Edgar Filing: NATIONWIDE HEALTH PROPERTIES INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 2000

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to

Commission file number 1-9028

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NATIONWIDE HEALTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)

Maryland 95-3997619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

610 Newport Center Drive, Suite
1150
Newport Beach, California 92660
(Address of principal executive
offices) (Zip Code)

Registrant's telephone number, including area code: (949) 718-4400

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Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
------------------- -----------------------

Common Stock, $.10 Par Value New York Stock Exchange
7.677% Series A Cumulative Preferred None

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

The aggregate market value of the voting stock held by non-affiliates of the
Company is approximately $677,122,000 as of February 28, 2001.

46,236,484
(Number of shares of common stock outstanding as of February 28, 2001)

Part III is incorporated by reference from the registrant's definitive proxy
statement for the Annual Meeting of Stockholders to be held on April 20, 2001.

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PART I

Item 1. Business.

Nationwide Health Properties, Inc., a Maryland corporation organized in
October 1985, is a real estate investment trust ("REIT") which invests
primarily in health care related facilities and provides financing to health
care providers. Whenever we refer herein to "the Company" or to "us" or use the
terms "we" or "our," we are referring to Nationwide Health Properties, Inc. As
of December 31, 2000, we had investments in 328 facilities located in 37 states
and operated by 57 healthcare providers. The facilities include 182 skilled
nursing facilities, 127 assisted living facilities, 14 continuing care
retirement communities, 2 residential care facilities for the elderly, 2
rehabilitation hospitals and 1 medical clinic.

As of December 31, 2000, we had direct ownership of 146 skilled nursing
facilities, 120 assisted living facilities, 10 continuing care retirement
communities, 2 residential care facilities for the elderly, 2 rehabilitation
hospitals and 1 medical clinic. Substantially all of our owned facilities are
leased under "net" leases, which are accounted for as operating leases, to 44
healthcare providers. Of our lessees, only Alterra Healthcare Corporation
("Alterra") is expected to account for more than 10% of the Company's revenues
in 2001.

The leases generally have initial terms ranging from 5 to 19 years, and
generally have two or more multiple-year renewal options. We earn fixed monthly
minimum rents and may earn periodic additional rents. The additional rent
payments are generally computed as a percentage of facility net patient
revenues in excess of base amounts or as a percentage of the increase in the
Consumer Price Index. Additional rents are generally calculated and payable
monthly or quarterly. While the calculations and payments are generally made on
a quarterly basis, SEC Staff Accounting Bulletin No. 101 Revenue Recognition in
Financial Statements ("SAB No. 101"), which we adopted during the fourth
quarter of 2000 does not allow for the recognition of such revenue until all
possible contingencies have been eliminated. Most of our leases contain
provisions such that the total rent cannot decrease from one year to the next.
In addition, most of our leases contain cross collateralization and cross
default provisions tied to other leases with the same lessee, as well as
grouped lease renewals and grouped purchase options. Obligations under our
leases have corporate guarantees, and leases covering 197 facilities are backed
by irrevocable letters of credit or security deposits that cover 1 to 12 months
of monthly minimum rents. Under the terms of the leases, the lessee is
responsible for all maintenance, repairs, taxes and insurance on the leased
properties.

During 2000, we completed the construction of 5 assisted living facilities
in which our total aggregate investment was approximately $44,384,000.
Additionally, we funded approximately $2,350,000 in capital improvements at
certain facilities in accordance with certain existing lease provisions. These
capital improvements result in an increase in the minimum rents earned by the
Company on these facilities.

As of December 31, 2000, we held 35 mortgage loans secured by 36 skilled
nursing facilities, 7 assisted living facilities, 4 continuing care retirement
communities and 4 parcels of land. These loans had an aggregate outstanding
principal balance of approximately $191,020,000 and a net book value of
approximately $185,623,000 at December 31, 2000, net of an aggregate discount
of approximately $5,397,000. The mortgage loans have individual outstanding
balances ranging from approximately $304,000 to $15,821,000 and have maturities
ranging from 2001 to 2025.

Our facilities are operated by 57 healthcare providers. The following table
summarizes our major operators, the number of facilities each operates and the
percentage of our annualized revenues received from each operator:

Number of Percentage of
Facilities Annualized
Operator Operated Revenue
-------- ---------- -------------

Alterra Healthcare Corporation...................... 54 12%
Beverly Enterprises, Inc............................ 34 9%
American Retirement Corporation..................... 12 8%
ARV Assisted Living, Inc............................ 16 8%
Mariner Post-Acute Network, Inc. ................... 21 6%
Liberty Healthcare.................................. 17 5%
Laureate Group...................................... 4 4%
Epoch Senior Living................................. 8 4%
Balanced Care Corporation........................... 10 4%
Sun Healthcare Group, Inc........................... 19 4%
Integrated Health Services, Inc. ................... 11 4%
Life Care Centers of America........................ 7 3%
National Assisted Living, LP........................ 8 3%
American Health Centers, Inc. ...................... 12 3%

We have historically provided lease or mortgage financing for healthcare
facilities to qualified operators and acquired additional healthcare related
facilities, including skilled nursing facilities, assisted living facilities,
acute care hospitals and medical office buildings. Financing for such
investments was provided by borrowings under our bank line of credit, private
placements or public offerings of debt or equity, and the assumption of secured
indebtedness.

