Hearthstone Acquisition

On June 1, 2006, we acquired the stock of Hearthstone Assisted Living, Inc. (“HAL”), causing HAL to become a qualified REIT subsidiary. As a result of the acquisition, we succeeded to HAL’s tax attributes, including HAL’s tax basis in its net assets. Prior to the acquisition, HAL was a corporation subject to federal and state income taxes. In connection with the acquisition of HAL, NHP acquired approximately $82.5 million of federal net operating losses (“NOLs”) which we can carry forward to future periods and the use of which is subject to annual limitations imposed by IRC Section 382. While we believe that these NOLs are accurate, any adjustments to HAL’s tax returns for periods prior to June 1, 2006 by the Internal Revenue Service could change the amount of the NOLs that we can utilize. We have used a portion of this amount in 2007 and 2008 and anticipate using additional amounts in future years. These NOLs are set to expire between 2017 and 2025. NOLs related to various states were also acquired and are set to expire based on the various laws of the specific states.

In addition, we may be subject to a corporate-level tax on any taxable disposition of HAL’s pre-acquisition assets that occurs within ten years after the June 1, 2006 acquisition. The corporate-level tax would be assessed only to the extent of the built-in gain that existed on the date of acquisition, based on the fair market value of the asset on June 1, 2006. We do not expect to dispose of any asset included in the HAL acquisition if such a disposition would result in the imposition of a material tax liability, and no such sales have taken place through March 31, 2011. Accordingly, we have not recorded a deferred tax liability associated with this corporate-level tax. Gains from asset dispositions occurring more than 10 years after the acquisition will not be subject to this corporate-level tax. However, we may dispose of HAL assets before the 10-year period if we are able to complete a tax-deferred exchange.

23

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

17. Segment Information

Our operations are organized into two segments — triple-net leases and multi-tenant leases. In the triple-net leases segment, we invest in healthcare related properties and lease the facilities to unaffiliated tenants under “triple-net” and generally “master” leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant. In the multi-tenant leases segment, we invest in healthcare related properties that have several tenants under separate leases in each building, thus requiring active management and responsibility for many of the associated operating expenses (although many of these are, or can effectively be, passed through to the tenants). During 2010 and the three months ended March 31, 2011, the multi-tenant leases segment was comprised exclusively of medical office buildings.

Non-segment revenues primarily consist of interest income on mortgages and unsecured loans and other income. Interest expense, depreciation and amortization and other expenses not attributable to individual facilities are not allocated to individual segments for purposes of assessing segment performance. Non-segment assets primarily consist of corporate assets including mortgages and unsecured loans, investment in unconsolidated joint ventures, cash, deferred financing costs and other assets not attributable to individual facilities.

Certain items in prior period financial statements have been reclassified to conform to current period presentation, including those required by ASC 360 which require the operating results of any assets with their own identifiable cash flows that are disposed of or held for sale and in which we have no continuing interest to be removed from income from continuing operations and reported as discontinued operations. Summary information related to our reportable segments is as follows:

	Three months ended
	March 31,
	2011		2010
	(In thousands)
Revenue:
Triple-net leases	$	82,271	$	72,200
Multi-tenant leases	29,515		21,685
Non-segment	10,588		6,963
	$	122,374	$	100,848
Net operating income (1):
Triple-net leases	$	82,271	$	72,200
Multi-tenant leases	19,157		13,038
	$	101,428	$	85,238

	March 31,		December 31,
	2011		2010
	(In thousands)
Assets:
Triple-net leases	$	2,737,985	$	2,638,261
Multi-tenant leases	930,342		937,636
Non-segment	485,518		516,727
	$	4,153,845	$	4,092,624

(1)Net operating income (“NOI”) is a non-GAAP supplemental financial measure used to evaluate the operating performance of our facilities. We define NOI for our triple-net leases segment as rent revenue. For our multi-tenant leases segment, we define NOI as revenue minus medical office building operating expenses. In some cases, revenue for medical office buildings includes expense reimbursements for common area maintenance charges. NOI excludes interest expense, depreciation and amortization expense, general and administrative expense and discontinued operations. We present NOI as it effectively presents our portfolio on a “net” rent basis and provides relevant and useful information as it measures the operating performance at the facility level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property

24

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

level performance of our properties. Furthermore, we believe that NOI provides investors relevant and useful information because it measures the operating performance of our real estate at the property level on an unleveraged basis. We believe that net income is the GAAP measure that is most directly comparable to NOI. However, NOI should not be considered as an alternative to net income as the primary indicator of operating performance as it excludes the items described above. Additionally, NOI as presented above may not be comparable to other REITs or companies as their definitions of NOI may differ from ours.

A reconciliation of net income, a GAAP measure, to NOI, a non-conforming GAAP measure, is as follows:

	Three months ended
	March 31,
	2011			2010
	(In thousands)
Net income	$	50,314		$	31,239
Interest and other income	(10,588		)	(6,963		)
Interest expense	22,771			23,590
Depreciation and amortization expense	38,674			31,290
General and administrative expense	7,365			6,980
Merger and acquisition costs	5,097			1,443
Income from unconsolidated joint ventures	(1,465		)	(1,347		)
Gain on debt extinguishment	—			(75		)
Gain on sale of facilities, net	(10,607		)	(22		)
Income from discontinued operations	(133		)	(897		)
Net operating income from reportable segments	$	101,428		$	85,238

18. Commitments and Contingencies

Proposed Merger with Ventas

On February 27, 2011, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ventas, Inc., a Delaware corporation, and Needles Acquisition LLC, a Delaware limited liability company and wholly owned subsidiary of Ventas (“Merger Sub”).

Under the terms of the Merger Agreement, NHP will be merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a subsidiary of Ventas. Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock, other than shares held by any wholly owned subsidiary of NHP, by Ventas or by any subsidiary of Ventas, will be cancelled and converted into the right to receive 0.7866 shares (the “Exchange Ratio”) of common stock of Ventas (“Ventas Common Stock”).

Upon completion of the Merger, (i) each outstanding stock option will become fully vested and, in Ventas’s discretion, either be (A) cashed out based on the option spread or (B) assumed by Ventas, on the same terms and conditions (subject to adjustment for the exchange ratio), provided that stock options granted to certain senior executives in February 2011 will be assumed by Ventas on the same terms and conditions (subject to adjustment for the Exchange Ratio); (ii) each restricted stock unit will vest in full and be cashed out based on the Exchange Ratio, provided that (a) restricted stock units granted to certain senior executives in February 2011 will be assumed by Ventas on the same terms and conditions (subject to adjustment for the Exchange Ratio) and (b) certain restricted stock units granted to certain senior executives will vest and be settled in accordance with their terms; (iii) each share of restricted stock will vest in full and be converted into Ventas Common Stock, based on the Exchange Ratio; (iv) performance shares will vest under the relevant agreements and will be converted into Ventas Common Stock based on the Exchange Ratio; and (v) dividend equivalent rights granted in connection with any award will become fully vested and be paid out.

We have made customary representations and warranties in the Merger Agreement and have agreed to customary covenants, including covenants regarding the operation of our business prior to the closing and covenants prohibiting us from soliciting, providing information or entering into discussions concerning proposals relating to

25

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

alternative business combination transactions, except in limited circumstances relating to unsolicited proposals that constitute, or are reasonably expected to lead to, a superior proposal.

Consummation of the Merger is subject to customary closing conditions, including approval of our stockholders and Ventas’s stockholders. The Merger Agreement may be terminated under certain circumstances, including by either party if the Merger has not occurred by October 31, 2011, if an order is entered prohibiting or disapproving the transaction and the order has become final and non-appealable, if our stockholders or Ventas’s stockholders fail to approve the transaction, or upon a material uncured breach by the other party that would cause the closing conditions not to be satisfied.

Litigation

From time to time, we are a party to various legal proceedings, lawsuits and other claims (as to some of which we may not be insured) that arise in the normal course of our business. Regardless of their merits, these matters may require us to expend significant financial resources. Except as described herein and in our Annual Report on Form 10-K for the year ended December 31, 2010, we are not aware of any other legal proceedings or claims that we believe may have, individually or taken together, a material adverse effect on our business, results of operations or financial position. However, we are unable to predict the ultimate outcome of pending litigation and claims, and if our assessment of our liability with respect to these actions and claims is incorrect, such actions and claims could have a material adverse effect on our business, results of operations or financial position.

Stockholder Litigation

In the weeks following the announcement of the proposed Merger between us and Ventas on February 28, 2011, purported stockholders filed seven lawsuits against us and our directors.  The purported stockholder plaintiffs commenced these actions in two jurisdictions: the Superior Court of the State of California, Orange County (the “California State Court”); and the Circuit Court for Baltimore City, Maryland (the “Maryland State Court”).  All of these actions were brought as putative class actions, and two also purport to assert derivative claims on behalf of the company.  All of these stockholder complaints allege that our directors breached certain alleged duties to our stockholders by approving the Merger Agreement, and certain complaints allege that we aided and abetted those breaches.  All of the complaints request an injunction of the proposed Merger. Certain of the complaints also seek damages.

In the California State Court, the following actions were filed purportedly on behalf of our stockholders: on February 28, 2011, a putative class action entitled Palma v. Nationwide Health Properties, Inc., et al.; on March 3, 2011, a putative class action entitled Barker v. Nationwide Health Properties, Inc., et al.; and on March 3, 2011, a putative class action entitled Davis v. Nationwide Health Properties, Inc., et al., which was subsequently amended on March 11, 2011 under the caption Davids v. Nationwide Health Properties, Inc., et al.  Each action names us and our directors as defendants.  Each complaint alleges, among other things, that our directors breached certain alleged duties by approving the Merger Agreement because the proposed transaction purportedly fails to maximize stockholder value and purportedly provides the directors personal benefits not shared by our stockholders.  The Palma and Davids actions allege that we aided and abetted those purported breaches.  Along with other relief, the complaints seek an injunction against the closing of the proposed Merger.  On March 22, 2011, the parties to the Palma, Barker, and Davids actions signed a Stipulation and Proposed Order on Consolidation of Related Actions providing for consolidation of all three actions.  On April 4, 2011, the defendants in all three actions demurred and moved to stay the proceedings in favor of parallel litigation pending in the Maryland State Court.

In the Maryland State Court, the following actions were filed purportedly on behalf of our stockholders: on March 7, 2011, a putative class action entitled Crowley v. Nationwide Health Properties, Inc., et al.; on March 10, 2011, a putative class action entitled Taylor v. Nationwide Health Properties, Inc., et. al.; on March 17, 2011, a putative class action entitled Haughey Family Trust v. Pasquale, et al.; and on March 31, 2011, a putative class action entitled Rappaport v. Pasquale, et al.  All four actions name us and our directors as defendants.  All four actions allege, among other things, that our directors breached certain alleged duties by approving the Merger Agreement because the proposed transaction purportedly fails to maximize stockholder value and purportedly provides certain directors personal benefits not shared by our stockholders. The Haughey, Rappaport and Crowley actions allege that we aided and abetted those purported breaches.  In addition to asserting direct claims on behalf of

26

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

March 31, 2011

a putative class of our stockholders, the Haughey and Rappaport actions purport to bring derivative claims on behalf of the company, asserting breaches of certain alleged duties by our directors in connection with their approval of the proposed Merger.  All four actions seek to enjoin the proposed Merger, and the Taylor action seeks damages.

On March 30, 2011, pursuant to stipulation of the parties, the Maryland State Court entered an order consolidating the Crowley, Taylor and Haughey actions.  On April 1, 2011, pursuant to stipulation of the parties, the Maryland State Court entered an order: (i) certifying a class of our stockholders; and (ii) providing for the plaintiffs to file a consolidated amended complaint. On April 13, 2011, the Maryland State Court held a status conference and thereafter entered certain scheduling orders. On April 22, 2011, the plaintiffs in Maryland filed a consolidated amended class action complaint.

Development Agreements

As of March 31, 2011, we had entered into a joint venture to develop a medical office building (see Note 5) and entered into other agreements to develop two assisted and independent living facilities (see Note 3) and to fund the expansion of a skilled nursing facility securing a mortgage loan (see Note 4). As of March 31, 2011, we had committed to fund an additional $52.5 million under these agreements, of which $34.5 million will be funded through a third party construction loan obtained during the three months ended March 31, 2011 (see Note 10).

Lines of Credit

Under the terms of an agreement with PMB LLC, we agreed to extend to PMB LLC a $10.0 million line of credit to fund certain costs of PMB LLC with respect to the proposed development of multi-tenant medical office buildings. During the three months ended March 31, 2011, we funded $1.3 million and received payments of $2.6 million under the line of credit. As of March 31, 2011, $3.6 million was outstanding and is included in the caption “Other assets” on our consolidated balance sheet.

During 2010, we agreed to loan two of our consolidated joint ventures up to $65.3 million as project financing, including $56.6 million that was disbursed initially and remained outstanding at March 31, 2011.

Indemnities

We have entered into indemnification agreements with those partners who contributed appreciated property into NHP/PMB. Generally, under these indemnification agreements, if any of the appreciated real estate contributed by the partners is sold by NHP/PMB in a taxable transaction within a specified number of years after the property was contributed, we will reimburse the affected partners for the federal and state income taxes associated with the pre-contribution gain that is specially allocated to the affected partner under the Code. We have no current plans to sell any of these properties.

19. Subsequent Events

From April 1, 2011 to May 5, 2011, we completed approximately $484 million of investments in 46 facilities.

27

EX-99.4

Exhibit 99.4

VENTAS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and For the Three Months Ended March 31, 2011 and For the Year Ended December 31, 2010

On October 22, 2010, Ventas, Inc. (“Ventas” or the “Company”) announced that it had entered into a definitive agreement to acquire 118 private pay seniors housing communities owned and/or operated by Atria Senior Living Group, Inc. (“Atria”) (including assets owned by Atria’s affiliate One Lantern Senior Living Inc (“One Lantern”)) from funds affiliated with Lazard Real Estate Partners LLC for a purchase price of approximately $3.1 billion, comprised of $1.35 billion in Ventas common stock (a fixed 24.96 million shares based on Ventas’s 10-day volume weighted average price as of October 20, 2010 of $54.09), $150 million in cash and the assumption or repayment of approximately $1.6 billion of debt and capital lease obligations, less assumed cash.