Taxation of the Company

We believe we have operated in such a manner as to qualify for taxation as a
"real estate investment trust" under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended, commencing with our taxable year ending
December 31, 1985, and we intend to continue to operate in such a manner. If
the Company qualifies for taxation as a real estate investment trust, we will
generally not be subject to federal corporate income taxes on our net income
that is currently distributed to stockholders. This treatment substantially
eliminates the "double taxation" (e.g. at the corporate and stockholder levels)
that generally results from investment in the stock of a corporation.

Properties

Of the 328 facilities in which we have investments, we have direct ownership
of 146 skilled nursing facilities, 120 assisted living facilities, 10
continuing care retirement communities, 2 residential care facilities for the
elderly, 2 rehabilitation hospitals and 1 medical clinic. Substantially all of
the properties are leased to other parties under terms which require the
lessee, in addition to paying rent, to pay all additional charges, taxes,
assessments, levies and fees incurred in the operation of the leased
properties.

Skilled Nursing Facilities

Skilled nursing facilities provide rehabilitative, restorative, skilled
nursing and medical treatment for patients and residents who do not require the
high-technology, care-intensive, high-cost setting of an acute-care or
rehabilitative hospital. Treatment programs include physical, occupational,
speech, respiratory and other therapeutic programs, including sub-acute
clinical protocols such as wound care and intravenous drug treatment.

Assisted Living Facilities

Assisted living facilities provide services to aid in everyday living, such
as bathing, routine or special meals, security, transportation, recreation,
medication supervision and limited therapeutic programs. More intensive
medical needs of the residents are often met within the Company's assisted
living facilities by home health providers, close coordination with the
individual's physician and skilled nursing facilities. Assisted living
facilities are increasingly successful as lower cost, less institutional
alternatives to the health problems of the elderly or medically frail.

Continuing Care Retirement Communities

Continuing care retirement communities provide a broad continuum of care.
At the most basic level, services are provided which aid in everyday living,
much like in an assisted living facility. At the other end of the spectrum,
skilled nursing, rehabilitation and medical treatment is provided to residents
who need those services. This type of facility offers residents the ability to
have the most independent lifestyle possible while providing a wide range of
social, health and nursing services tailored to meet individual needs.

Residential Care Facilities for the Elderly

Residential care facilities for the elderly offer similar services to an
assisted living facility, except they are provided in a residential home
setting. These facilities are generally three to four bedroom houses in
residential neighborhoods, which are slightly modified to enable adequate
access and care for the residents. There is generally one 24-hour caregiver at
each location to provide meals and assistance with activities such as bathing,
dressing, laundry and cleaning.

Rehabilitation Hospitals

Rehabilitation hospitals provide inpatient and outpatient medical care to
patients requiring high intensity physical, respiratory, neurological,
orthopedic and other treatment protocols and for intermediate periods in their
recovery. These programs are often the most effective in treating severe
skeletal or neurological injuries and traumatic diseases such as stroke or
acute arthritis.

The following table sets forth certain information regarding our owned
facilities as of December 31, 2000.

Number Annual 2000
Number of of Beds/ Gross Minimum Additional
Facility Location Facilities Units(1) Investment Rent(2) Rent(2)
----------------- ---------- -------- ---------- ------- ----------
(Dollars in Thousands)

Skilled Nursing Facilities:
Arizona..................... 1 130 $ 3,540 $ 481 $144
Arkansas.................... 9 918 35,932 3,218 104
California.................. 8 963 26,481 3,082 835
Connecticut................. 2 239 6,192 922 96
Florida..................... 8 1,098 29,296 3,063 188
Georgia..................... 2 263 11,685 1,257 --
Idaho....................... 1 64 792 81 --
Illinois.................... 2 210 5,549 701 215
Indiana..................... 7 886 27,334 3,335 707
Kansas...................... 9 685 13,919 1,408 127
Maryland.................... 4 749 22,233 2,933 371
Massachusetts............... 17 1,754 75,092 7,600 680
Minnesota................... 7 890 28,152 2,042 31
Mississippi................. 1 120 4,345 388 19
Missouri.................... 1 108 2,740 517 --