On February 28, 2011, Ventas announced that it had entered into a definitive agreement to acquire Nationwide Health Properties, Inc. (“NHP”) in a stock-for-stock transaction valued at approximately $7.4 billion.  Under the terms of the agreement, in the merger, NHP stockholders will receive a fixed exchange ratio of 0.7866 shares of Ventas common stock for each share of NHP common stock they own.

The following unaudited pro forma condensed consolidated financial information sets forth:

·The historical consolidated financial information of Ventas as of and for the three months ended March 31, 2011, derived from Ventas’s unaudited consolidated financial statements, and the historical consolidated statement of income for the year ended December 31, 2010, derived from Ventas’s audited consolidated financial statements;

·Pro forma adjustments to give effect to Ventas’s 2010 acquisitions and other investments, dispositions and significant debt activity on Ventas’s consolidated statement of income for the year ended December 31, 2010, as if these transactions occurred on January 1, 2010;

·The historical consolidated financial information of Atria and One Lantern as of and for the three months ended March 31, 2011, derived from Atria’s and One Lantern’s unaudited condensed consolidated financial statements, respectively, and the historical consolidated statements of income for the year ended December 31, 2010, derived from Atria’s and One Lantern’s audited consolidated financial statements, respectively;

·Pro forma adjustments to give effect to Ventas’s acquisition of Atria and One Lantern on Ventas’s consolidated balance sheet as of March 31, 2011, as if the acquisition closed on March 31, 2011;

·Pro forma adjustments to give effect to Ventas’s acquisition of Atria and One Lantern on Ventas’s consolidated statements of income for the three months ended March 31, 2011 and for the year ended December 31, 2010, as if the acquisitions closed on January 1, 2010;

·Pro forma adjustments to give effect to Ventas’s February 2011 equity issuance and related debt activity on Ventas’s consolidated statements of income for the three months ended March 31, 2011 and year ended December 31, 2010 as if the transactions occurred on January 1, 2010, which was completed in contemplation of the acquisitions of Atria and One Lantern;

·The historical consolidated financial information of NHP as of and for the three months ended March 31, 2011, derived from NHP’s unaudited consolidated financial statements, and the historical consolidated statement of income for the year ended December 31, 2010, derived from NHP’s audited consolidated financial statements;

·Pro forma adjustments to give effect to NHP’s 2011 and 2010 acquisitions and other investments, dispositions, significant debt activity and equity issuances on NHP’s consolidated statements of income for the three months ended March 31, 2011 and for the year ended December 31, 2010, as if these transactions occurred on January 1, 2010;

·Pro forma adjustments to give effect to Ventas’s acquisition of NHP on Ventas’s consolidated balance sheet as of March 31, 2011, as if the acquisition closed on March 31, 2011; and

·Pro forma adjustments to give effect to Ventas’s acquisition of NHP on Ventas’s consolidated statements of income for the three months ended March 31, 2011 and for the year ended December 31, 2010, as if the acquisition closed on January 1, 2010.

Certain assets and liabilities of Atria and One Lantern included in the historical consolidated financial information consisting primarily of certain working capital, property leases, insurance items and property management services will not be acquired and have been so reflected in the pro forma adjustments.  Also, certain intercompany activity between Atria, One Lantern and NHP has been eliminated in the pro forma adjustments.

These unaudited pro forma condensed consolidated financial statements are prepared for informational purposes only and are based on assumptions and estimates considered appropriate by Ventas’s management; however, they are not necessarily indicative of what Ventas’s consolidated financial condition or results of operations actually would have been assuming the transactions had been consummated as of the dates indicated, nor do they purport to represent the consolidated financial position or results of operations for future periods. These unaudited pro forma condensed consolidated financial statements do not include the impact of any synergies that may be achieved in the transactions or any strategies that management may consider in order to continue to efficiently manage Ventas’s operations.  This pro forma condensed consolidated financial information should be read in conjunction with:

·Ventas’s unaudited condensed consolidated financial statements and the related notes thereto as of March 31, 2011 and for the three months ended March 31, 2011 included in the Company’s Quarterly Report on Form 10-Q for the quarter then ended, filed with the Securities and Exchange Commission (“SEC”) on May 6, 2011;

·Ventas’s audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2010 included in the Company’s Annual Report on Form 10-K for the year then ended, filed with the SEC on February 18, 2011;

·Atria’s and One Lantern’s unaudited condensed consolidated financial statements and the related notes thereto as of March 31, 2011 and for the three months ended March 31, 2011 included herein;

·Atria’s and One Lantern’s audited consolidated financial statements and the related notes thereto for the year ended December 31, 2010 included in the Company’s Current Report on Form 8-K, filed with the SEC on April 11, 2011;

·NHP’s unaudited condensed consolidated financial statements and the related notes thereto as of March 31, 2011 and for the three months ended March 31, 2011 included herein; and

·NHP’s audited consolidated financial statements and the related notes thereto for the year ended December 31, 2010 included in the Company’s Current Report on Form 8-K, filed with the SEC on April 11, 2011.

The acquisition of Atria, One Lantern and NHP will be accounted for using the acquisition method of accounting.  The total purchase price of approximately $10.5 billion will be allocated to the assets ultimately acquired and liabilities ultimately assumed based upon their respective fair values.  The allocations of the purchase prices reflected in these unaudited pro forma condensed consolidated financial statements have not been finalized and are based upon preliminary estimates of these fair values, which is the best available information at the current time. A final determination of the fair values of the assets and liabilities, which cannot be made prior to the completion of the acquisitions, which are anticipated to occur during 2011, will be based on the actual valuations of the tangible and intangible assets and liabilities that exist as of the dates of completion of the acquisitions. Consequently, amounts preliminarily allocated to identifiable tangible and intangible assets and liabilities could change significantly from those used in the unaudited pro forma condensed consolidated financial statements and could result in a material change in depreciation and amortization of tangible and intangible assets and liabilities.

The completion of the valuations, the allocations of purchase price, the impact of ongoing integration activities, the timing of completion of the acquisitions and other changes in tangible and intangible assets and liabilities that occur prior to completion of the acquisitions could cause material differences in the information presented.

VENTAS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of March 31, 2011

(In thousands)

	Ventas Historical		Atria Historical (A)		One Lantern Historical (B)		Atria and One Lantern Acquisition Adjustments (C)				Ventas Pro Forma for the Atria and One Lantern Acquisition		NHP Historical (D)		NHP Acquisition Adjustments (E)				Total Pro Forma
Assets:
Net real estate investments	$	5,389,043	$	1,050,639	$	721,052	$	1,550,331		(F)	$	8,711,065	$	3,919,136	$	3,463,137		(N)	$	16,093,338
Cash and cash equivalents	41,899		134,637		24,615		(84,998		)	(G)	116,153		51,207		—				167,360
Escrow deposits and restricted cash	35,399		27,356		33,323		(12,992		)	(G)	83,086		7,192		(4,641		)	(O)	85,637
Deferred financing costs, net	17,141		10,657		3,739		(14,396		)	(H)	17,141		8,138		(8,138		)	(H)	17,141
Other	210,616		119,795		11,849		(111,841		)	(G)	230,419		168,172		11,892			(P)	410,483
Total assets	$	5,694,098	$	1,343,084	$	794,578	$	1,326,104			$	9,157,864	$	4,153,845	$	3,462,250			$	16,773,959
Liabilities and equity:
Liabilities:
Senior notes payable and other debt	$	2,571,368	$	1,063,164	$	661,942	$	255,062		(I)	$	4,551,536	$	1,601,797	$	(38,682	)	(Q)	$	6,114,651
Accrued interest	34,543		218		7,466		(73		)	(G)	42,154		17,392		(137		)	(O)	59,409
Accounts payable and other liabilities	203,594		72,205		47,298		26,605			(J)	349,702		129,644		401,682			(R)	881,028
Deferred income taxes	238,146		27,973		—		11,890			(K)	278,009		—		—				278,009
Total liabilities	3,047,651		1,163,560		716,706		293,484				5,221,401		1,748,833		362,863				7,333,097
Redeemable OP unitholder interests	—		—		—		—				—		92,575		5,355			(S)	97,930
Commitments and contingencies
Equity:
Total stockholders’ equity	2,643,404		179,524		43,627		1,066,865			(L)	3,933,420		2,279,522		3,010,671			(T)	9,223,613
Noncontrolling interest	3,043		—		34,245		(34,245		)	(M)	3,043		32,915		83,361			(U)	119,319
Total equity	2,646,447		179,524		77,872		1,032,620				3,936,463		2,312,437		3,094,032				9,342,932
Total liabilities and equity	$	5,694,098	$	1,343,084	$	794,578	$	1,326,104			$	9,157,864	$	4,153,845	$	3,462,250			$	16,773,959

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

VENTAS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the three months ended March 31, 2011

(In thousands, except per share amounts)

	Ventas Historical			Atria Historical (A)			One Lantern Historical (B)			Atria and One Lantern Acquisition Adjustments (C)				Ventas Pro Forma for the Atria and One Lantern Acquisition			NHP Historical (D)			NHP 2011 Transactions Adjustments (V)			Pro Forma for NHP 2011 Transactions			NHP Acquisition Adjustments (E)				Total Pro Forma
Revenues:
Rental income:
Triple-net leased	$	118,603		$	—		$	—		$	—			$	118,603		$	82,271		$	412		$	82,683		$	2,376		(BB)	$	203,662
Medical office buildings	24,236			—			—			—				24,236			29,515			14			29,529			(529		)	(CC)	53,236
	142,839			—			—			—				142,839			111,786			426			112,212			1,847				256,898
Resident fees and services	114,502			121,703			43,147			(8,928		)	(W)	270,424			—			—			—			—				270,424
Medical office building services revenue	6,957			—			—			—				6,957			—			—			—			—				6,957
Income from loans and investments	6,085			—			—			—				6,085			9,871			—			9,871			(4		)	(DD)	15,952
Interest and other income	78			19,681			207			(19,804		)	(W)	162			713			(8		)	705			—				867
Total revenues	270,461			141,384			43,354			(28,732		)		426,467			122,370			418			122,788			1,843				551,098
Expenses:
Interest	42,558			17,774			12,065			(10,556		)	(X)	61,841			23,201			—			23,201			(9,290		)	(EE)	75,752
Depreciation and amortization	51,759			13,497			6,004			1,733			(Y)	72,993			38,670			268			38,938			24,849			(FF)	136,780
Property-level operating expenses:
Senior living	78,111			101,668			28,729			(19,969		)	(Z)	188,539			—			—			—			(744		)	(O)	187,795
Medical office buildings	8,676			—			—			—				8,676			9,898			8			9,906			—				18,582
	86,787			101,668			28,729			(19,969		)		197,215			9,898			8			9,906			(744		)		206,377
Medical office building services costs	5,536			—			—			—				5,536			—			—			—			—				5,536
General, administrative and professional fees	14,832			11,788			179			(11,967		)	(W)	14,832			7,395			—			7,395			—				22,227
Foreign currency loss	1			—			—			—				1			—			—			—			—				1
Loss on extinguishment of debt	16,520			—			—			—				16,520			—			—			—			—				16,520
Other	—			1,487			2,519			(19		)	(W)	3,987			—			—			—			—				3,987
Merger related expenses and deal costs	6,449			—			—			—				6,449			5,097			—			5,097			—				11,546
Total expenses	224,442			146,214			49,496			(40,778		)		379,374			84,261			276			84,537			14,815				478,726
Income (loss) before (loss) income from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest	46,019			(4,830		)	(6,142		)	12,046				47,093			38,109			142			38,251			(12,972		)		72,372
(Loss) income from unconsolidated entities	(170		)	—			77			(77		)	(W)	(170		)	1,465			—			1,465			(42		)	(GG)	1,253
Income tax benefit	3,197			667			—			(667		)	(W)	3,197			—			—			—			—				3,197
Income (loss) from continuing operations	49,046			(4,163		)	(6,065		)	11,302				50,120			39,574			142			39,716			(13,014		)		76,822
Net income (loss) attributable to noncontrolling interest	62			—			(543		)	543			(M)	62			(237		)	—			(237		)	(1,242		)	(GG)	(1,417		)
Income (loss) from continuing operations attributable to common stockholders	$	48,984		$	(4,163	)	$	(5,522	)	$	10,759			$	50,058		$	39,811		$	142		$	39,953		$	(11,772	)		$	78,239
Income from continuing operations attributable to common stockholders per common share:
Basic	$	0.31		n/a			n/a			n/a				$	0.27		$	0.31		n/a			$	0.32		n/a				$	0.27
Diluted	$	0.30		n/a			n/a			n/a				$	0.26		$	0.31		n/a			$	0.31		n/a				$	0.27
Shares used in computing earnings per common share:
Basic	160,420			n/a			n/a			27,061			(AA)	187,481			126,474			—			126,474			103,107			(HH)	290,588
Diluted	162,023			n/a			n/a			27,061			(AA)	189,084			128,890			—			128,890			103,107			(HH)	292,191

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

VENTAS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the year ended December 31, 2010

(In thousands, except per share amounts)