Skilled Nursing Facilities
(continued):
Nevada..................... 1 140 $ 4,034 $ 480 $ 77
New Jersey................. 1 180 6,808 391 45
North Carolina............. 1 150 2,360 333 --
Ohio....................... 6 811 29,551 3,304 242
Oklahoma................... 3 253 3,939 404 130
Oregon..................... 1 85 1,215 175 --
Tennessee.................. 10 1,111 35,506 3,627 575
Texas...................... 25 2,791 60,559 6,586 1,636
Virginia................... 4 604 18,568 2,910 --
Washington................. 7 697 29,377 2,656 228
Wisconsin.................. 8 773 19,692 2,893 104
--- ------ -------- ------- ------
Subtotals................. 146 16,672 504,891 54,787 6,554
--- ------ -------- ------- ------
Assisted Living Facilities:
Alabama.................... 2 166 5,953 515 35
Arizona.................... 2 142 7,868 743 58
Arkansas................... 1 32 2,150 144 5
California................. 13 1,590 79,578 8,191 1,579
Colorado................... 6 607 45,615 4,294 108
Delaware................... 1 54 5,301 572 8
Florida.................... 20 1,400 92,900 8,902 429
Idaho...................... 1 158 11,800 1,176 86
Illinois................... 1 178 11,076 1,037 81
Indiana.................... 1 50 4,666 458 17
Kansas..................... 4 231 13,470 1,196 20
Kentucky................... 1 44 2,657 273 14
Louisiana.................. 1 104 7,384 883 --
Maryland................... 1 56 5,162 517 --
Massachusetts.............. 1 118 11,007 992 33
Michigan................... 1 143 7,306 816 128
Nevada..................... 2 155 13,616 1,254 13
New Jersey................. 1 52 4,085 353 15
North Carolina............. 1 42 2,916 257 12
Ohio....................... 11 635 38,594 3,769 164
Oklahoma................... 3 188 8,100 771 42
Oregon..................... 6 536 28,831 2,851 132
Pennsylvania............... 2 163 14,628 1,486 --
Rhode Island............... 3 274 29,920 3,182 --
South Carolina............. 4 162 11,041 943 49
Tennessee.................. 5 278 24,534 2,462 29
Texas...................... 16 915 75,245 6,671 245
Virginia................... 2 153 12,969 1,684 --
Washington................. 4 341 22,935 2,267 101
West Virginia.............. 1 60 6,010 602 --
Wisconsin.................. 2 422 29,061 2,181 110
--- ------ -------- ------- ------
Subtotals................. 120 9,449 636,378 61,442 3,513
--- ------ -------- ------- ------

Continuing Care Retirement
Communities:
California................ 1 279 $ 12,427 $ 1,222 $ 270
Colorado.................. 1 119 3,115 307 59
Georgia................... 1 190 11,492 909 27
Kansas.................... 1 200 13,204 1,267 75
Massachusetts............. 1 178 14,292 561 18
Tennessee................. 1 80 3,178 330 5
Texas..................... 2 550 37,336 3,289 48
Wisconsin................. 2 942 64,351 6,015 239
--- ------ ---------- -------- -------
Subtotals................. 10 2,538 159,395 13,900 741
--- ------ ---------- -------- -------
Residential Care Facilities
for the Elderly:
California................ 2 12 325 -- --
--- ------ ---------- -------- -------
Rehabilitation Hospitals:
Arizona.................. 2 116 16,826 1,770 230
--- ------ ---------- -------- -------

Medical Clinics:
Alabama.................. 1 -- 2,433 -- --
--- ------ ---------- -------- -------

Construction in Progress... -- -- 9,478 -- --
--- ------ ---------- -------- -------

Land Parcels:
Kentucky................. -- -- 578 -- --
New Hampshire............ -- -- 736 -- --
Ohio..................... -- -- 1,759 -- --
Texas.................... -- -- 810 -- --
--- ------ ---------- -------- -------
Subtotals.............. -- -- 3,883 -- --
--- ------ ---------- -------- -------
Total All Owned
Facilities................ 281 28,787 $1,333,609 $131,899 $11,038
=== ====== ========== ======== =======

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(1) Assisted living facilities are measured in units, continuing care
retirement communities are measured in beds and units and all other
facilities are measured by bed count.

(2) Annual Minimum Rent (as defined in the leases) for each of our owned
properties. Additional rent, generally contingent upon increases in the
facility net patient revenues in excess of a base amount or increases in
the Consumer Price Index, may also be paid. The 2000 additional rent
amounts reflect additional rent earned in 2000.

As of December 31, 2000, 29 of our 281 owned facilities were being leased to
and operated by subsidiaries of Beverly Enterprises, Inc. ("Beverly"). We
expect that as new facilities are acquired, an increasing percentage of our
facilities will be leased to operators unaffiliated with Beverly. For
additional financial information regarding Beverly, see Appendix 1 attached as
part of this Annual Report on Form 10-K.

As of December 31, 2000, 53 of the owned facilities are leased to and
operated by subsidiaries of Alterra.

Competition

We generally compete with other REITs, real estate partnerships, health care
providers and other investors, including, but not limited to, banks and
insurance companies, in the acquisition, leasing and financing of health care
facilities. The operators of the health care facilities compete on a local and
regional basis with operators of facilities that provide comparable services.
Operators compete for patients based on quality of care, reputation, physical
appearance of facilities, services offered, family preferences, physicians,
staff and price.

Regulation

Payments for health care services provided by the operators of our
facilities are received principally from four sources: private funds; Medicaid,
a medical assistance program for the indigent, operated by individual states
with the financial participation of the federal government; Medicare, a federal
health insurance program for the aged and certain chronically disabled
individuals; and health and other insurance plans. Government revenue sources,
particularly Medicaid programs, are subject to statutory and regulatory
changes, administrative rulings, and government funding restrictions, all of
which may materially increase or decrease the rates of payment to nursing
facilities and the amount of additional rents payable to the Company under the
Leases. Effective for cost reporting years beginning after July 1, 1998, the
payment methodology for nursing homes under the Medicare program was changed.
Under the new methodology, Medicare reimburses nursing home operators for
nursing care, ancillary services and capital costs at a flat per diem rate. In
the past, a cost-based system of reimbursement was used. This new reimbursement
methodology is being phased in over four years. Payments under the new
methodology are generally lower than the payments the facilities had
historically received, however there has been some relief during 2000 as a
portion of the reduction in payments was reversed. There is no assurance that
payments under such programs will remain at levels comparable to the present
levels or be sufficient to cover all the operating and fixed costs allocable to
Medicaid and Medicare patients. Any changes in reimbursement levels could have
an adverse impact on the revenues of the operators of our facilities, which
could in turn adversely impact their ability to make their monthly lease or
debt payments to us.

Health care facilities in which we invest are also generally subject to
state licensure statutes and regulations and statutes which may require
regulatory approval, in the form of a certificate of need ("CON"), prior to the
addition or construction of new beds, the addition of services or certain
capital expenditures. CON requirements generally do not apply to assisted
living facilities. CON requirements are not uniform throughout the United
States and are subject to change. We cannot predict the impact of regulatory
changes with respect to licensure and CONs on the operations of our lessees and
mortgagees.

Executive Officers of the Company

The table below sets forth the name, position and age of each executive
officer of the Company. Each executive officer is appointed by our Board of
Directors, serves at their pleasure and holds office until a successor is
appointed, or until the earliest of death, resignation or removal. There is no
"family relationship" between any of the named executive officers or any
director of the Company. All information is given as of February 28, 2001.

Name Position Age
---- -------- ---

R. Bruce Andrews........ President and Chief Executive Officer 60
Mark L. Desmond......... Senior Vice President and Chief Financial Officer 42
T. Andrew Stokes........ Senior Vice President of Corporate Development 53
Steven J. Insoft........ Vice President of Development 37
John J. Sheehan, Jr. ... Vice President of Development 43

R. Bruce Andrews--President and Chief Executive Officer since September 1989
and a director of the Company since October 1989. Mr. Andrews had previously
served as a director of American Medical International, Inc., a hospital
management company, and served as its Chief Financial Officer from 1970 to 1985
and its Chief Operating Officer in 1985 and 1986. From 1986 through 1989, Mr.
Andrews was engaged in various private investments. Mr. Andrews is also a
director of CenterTrust Retail Properties, Inc.

Mark L. Desmond--Senior Vice President and Chief Financial Officer since
January 1996. Mr. Desmond was Vice President and Treasurer of the Company from
May 1990 to December 1995 and Controller, Chief Accounting Officer and
Assistant Treasurer of the Company from June 1988 to April 1990. From 1986
until joining the Company, Mr. Desmond held various accounting positions with
Beverly, an operator of nursing facilities, pharmacies and pharmacy related
outlets.

T. Andrew Stokes--Senior Vice President of Corporate Development since
January 1996. Mr. Stokes was Vice President of Development of the Company from
August 1992 to December 1995. From 1984 to 1988, Mr. Stokes served as Vice
President, Corporate Development for American Medical International, Inc., a
hospital management company. From 1989 until joining the Company, Mr. Stokes
was Healthcare Group Director of Houlihan, Lokey, Howard & Zukin, a national
financial advisory firm.

Steven J. Insoft--Vice President of Development since February 1998. From
1991 to 1997, Mr. Insoft served as President of CMI Senior Housing &
Healthcare, Inc., an operator of nursing facilities. From 1988 to 1991, Mr.
Insoft was an Associate in the Capital Markets Group of Prudential Insurance
Company of America.

John J. Sheehan, Jr.--Vice President of Development since February 1996.
From September 1987 through April 1990, Mr. Sheehan served as Director of Asset
Management for Southmark Corporation, a real estate syndication company. From
April 1990 until joining the Company, Mr. Sheehan was Vice President, Mortgage
Finance for Life Care Centers of America, an operator and manager of nursing
facilities.

Employees

As of February 28, 2001, the Company had fourteen employees.

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision about the Company. The risks and uncertainties described
below are not the only ones facing the Company and there may be additional
risks that we do not presently know of or that we currently consider
immaterial. All of these risks could adversely affect our business, financial
condition, results of operations and cash flows. As a result, our ability to
pay distributions on, and the market price of, our common stock may be
adversely affected if any of such risks are realized.