	Ventas Historical			Ventas 2010 Transactions Adjustments (V)			Pro Forma for Ventas 2010 Transactions			Atria Historical (A)			One Lantern Historical (B)			Atria and One Lantern Acquisition Adjustments (C)				Ventas Pro Forma for the Atria and One Lantern Acquisition			NHP Historical (D)			NHP 2010 and 2011 Transactions Adjustments (V)			Pro Forma for NHP 2010 and 2011 Transactions			NHP Acquisition Adjustments (E)				Total Pro Forma
Revenues:
Rental income:
Triple-net leased	$	469,825		$	260		$	470,085		$	—		$	—		$	—			$	470,085		$	307,567		$	30,947		$	338,514		$	13,464		(BB)	$	822,063
Medical office buildings	69,747			25,949			95,696			—			—			—				95,696			102,287			12,783			115,070			(2,398		)	(CC)	208,368
	539,572			26,209			565,781			—			—			—				565,781			409,854			43,730			453,584			11,066				1,030,431
Resident fees and services	446,301			1,619			447,920			466,773			165,463			(33,316		)	(W)	1,046,840			—			—			—			—				1,046,840
Medical office building services revenue	14,098			14,098			28,196			—			—			—				28,196			—			—			—			—				28,196
Income from loans and investments	16,412			1,024			17,436			—			—			—				17,436			26,402			5,678			32,080			(100		)	(DD)	49,416
Interest and other income	484			19			503			77,789			820			(78,318		)	(W)	794			2,977			(1		)	2,976			—				3,770
Total revenues	1,016,867			42,969			1,059,836			544,562			166,283			(111,634		)		1,659,047			439,233			49,407			488,640			10,966				2,158,653
Expenses:
Interest	178,863			9,178			188,041			71,604			47,236			(47,391		)	(X)	259,490			97,329			(988		)	96,341			(38,320		)	(EE)	317,511
Depreciation and amortization	205,600			14,845			220,445			52,138			22,663			111,057			(Y)	406,303			134,522			25,293			159,815			101,842			(FF)	667,960
Property-level operating expenses:
Senior living	291,831			1,443			293,274			395,796			109,277			(77,809		)	(Z)	720,538			—			—			—			(3,039		)	(O)	717,499
Medical office buildings	24,122			9,783			33,905			—			—			—				33,905			39,536			2,655			42,191			—				76,096
	315,953			11,226			327,179			395,796			109,277			(77,809		)		754,443			39,536			2,655			42,191			(3,039		)		793,595
Medical office building services costs	9,518			9,518			19,036			—			—			—				19,036			—			—			—			—				19,036
General, administrative and professional fees	49,830			7,981			57,811			47,558			749			(48,307		)	(W)	57,811			31,057			—			31,057			—				88,868
Foreign currency loss	272			—			272			—			—			—				272			—			—			—			—				272
Loss (gain) on extinguishment of debt	9,791			—			9,791			2			—			(2		)	(W)	9,791			(75		)	—			(75		)	75			(JJ)	9,791
Other	—			—			—			6,009			19,607			(85		)	(W)	25,531			—			—			—			—				25,531
Merger related expenses and deal costs	19,243			—			19,243			—			—			—				19,243			5,118			—			5,118			—				24,361
Total expenses	789,070			52,748			841,818			573,107			199,532			(62,537		)		1,551,920			307,487			26,960			334,447			60,558				1,946,925
Income (loss) before (loss) income from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest	227,797			(9,779		)	218,018			(28,545		)	(33,249		)	(49,097		)		107,127			131,746			22,447			154,193			(49,592		)		211,728
(Loss) income from unconsolidated entities	(664		)	(664		)	(1,328		)	—			130			(130		)	(W)	(1,328		)	5,478			(12		)	5,466			(887		)	(GG)	3,251
Income tax (expense) benefit	(5,201		)	(39		)	(5,240		)	7,560			—			32,303			(II)	34,623			—			—			—			—				34,623
Income (loss) from continuing operations	221,932			(10,482		)	211,450			(20,985		)	(33,119		)	(16,924		)		140,422			137,224			22,435			159,659			(50,479		)		249,602
Net income (loss) attributable to noncontrolling interest	3,562			(3,616		)	(54		)	—			(5,907		)	5,907			(M)	(54		)	(1,643		)	(317		)	(1,960		)	(3,165		)	(GG)	(5,179		)
Income (loss) from continuing operations attributable to common stockholders	$	218,370		$	(6,866	)	$	211,504		$	(20,985	)	$	(27,212	)	$	(22,831	)		$	140,476		$	138,867		$	22,752		$	161,619		$	(47,314	)		$	254,781
Income from continuing operations attributable to common stockholders per common share:
Basic	$	1.39		n/a			$	1.35		n/a			n/a			n/a				$	0.75		$	1.14		n/a			$	1.28		n/a				$	0.88
Diluted	$	1.38		n/a			$	1.34		n/a			n/a			n/a				$	0.75		$	1.12		n/a			$	1.25		n/a				$	0.87
Shares used in computing earnings per common share:
Basic	156,608			n/a			156,608			n/a			n/a			30,522			(AA)	187,130			121,687			4,782			126,469			103,107			(HH)	290,237
Diluted	157,657			n/a			157,657			n/a			n/a			30,522			(AA)	188,179			124,339			4,782			129,121			103,107			(HH)	291,286

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

VENTAS, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — BASIS OF PRO FORMA PRESENTATION

Ventas, Inc. (“Ventas” or the “Company”) is a real estate investment trust (“REIT”) with a geographically diverse portfolio of seniors housing and healthcare properties in the United States and Canada.  The historical consolidated financial statements of Ventas include the accounts of the Company and its wholly owned subsidiaries and joint venture entities over which it exercises control.

On October 22, 2010, Ventas announced that it had entered into a definitive agreement to acquire 118 private pay seniors housing communities owned and/or operated by Atria Senior Living Group, Inc. (“Atria”) (including assets owned by Atria’s affiliate One Lantern Senior Living Inc (“One Lantern”)) from funds affiliated with Lazard Real Estate Partners LLC for a purchase price of approximately $3.1 billion, comprised of $1.35 billion in Ventas common stock (a fixed 24.96 million shares based on Ventas’s 10-day volume weighted average price as of October 20, 2010 of $54.09), $150 million in cash and the assumption or repayment of approximately $1.6 billion of debt and capital lease obligations, less assumed cash.

On February 28, 2011, Ventas announced that it had entered into a definitive agreement to acquire Nationwide Health Properties, Inc. (“NHP”) in a stock-for-stock transaction valued at approximately $7.4 billion.  Under the terms of the agreement, in the merger, NHP stockholders will receive a fixed exchange ratio of 0.7866 shares of Ventas common stock for each share of NHP common stock they own.

NOTE 2 — ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(A)Reflects historical financial condition or results of operations of Atria as of or for the three months ended March 31, 2011 or for the year ended December 31, 2010.  Certain amounts have been reclassified to conform to Ventas’s presentation.

(B)Reflects historical financial condition or results of operations of One Lantern as of or for the three months ended March 31, 2011 or for the year ended December 31, 2010.  Certain amounts have been reclassified to conform to Ventas’s presentation.

(C)Represents adjustments to record the acquisition of Atria and One Lantern by Ventas based upon the estimated purchase price of approximately $3.1 billion.  The calculation of the estimated purchase price to be allocated is as follows (in millions, except per share amounts):

Equity to be issued (24.96 million shares at $54.09 per share) (1)	$	1,350
Cash to be paid (assumed to be funded with borrowings from Ventas’s unsecured revolving credit facilities)	150
Assumption or repayment of net debt, including capital lease obligations	1,626
Estimated purchase price	$	3,126

(1)Purchase price will be adjusted based on the share price of Ventas common stock at closing consistent with the requirements of ASC 805, Business Combinations.

(D)Reflects historical financial condition or results of operations of NHP as of or for the three months ended March 31, 2011 or for the year ended December 31, 2010.  Certain amounts have been reclassified to conform to Ventas’s presentation.

(E)Represents adjustments to record the acquisition of NHP by Ventas based upon the estimated purchase price of approximately $7.4 billion.  Additionally, certain intercompany activity between Atria, One Lantern and NHP has been eliminated. The calculation of the estimated purchase price to be allocated is as follows (in millions, except per share amounts):

Equity to be issued (126.3 million shares of NHP common stock and 2.2 million Class A limited partnership units at $44.99 per share) (1)	$	5,778
Assumption of debt (2)	1,614
Estimated purchase price	$	7,392

(1)	Purchase price will be adjusted based on the share price of Ventas common stock at closing consistent with the requirements of ASC 805, Business Combinations.
(2)	Includes NHP’s joint venture share of total debt from its unconsolidated entities.