Operator Obligations

Our income would be adversely affected if a significant number of our
operators were unable to meet their obligations to us or if we were unable to
lease our facilities or make mortgage loans on economically favorable terms.
There can be no assurance that any lessee will exercise its option to renew its
lease upon the expiration of the initial term or that if such failure to renew
were to occur, we could lease the facility to others on favorable terms.

Operator Governmental Regulations

Our operators are subject to significant regulation by federal, state and
local governments. These laws and regulations are subject to frequent and
substantial changes resulting from legislation, adoption of rules and
regulations, and administrative and judicial interpretations of existing law.
These changes may have a dramatic effect on our operators' costs associated
with doing business and the amount of reimbursement by both government and
other third-party payors. These changes may be applied retroactively. The
ultimate timing or effect of these changes cannot be predicted. The failure of
any of our operators to comply with such laws, requirements and regulations
could adversely affect such operator's ability to meet their obligations to the
Company.

Operator Reimbursement Rates

The ability of our operators to generate revenue and profit affects the
underlying value of our facilities. Revenues of our operators are generally
derived from payments for patient care from the federal Medicare program, state
Medicaid programs, private insurance carriers, health care service plans,
health maintenance organizations, preferred provider arrangements, self-insured
employers, as well as the patients themselves.

A significant portion of our operators' revenue is derived from
governmentally-funded reimbursement programs, such as Medicare and Medicaid.
Both federal and state governments have adopted and continue to consider
various health care reform proposals to control health care costs. In recent
years, there have been fundamental changes in the Medicare program that
resulted in reduced levels of payment for a substantial portion of health care
services. In many instances, revenues from Medicaid programs are already
insufficient to cover the actual costs incurred in providing care to those
patients. In addition, reimbursement from private payors has in many cases
effectively been reduced to levels approaching those of government payors.

Governmental and public concern regarding health care costs may result in
significant reductions in payment to health care facilities, and there can be
no assurance that future reimbursement rates for either governmental or private
payors will be sufficient to cover cost increases in providing services to
patients. Any changes in reimbursement policies that reduce reimbursement to
levels that are insufficient to cover the cost of providing patient care could
adversely affect revenues of our operators and thereby adversely affect their
ability to meet their obligations to the Company.

Operator Financial Difficulties

Our facilities are operated by 57 health care providers including Alterra
Healthcare Corporation, American Retirement Corporation, ARV Assisted Living,
Beverly Enterprises, Inc., Harborside Healthcare Corporation,

HEALTHSOUTH Corporation, Integrated Health Services, Inc. ("Integrated"),
Mariner Post-Acute Network, Inc. ("Mariner") and Sun Healthcare Group, Inc.
("Sun"). As of December 31, 2000, Alterra operated 54 facilities representing
approximately 12% of our revenues. Other than Alterra, no health care provider
operated facilities representing over 10% of our revenues.

As of December 31, 2000, three operators, Sun, Mariner and Integrated, have
filed for bankruptcy protection. See "Management's Discussion and Analysis--
Information Regarding Certain Operators" for a more comprehensive discussion of
our relationship with these operators and a discussion regarding termination of
the Company's leases with Balanced Care Corporation following their default in
December 2000. In addition, in February 2001, Alterra announced that it
commenced discussion with its principal lenders and lessors regarding the
restructuring of its debt and lease obligations. While we expect to be able to
accommodate Alterra's restructuring efforts without any adverse effect to the
Company, there can be no guarantee that the restructuring will not have a
negative impact on our earnings or cash flow.

Our financial position and our ability to make distributions may be
adversely affected by financial difficulties experienced by any of our major
operators, including bankruptcy, insolvency or general downturn in business of
any such operator, or in the event any such operator does not renew and/or
extend its relationship with us as it expires.

Operators Seeking Bankruptcy Protection

The Company is exposed to the risk that our operators may not be able to
meet their obligations, which may result in bankruptcy or insolvency of our
operators. Although our leases and loans provide the Company the right to
terminate an investment, evict an operator, demand immediate repayment, and
other remedies, the bankruptcy laws afford certain rights to a party that has
filed for bankruptcy or reorganization. An operator in bankruptcy may be able
to restrict the Company's ability to collect unpaid rent and interest during
the bankruptcy proceeding.

If one of our lessees seeks bankruptcy protection, the lessee can either
assume or reject the lease. If the lessee assumes the lease, the court cannot
change the rental amount or any other lease provision which could financially
impact the Company. However, if the lessee rejects the lease, the facility
would be returned to the Company. If the facility is returned to the Company,
our financial condition could be adversely affected by delays in leasing the
facility to a new operator.

In the event of a default by our operators under mortgage loans, we may have
to foreclose the mortgage or protect our interest by acquiring title to a
property and thereafter making substantial improvements or repairs in order to
maximize the facility's investment potential. Operators may contest enforcement
of foreclosure or other remedies, seek bankruptcy protection against such
enforcement and/or bring claims for lender liability in response to actions to
enforce mortgage obligations. If an operator seeks bankruptcy protection, the
automatic stay of the Bankruptcy Code would preclude us from enforcing
foreclosure or other remedies against the operator unless relief is obtained
from the court. High "loan to value" ratios or declines in the value of the
facility may prevent us from realizing an amount equal to our mortgage loan
upon foreclosure.

The receipt of liquidation proceeds or the replacement of an operator that
has defaulted on its lease or loan could be delayed by the approval process of
any federal, state or local agency necessary for the replacement of the
operator licensed to manage the facility. In some instances, the Company may
take possession of a property that may expose the Company to successor
liabilities. If any of these events occur, the Company's revenue and operating
cash flow could be adversely affected. See "Management's Discussion and
Analysis--Information Regarding Certain Operators" for a discussion regarding
three of our operators that have filed for bankruptcy protection.

Fraud and Abuse Regulations

There are various federal and state laws prohibiting fraud by health care
providers, including criminal provisions that prohibit filing false claims or
making false statements to receive payment or certification under Medicare and
Medicaid, or failing to refund overpayments or improper payments.

There are also laws that govern referrals and financial relationships. A
wide array of relationships and arrangements, including ownership interests in
a company by persons who refer or who are in a position to refer patients, as
well as personal services agreements, have under certain circumstances, been
alleged or been found to violate these provisions. State and federal
governments are devoting increasing attention and resources to anti-fraud
initiatives against health care providers.

Based upon information we have periodically received from our operators, we
believe that the facilities in which we have investments are in substantial
compliance with the various regulatory requirements applicable to them,
although there can be no assurance that the operators are in compliance or will
remain in compliance in the future.

Licensing, Certification and Accreditation

Our operators and facilities are subject to regulatory and licensing
requirements of federal, state and local authorities. In granting and renewing
licenses, regulatory agencies consider, among other things, the physical
buildings and equipment, the qualifications of the administrative personnel and
nursing staff, the quality of care and continuing compliance with the laws and
regulations relating to the operation of the facilities. In the ordinary course
of business, the operators receive notices of deficiencies for failure to
comply with various regulatory requirements and take appropriate corrective and
preventive actions.

Failure to obtain licensure or loss of licensure would prevent a facility
from operating. Failure to maintain certification in the Medicare and Medicaid
programs would result in a loss of funding from those programs. Although
accreditation is generally voluntary, loss of accreditation could result in a
facility failing to meet eligibility requirements to participate in various
reimbursement programs. These events could adversely affect the facility
operator's ability to meet its obligations to the Company.

Competition

The health care industry is highly competitive and we expect that it may
become more competitive in the future. We generally compete with other REITs,
real estate partnerships, health care providers and other investors, including,
but not limited to, banks and insurance companies, in the acquisition, leasing
and financing of health care facilities. Our operators are competing with
numerous other companies providing similar health care services or alternatives
such as home health agencies, life care at home, community-based service
programs, retirement communities and convalescent centers. There can be no
assurance that our operators will not encounter increased competition in the
future that could limit their ability to attract residents or expand their
businesses and therefore affect their ability to meet their obligations to the
Company.

Debt Obligations

We are subject to risks normally associated with debt financing, including
the risks that our cash flow will be insufficient to make distributions to our
stockholders, that we will be unable to refinance existing indebtedness and
that the terms of refinancing will not be as favorable as the terms of existing
indebtedness.

If we are unable to refinance or extend principal payments due at maturity
or pay them with proceeds from other capital transactions, our cash flow may
not be sufficient in all years to pay distributions to our stockholders and to
repay all maturing debt. Furthermore, if prevailing interest rates or other
factors at the time of refinancing result in higher interest rates upon
refinancing, the interest expense relating to that refinanced indebtedness
would increase. This increased interest expense would adversely affect our
financial condition and results of operations. See "Management's Discussion and
Analysis--Market Risk Exposure" for a more comprehensive discussion regarding
the impact of rising interest rates on our results of operations and financial
condition.

Leverage

Financing for our future investments may be provided by borrowings under our
bank line of credit, private or public offerings of debt and the assumption of
secured indebtedness. Accordingly, we could become more highly leveraged. The
degree of leverage could have important consequences to stockholders, including
affecting our ability to obtain additional financing in the future for working
capital, capital expenditures,

acquisitions, development or other general corporate purposes and making us
more vulnerable to a downturn in business or the economy generally. See
"Management's Discussion and Analysis--Liquidity and Capital Resources" for a
discussion regarding our indebtedness.

External Sources of Capital

In order to qualify as a REIT under the Internal Revenue Code, we are
required each year to distribute to our stockholders at least 95% (90% for
years ending after December 31, 2000) of our REIT taxable income. Because of
this distribution requirement, we may not be able to fund all future capital
needs, including capital needs in connection with acquisitions, from cash
retained from operations. As a result, we rely on other sources of capital,
which we may not be able to obtain on favorable terms or at all. Our access to
capital depends upon a number of factors, including general market conditions
and the market's perception of our growth potential and our current and
potential future earnings and cash distributions and the market price of the
shares of our capital stock. Additional debt financing may substantially
increase our leverage.