(F)Reflects adjustment to eliminate assets of Atria and One Lantern included in the historical consolidated financial information that Ventas is not purchasing and an adjustment to record the estimated increase over Atria’s and One Lantern’s historical investment in real estate based upon the preliminary estimated fair value for the tangible and intangible real estate assets to be acquired.  These estimated values are as follows (in millions):

Land	$	609
Buildings and improvements	2,539
Acquired lease intangibles	140
Construction in progress	34
Estimated fair value of net real estate investments	$	3,322

(G)Reflects adjustments to eliminate assets and liabilities of Atria and One Lantern included in the historical consolidated financial information that Ventas is not acquiring or assuming as part of the working capital consideration.

(H)Represents the write-off of Atria’s, One Lantern’s and NHP’s historical deferred financing costs, which were not assigned any value in the preliminary purchase price allocation.

(I)Represents the following adjustments (in millions):

Write-off Atria’s and One Lantern’s historical fair value of debt adjustment	$	28
Fair value of debt adjustment recorded in connection with the acquisition	49
Debt not assumed as part of the acquisition included in the historical consolidated financial information	(58		)
Net adjustment allocated for the acquired capital lease obligations	26
Atria and/or One Lantern debt anticipated to be repaid at closing	(181		)
Anticipated borrowings on unsecured revolving credit facility (1)	391
Pro forma adjustment to debt	$	255

(1) Borrowings are comprised of $150 million of cash to be paid at closing, $181 million for the Atria and/or One Lantern debt anticipated to be repaid at closing and $60 million for estimated transaction and debt extinguishment costs to be paid related to the Atria and One Lantern acquisition.

(J)Reflects adjustments to eliminate other liabilities of Atria and One Lantern included in the historical consolidated financial information that Ventas is not assuming as part of the working capital consideration, offset primarily by approximately $40.2 million of a contingent consideration liability, which was recorded based on preliminary fair value calculations.

(K)Represents the write-off of Atria’s historical deferred income tax liability, which was not assigned any value in the allocation of the acquisition, offset by Ventas’s estimate of approximately $39.9 million for its deferred tax liability associated with the step up to fair value for book purposes of the Atria and One Lantern assets, acquired by a wholly-owned taxable REIT subsidiary of Ventas (difference between book and tax bases).

(L)Represents the write-off of Atria’s and One Lantern’s historical equity, net of the issuance of 24.96 million shares of Ventas common stock to be issued in connection with the Atria acquisition, which was valued at $1.35 billion at the time of the announcement of the transaction.  Additionally, the adjustment includes a reduction of stockholders’ equity in the amount of $60 million for the estimated transaction and debt extinguishment costs to be paid related to the Atria and One Lantern acquisition.

(M)Reflects the acquisition of the noncontrolling interest in One Lantern by Ventas as part of the transaction consideration.

(N)Reflects adjustment to record the estimated increase over NHP’s historical investment in real estate based upon the preliminary estimated fair value for the tangible and intangible real estate assets to be acquired.  Additionally, certain intercompany activity between Atria, One Lantern and NHP has been eliminated. These estimated values and eliminations are as follows (in millions):

Land	$	1,287
Buildings and improvements	5,653
Acquired lease intangibles	418
Construction in progress	22
Loans receivable	278
Investments in unconsolidated entities	85
Elimination of Atria and One Lantern assets leased from NHP that were classified as capital lease assets	(361		)
Pro forma adjustment to net real estate investments	$	7,382

(O)Reflects the elimination of certain intercompany activity between Atria, One Lantern and NHP.

(P)Reflects adjustment to eliminate historical other assets of NHP that were not assigned any value in the preliminary purchase price allocation and the elimination of certain intercompany activity between Atria, One Lantern and NHP, net of other acquired assets, primarily consisting of other intangible assets.

(Q)Represents the following adjustments (in millions): 

Fair market value of debt adjustment allocated for the acquisition	$	66
Borrowings on unsecured revolving credit facility for estimated transaction costs and transition and integration expenses to be paid related to the NHP acquisition	125
Elimination of promissory note between Atria and NHP	(23		)
Elimination of capital lease obligations between Atria, One Lantern and NHP	(207		)
Pro forma adjustment to debt	$	(39	)

(R)Reflects adjustment to eliminate historical other liabilities of NHP that were not assigned any value in the preliminary purchase price allocation, the elimination of certain intercompany activity between Atria, One Lantern and NHP and the recording of approximately $434.8 million of various lease intangibles, which primarily include below market operating lease intangibles, all of which are based on the preliminary fair value calculations.

(S)Represents the adjustment to record the fair market value of the redeemable OP unitholder interests, which are valued at a price of $44.99 per unit (the acquisition value of each share of NHP common stock at the time the acquisition was announced).

(T)Represents the adjustment to convert NHP’s historical equity into Ventas common stock, which was valued at a price of $44.99 per common share at the time the acquisition was announced.  Additionally, the adjustment includes a reduction of stockholders’ equity in the amount of $125 million for the estimated transaction costs and transition and integration expenses to be paid related to the NHP acquisition.

(U)Reflects the adjustment to record the estimated increase over NHP’s historical noncontrolling interest value based upon the preliminary estimated fair value of the noncontrolling interest.

NOTE 3 — NHP 2011 AND VENTAS AND NHP 2010 TRANSACTIONS ADJUSTMENTS

(V)Adjustments reflect the effect on Ventas’s and NHP’s historical consolidated statements of income and shares used in computing earnings per common share as if Ventas or NHP had consummated its significant 2011 and/or 2010 transactions on January 1, 2010.  With respect to Ventas, these adjustments primarily relate to the recording of income statement activity specific to the acquisition of Lillibridge Healthcare Services, Inc. and the acquisition of Sunrise Senior Living, Inc.’s noncontrolling interests in certain consolidated entities, and adjusting interest expense for a $200 million term loan with Bank of America, N.A. and a $400 million 3.125% senior notes issuance, assuming all transactions occurred on January 1, 2010.  With respect to NHP, the adjustments primarily relate to the recording of income statement activity for 2011 and 2010 acquisitions (56 properties subject to triple-net leases and 21 multi-tenant medical office buildings), adjusting income from loans and other investments for the funding/acquisition of five new mortgage loans, adjusting interest expense for the prepayment of $118.3 million of secured debt and $175 million of credit facility borrowings and adjusting shares used in computing earnings per share for equity issuances, assuming all transactions occurred on January 1, 2010.

NOTE 4 — ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(W)Reflects adjustments to eliminate historical revenues and expenses of Atria and One Lantern attributable to assets or liabilities that Ventas is not acquiring or assuming as part of the acquisition.