Investment Level

Difficult capital market conditions in our industry have limited our access
to capital. As a result, the level of our new investments has decreased and we
do not anticipate making additional investments beyond our current commitments
until such time as equity capital is available under more favorable terms. In
the event that there are mortgage repayments or facility sales in excess of new
investments, our revenues may decrease.

Change of Control Provisions

Our charter and bylaws contain provisions that may delay, defer or prevent a
change in control or other transaction that could provide the holders of our
common stock with the opportunity to realize a premium over the then-prevailing
market price for our common stock.

In order to protect us against the risk of losing our REIT status for
federal income tax purposes, our charter prohibits the ownership by any single
person of more than 9.9% of the issued and outstanding shares of our voting
stock. We will redeem shares acquired or held in excess of the ownership limit.
In addition, any acquisition of our common stock or preferred stock that would
result in our disqualification as a REIT is null and void. The ownership limit
may have the effect of delaying, deferring or preventing a change in control
and, therefore, could adversely affect our stockholders' ability to realize a
premium over the then-prevailing market price for the shares of our common
stock in connection with such transaction. The Board of Directors has increased
to 20% the ownership limit applicable to our voting stock with respect to Cohen
& Steers Capital Management, Inc. As of December 31, 2000, Cohen & Steers
Capital Management, Inc. held 18.60% of our common stock.

Our charter authorizes us to issue additional shares of common stock and one
or more series of preferred stock and to establish the preferences, rights and
other terms of any series of preferred stock that we issue. Although our Board
of Directors has no intention to do so at the present time, it could establish
a series of preferred stock that could delay, defer or prevent a transaction or
a change in control that might involve a premium price for our common stock or
otherwise be in the best interests of our stockholders.

Maryland law also contains other provisions that may delay, defer or prevent
a transaction, including a change in control, that might involve payment of a
premium price for our common stock or otherwise be in the best interests of our
stockholders. Those provisions include the following:

. The requirement of Maryland law that a proposed consolidation, merger,
share exchange or transfer must be approved by two-thirds of the votes
entitled to be cast on the matter; and

. the requirement of Maryland law that stockholders may only take action
by written consent with the unanimous approval of all stockholders
entitled to vote on the matter in question.

These provisions may impede various actions by stockholders without approval
of our Board of Directors, which in turn may delay, defer or prevent a
transaction involving a change of control.

Stock Price

As with other publicly-traded equity securities, the market price of our
common stock will depend upon various market conditions, which may change from
time to time. Among the market conditions that may affect the market price of
our common stock are the following:

. the extent of investor interest;

. the general reputation of REITs and the attractiveness of their equity
securities in comparison to other equity securities (including
securities issued by other real estate-based companies);

. our financial performance and that of our operators;

. the contents of analyst reports regarding the Company and the REIT
industry; and

. general stock and bond market conditions, including changes in interest
rates on fixed income securities which may lead prospective purchasers
of our common stock to demand a higher annual yield from future
distributions. Such an increase in the required yield from distributions
may adversely affect the market price of our common stock.

Other factors such as governmental regulatory action and changes in tax laws
could also have a significant impact on the future market price of our common
stock.

The market value of the equity securities of a REIT is generally based upon
the market's perception of the REIT's growth potential and its current and
potential future earnings and cash distributions. For that reason, shares of
our common stock may trade at prices that are higher or lower than the net
asset value per share. Our failure to meet the market's expectation with regard
to future earnings and cash distributions likely would adversely affect the
market price of our common stock. Another factor that may influence the price
of our common stock will be the distribution yield on our common stock (as a
percentage of the price of our common stock) relative to market interest rates.
An increase in market interest rates might lead prospective purchasers of our
common stock to expect a higher distribution yield, which would adversely
affect the market price of our common stock.

REIT Status

We intend to operate in a manner to qualify as a REIT under the Internal
Revenue Code. We believe that we have been organized and have operated in a
manner, which would allow us to qualify as a REIT under the Internal Revenue
Code. However, it is possible that we have been organized or have operated in a
manner that would not allow us to qualify as a REIT, or that our future
operations could cause us to fail to qualify. Qualification as a REIT requires
us to satisfy numerous requirements established under highly technical and
complex Internal Revenue Code provisions. For example, in order to qualify as a
REIT, at least 95% of our gross income in any year must be derived from
qualifying sources, and we must pay dividends to stockholders aggregating
annually at least 95% (90% for taxable years beginning after December 31, 2000)
of our REIT taxable income. Legislation, new regulations, administrative
interpretations or court decisions could significantly change the tax laws with
respect to qualification as a REIT or the federal income tax consequences of
such qualification. However, we are not aware of any pending tax legislation
that would adversely affect our ability to operate as a REIT.

If we fail to qualify as a REIT in any taxable year, we will be subject to
federal income tax on our taxable income at regular corporate rates. Unless we
are entitled to relief under statutory provisions, we would be disqualified
from treatment as a REIT for the four taxable years following the year during
which we lost qualification. If we lose our REIT status, our net earnings
available for investment or distribution to stockholders would be significantly
reduced for each of the years involved. In addition, we would no longer be
required to make distributions to stockholders.