(X)Represents the following adjustments (in millions):

	For the Three Months Ended March 31, 2011			For the Year Ended December 31, 2010
Elimination of historical interest expense on debt not assumed as part of the acquisition	$	(1	)	$	(5	)
Fair market value of debt adjustment allocated for the acquisition	(4		)	(14		)
Elimination of historical interest related to Atria and/or One Lantern deferred financing fees	(1		)	(4		)
Elimination of Atria’s and/or One Lantern’s historical interest expense on debt anticipated to be repaid at closing	(4		)	(13		)
Additional interest expense on borrowings on unsecured revolving credit facility	3			13
Ventas debt repaid with proceeds from its February 2011 equity issuance	(3		)	(19		)
Net adjustment allocated for the acquired capital lease obligations	(1		)	(5		)
Pro forma adjustment to interest	$	(11	)	$	(47	)

(Y)Based on the preliminary purchase price allocation, Ventas expects to allocate $609 million to land and $2.5 billion to buildings and improvements. Depreciation expense is calculated on a straight-line basis based on Ventas’s purchase price allocation and using a 35-year life for buildings and permanent structural improvements, a five-year life for furniture and equipment and a 10-year life for land improvements. Additionally, Ventas’s purchase price allocation includes $101 million of acquired in-place lease intangibles, which will be amortized over the average remaining life of these leases (approximately one year).  Further, the adjustment reflects the elimination of historical depreciation expense related to assets Ventas is not acquiring.

(Z)Reflects adjustments to eliminate historical expenses of Atria and One Lantern attributable to assets or liabilities that Ventas is not acquiring or assuming as part of the acquisition, offset by the 5% management fee Ventas will be paying to Atria for management services related to the acquired communities.

(AA)Reflects the issuance of 24.96 million shares of Ventas common stock upon consummation of the Atria and One Lantern acquisition and Ventas’s February 2011 equity issuance of 5.6 million shares.

(BB)	Reflects the net amortization of above and below market lease intangibles recorded by Ventas as a result of the NHP acquisition and the elimination of certain intercompany activity between Atria, One Lantern and NHP.
(CC)	Reflects the net amortization of above and below market lease intangibles recorded by Ventas as a result of the NHP acquisition and the elimination of NHP’s historical amortization related to above and below market lease intangibles.
(DD)	Reflects adjustments to eliminate revenues and expenses of NHP attributable to assets or liabilities that Ventas is not acquiring or assuming as part of the acquisition and the elimination of certain intercompany activity between Atria, One Lantern and NHP.
(EE)	Represents the following adjustments (in millions):

	For the Three Months Ended March 31, 2011			For the Year Ended December 31, 2010
Fair market value of debt adjustment allocated for the acquisition	$	(7	)	$	(27	)
Elimination of historical interest expense related to NHP deferred financing fees	(1		)	(4		)
Elimination of interest expense from a promissory note between Atria and NHP	—			(1		)
Elimination of Atria and One Lantern capital lease obligation interest	(2		)	(10		)
Additional interest on borrowings on unsecured revolving credit facility	1			4
Pro forma adjustment to interest	$	(9	)	$	(38	)

(FF)	Based on the preliminary purchase price allocation, Ventas expects to allocate $1.3 billion to land and $5.7 billion to buildings and improvements. Depreciation expense is calculated on a straight-line basis based on Ventas’s purchase price allocation and using an average 34-year life for buildings and permanent structural improvements, a five-year life for furniture and equipment, an average eight-year life for land improvements and an average four-year life for tenant improvements. Additionally, Ventas’s purchase price allocation includes $261 million of in-place acquired lease intangibles, which will be amortized over the average remaining life of these leases. Further, the adjustment reflects the elimination of certain intercompany activity between Atria, One Lantern and NHP.
(GG)	Reflects the adjustment to record the estimated increase over NHP’s historical income related to the various joint venture entities as a result of the preliminary estimated fair value for the assets and liabilities acquired that will be depreciated and amortized over the estimated remaining useful life.
(HH)	Reflects the conversion of NHP common stock to Ventas common stock at the exchange ratio of 0.7866.
(II)	Reflects adjustments to eliminate the historical tax benefit of Atria, offset by the estimated tax benefit Ventas expects to recognize due to the acquisition.
(JJ)	Reflects adjustment to eliminate gains and expenses of NHP attributable to transactions that would not have occurred had the acquisition closed on January 1, 2010.

NOTE 5 — FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS

Ventas’s historical and pro forma funds from operations (“FFO”) and normalized FFO for the three months ended March 31, 2011 and the year ended December 31, 2010 are summarized as follows (in thousands):

VENTAS, INC.

UNAUDITED PRO FORMA FFO AND NORMALIZED FFO

For the three months ended March 31, 2011

(In thousands, except per share amounts)

	Ventas Historical			Atria Historical (A)			One Lantern Historical (B)			Atria and One Lantern Acquisition Adjustments (C)		Ventas Pro Forma for the Atria and One Lantern Acquisition			NHP Historical (D)			NHP 2011 Transactions Adjustments (V)		Pro Forma for NHP 2011 Transactions			NHP Acquisition Adjustments (E)			Total Pro Forma
Income (loss) from continuing operations attributable to common stockholders	$	48,984		$	(4,163	)	$	(5,522	)	$	10,759	$	50,058		$	39,811		$	142	$	39,953		$	(11,772	)	$	78,239
Discontinued operations	—			—			—			—		—			10,740			—		10,740			(10,740		)	—
Net income (loss) attributable to common stockholders	48,984			(4,163		)	(5,522		)	10,759		50,058			50,551			142		50,693			(22,512		)	78,239
Adjustments:
Real estate depreciation and amortization	51,173			13,497			6,004			1,733		72,407			38,573			268		38,841			24,849			136,097
Real estate depreciation and amortization related to noncontrolling interest	(204		)	—			—			—		(204		)	(325		)	—		(325		)	(1,242		)	(1,771		)
Real estate depreciation and amortization related to unconsolidated entities	1,035			—			—			—		1,035			1,182			—		1,182			111			2,328
Gain on sale of real estate assets	—			—			—			—		—			(11,078		)	—		(11,078		)	11,078			—
FFO	100,988			9,334			482			12,492		123,296			78,903			410		79,313			12,284			214,893
Adjustments:
Income tax benefit	(3,197		)	(667		)	—			667		(3,197		)	—			—		—			—			(3,197		)
Loss on extinguishment of debt	16,520			—			—			—		16,520			—			—		—			—			16,520
Merger-related expenses and deal costs	6,449			—			—			—		6,449			5,097			—		5,097			—			11,546
Loss on interest rate swap	—			—			2,040			—		2,040			—			—		—			—			2,040
Amortization of other intangibles	256			—			—			—		256			—			—		—			—			256
Normalized FFO	$	121,016		$	8,667		$	2,522		$	13,159	$	145,364		$	84,000		$	410	$	84,410		$	12,284		$	242,058

Ventas’s historical and pro forma FFO and normalized FFO per diluted share outstanding for the three months ended March 31, 2011 follows (in thousands, except per share amounts)(1):

	Ventas Historical			Ventas Pro Forma for the Atria and One Lantern Acquisition			NHP Historical (D)			Total Pro Forma
Income from continuing operations attributable to common stockholders	$	0.30		$	0.26		$	0.31		$	0.27
Discontinued operations	—			—			0.08			—
Net income attributable to common stockholders	0.30			0.26			0.39			0.27
Adjustments:
Real estate depreciation and amortization	0.32			0.38			0.30			0.47
Real estate depreciation related to noncontrolling interest	0.00			—			0.00			(0.01		)
Real estate depreciation and amortization related to unconsolidated entities	0.01			0.01			0.01			0.01
Gain on sale of real estate assets	—			—			(0.09		)	—
FFO	0.62			0.65			0.61			0.74
Adjustments:
Income tax benefit	(0.02		)	(0.02		)	—			(0.01		)
Loss on extinguishment of debt	0.10			0.09			—			0.06
Merger-related expenses and deal costs	0.04			0.03			0.04			0.04
Loss on interest rate swap	—			0.01			—			0.01
Amortization of other intangibles	0.00			—			—			—
Normalized FFO	$	0.75		$	0.77		$	0.65		$	0.83
Dilutive shares outstanding used in computing FFO and normalized FFO per common share	162,023			189,084			129,129			292,191

(1) Per share amounts may not add due to rounding.

VENTAS, INC.

UNAUDITED PRO FORMA FFO AND NORMALIZED FFO

For the year ended December 31, 2010

(In thousands, except per share amounts)

	Ventas Historical			Ventas 2010 Transactions Adjustments (V)			Pro Forma for Ventas 2010 Transactions			Atria Historical (A)			One Lantern Historical (B)			Atria and One Lantern Acquisition Adjustments (C)			Ventas Pro Forma for the Atria and One Lantern Acquisition			NHP Historical (D)			NHP 2010 and 2011 Transactions Adjustments (V)			Pro Forma for NHP 2010 and 2011 Transactions			NHP Acquisition Adjustments (E)			Total Pro Forma
Income (loss) from continuing operations attributable to common stockholders	$	218,370		$	(6,866	)	$	211,504		$	(20,985	)	$	(27,212	)	$	(22,831	)	$	140,476		$	138,867		$	22,752		$	161,619		$	(47,314	)	$	254,781
Discontinued operations	27,797			(2,556		)	25,241			—			—			—			25,241			4,899			(3,836		)	1,063			—			26,304
Net income (loss) attributable to common stockholders	246,167			(9,422		)	236,745			(20,985		)	(27,212		)	(22,831		)	165,717			143,766			18,916			162,682			(47,314		)	281,085
Adjustments:
Real estate depreciation and amortization	203,966			14,845			218,811			52,138			22,663			111,057			404,669			133,992			25,293			159,285			101,842			665,796
Real estate depreciation and amortization related to noncontrolling interest	(6,217		)	—			(6,217		)	—			—			—			(6,217		)	(1,099		)	(2,005		)	(3,104		)	(2,656		)	(11,977		)
Real estate depreciation and amortization related to unconsolidated entities	2,367			2,367			4,734			—			—			—			4,734			4,793			—			4,793			878			10,405
Discontinued operations:
Gain on sale of real estate assets	(25,241		)	—			(25,241		)	—			—			—			(25,241		)	(16,948		)	—			(16,948		)	16,948			(25,241		)
Depreciation on real estate assets	464			(464		)	—			—			—			—			—			2,352			(1,473		)	879			—			879
FFO	421,506			7,326			428,832			31,153			(4,549		)	88,226			543,662			266,856			40,731			307,587			69,698			920,947
Adjustments:
Income tax expense (benefit)	2,930			39			2,969			(7,560		)	—			(32,303		)	(36,894		)	—			—			—			—			(36,894		)
Loss (gain) on extinguishment of debt	9,791			—			9,791			2			—			(2		)	9,791			(75		)	—			(75		)	75			9,791
Merger-related expenses and deal costs	19,243			—			19,243			—			—			—			19,243			5,118			—			5,118			—			24,361
Loss on interest rate swap	—			—			—			—			16,020			—			16,020			—			—			—			—			16,020
Amortization of other intangibles	511			511			1,022			—			—			—			1,022			—			—			—			—			1,022
Gain on re-measurement of equity interest upon acquisition, net	—			—			—			—			—			—			—			(620		)	—			(620		)	—			(620		)
Impairments	—			—			—			—			—			—			—			15,006			—			15,006			—			15,006
Normalized FFO	$	453,981		$	7,876		$	461,857		$	23,595		$	11,471		$	55,921		$	552,844		$	286,285		$	40,731		$	327,016		$	69,773		$	949,633

Ventas’s historical and pro forma FFO and normalized FFO per diluted share outstanding for the year ended December 31, 2010 follows (in thousands, except per share amounts)(1):

	Ventas Historical			Ventas Pro Forma for the Atria and One Lantern Acquisition			NHP Historical (D)			Total Pro Forma
Income from continuing operations attributable to common stockholders	$	1.39		$	0.75		$	1.12		$	0.87
Discontinued operations	0.18			0.13			0.04			0.09
Net income attributable to common stockholders	1.56			0.88			1.15			0.96
Adjustments:
Real estate depreciation and amortization	1.29			2.15			1.08			2.29
Real estate depreciation related to noncontrolling interest	(0.04		)	(0.03		)	(0.01		)	(0.04		)
Real estate depreciation and amortization related to unconsolidated entities	0.02			0.03			0.04			0.04
Discontinued operations:
Gain on sale of real estate assets	(0.16		)	(0.13		)	(0.14		)	(0.09		)
Depreciation on real estate assets	0.00			—			0.02			0.00
FFO	2.67			2.89			2.14			3.16
Adjustments:
Income tax expense (benefit)	0.02			(0.20		)	—			(0.13		)
Loss on extinguishment of debt	0.06			0.05			0.00			0.03
Merger-related expenses and deal costs	0.12			0.10			0.04			0.08
Loss on interest rate swap	—			0.09			—			0.05
Amortization of other intangibles	0.00			0.01			—			0.00
Gain on re-measurement of equity interest upon acquisition, net	—			—			0.00			0.00
Impairments	—			—			0.12			0.05
Normalized FFO	$	2.88		$	2.94		$	2.30		$	3.26
Dilutive shares outstanding used in computing FFO and normalized FFO per common share	157,657			188,179			124,514			291,286

(1) Per share amounts may not add due to rounding.

Pro forma FFO and normalized FFO are presented for information purposes only, and were based on available information and assumptions that the Company’s management believes to be reasonable; however, they are not necessarily indicative of what Ventas’s FFO or normalized FFO actually would have been assuming the transactions had occurred as of the dates indicated.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  Since real estate values, instead, have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.  To overcome this problem, Ventas considers FFO and normalized FFO appropriate measures of operating performance of an equity REIT.  Further, Ventas believes that normalized FFO provides useful information because it allows investors, analysts and Ventas management to compare Ventas’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items.  Ventas uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO.  NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis.  Ventas defines “normalized FFO” as FFO excluding the following items (which may be recurring in nature): (a) gains and losses on the sales of real property assets; (b)

merger-related costs and expenses, including amortization of intangibles and transition and integration expenses, and deal costs and expenses, including expenses and recoveries, if any, relating to the Company’s lawsuit against HCP, Inc.; (c) the impact of any expenses related to asset impairment and valuations allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt; (d) the non-cash effect of income tax benefits or expenses; (e) the impact of future unannounced acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions; (f) gains and losses for the non-operational hedge agreements; and (g) any gains or losses on re-measurement of equity interests upon acquisition.

FFO and normalized FFO presented herein are not necessarily identical to FFO and normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same definitions.  FFO and normalized FFO should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of Ventas’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of Ventas’s liquidity, nor is FFO and normalized FFO necessarily indicative of sufficient cash flow to fund all of Ventas’s needs.  Ventas believes that in order to facilitate a clear understanding of Ventas’s consolidated historical operating results, FFO and normalized FFO should be examined in conjunction with net income as presented in the Unaudited Pro Forma Condensed Consolidated Financial Statements.