Key Personnel

We depend on the efforts of our executive officers, particularly Mr. R.
Bruce Andrews, Mr. T. Andrew Stokes and Mr. Mark L. Desmond. While we believe
that we could find suitable replacements for these key personnel, the loss of
their services or the limitation of their availability could have an adverse
impact on our operations. Although we have entered into employment agreements
with these executive officers, these employment agreements may not assure their
continued service.

Item 2. Properties.

See Item 1 for details.

Item 3. Legal Proceedings.

There are various legal proceedings pending to which the Company is a party
or to which some of its properties are subject arising in the normal course of
business. We do not believe that the ultimate resolution of these proceedings
will have a material adverse effect on the Company's consolidated financial
position or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

PART II

Item 5. Market For The Company's Common Equity and Related Stockholder Matters.

The Company's common stock is listed on the New York Stock Exchange. It has
been our policy to declare quarterly dividends to holders of the Company's
common stock in order to comply with applicable sections of the Internal
Revenue Code governing real estate investment trusts. Set forth below are the
high and low sales prices of our common stock from January 1, 1999 to December
31, 2000 as reported by the New York Stock Exchange and the cash dividends per
share paid with respect to such periods:

High Low Dividend
---- ---- --------

2000

First quarter................................. $14 13/16 $ 9 9/16 $.46
Second quarter................................ 15 9 5/8 .46
Third quarter................................. 16 3/8 13 7/8 .46
Fourth quarter................................ 16 1/4 12 .46

1999

First quarter................................. $22 1/4 $16 3/4 $.45
Second quarter................................ 21 17 3/4 .45
Third quarter................................. 19 3/16 14 15/16 .45
Fourth quarter................................ 17 1/16 11 3/4 .45

As of February 28, 2001 there were approximately 1,000 holders of record of
the Company's common stock.

Item 6. Selected Financial Data.

The following table presents selected financial data with respect to the
Company. Certain of this financial data has been derived from our audited
financial statements included elsewhere in this Annual Report on Form 10-K and
should be read in conjunction with those financial statements and accompanying
notes and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Reference is made to Note 4 of Notes to Consolidated
Financial Statements for information regarding our acquisitions and
divestitures.

Years ended December 31,
--------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- --------
(In thousands, except per share data)

Operating Data:
Total revenues.......... $ 171,396 $ 163,865 $ 142,584 $ 115,705 $ 95,776
Income from operations.. 70,013 71,148 67,427 62,988 54,944
Gain (loss) on sale of
facilities............. 1,149 (335) 2,321 829 --
Net income.............. 71,162 70,813 69,748 63,817 54,944
Preferred stock
dividends.............. (7,677) (7,677) (7,677) (1,962) --
Net income available to
common stockholders.... 63,485 63,136 62,071 61,855 54,944
Dividends paid on common
stock.................. 85,889 83,480 75,128 65,734 59,581

Per Share Data:
Basic/diluted income
from continuing
operations available to
common
stockholders(1)........ $ 1.35 $ 1.37 $ 1.34 $ 1.45 $ 1.36
Basic/diluted net income
available to common
stockholders........... 1.37 1.37 1.39 1.47 1.36
Dividends paid on common
stock.................. 1.84 1.80 1.68 1.56 1.48

Balance Sheet Data:
Investments in real
estate, net............ $1,333,026 $1,372,064 $1,316,685 $1,053,273 $722,506
Total assets............ 1,381,007 1,430,056 1,357,303 1,077,394 744,984
Senior unsecured notes
due 2001-2038.......... 627,900 657,900 545,150 355,000 190,000
Bank borrowings......... 79,000 75,300 42,000 19,600 32,300
Convertible debentures.. -- -- 57,431 64,512 64,920
Notes and bonds
payable................ 62,857 64,048 64,623 58,297 9,229
Stockholders' equity.... 563,472 585,590 605,558 553,046 428,588

Other Data:
Net cash provided by
operating activities... $ 99,940 $ 94,659 $ 106,067 $ 86,010 $ 74,129
Net cash provided by
(used in) investing
activities............. 11,258 (89,753) (282,968) (267,302) (85,034)
Net cash provided by
(used in) financing
activities............. (121,188) (4,949) 182,891 179,775 14,677
Funds from operations
available to common
stockholders(2)........ $ 99,632 $ 99,602 $ 92,726 $ 80,851 $ 71,667

Weighted average shares
outstanding............ 46,226 46,216 44,637 42,164 40,373

--------
(1) For per share purposes, income from continuing operations is defined as
income before the effect of any gains or losses on sales of properties.

(2) Industry analysts generally consider funds from operations to be an
alternative measure of the performance of an equity REIT. We therefore
disclose funds from operations, although it is a measurement that is not
defined by generally accepted accounting principles. We use the NAREIT
measure of funds from operations, which is generally defined as income
before extraordinary items adjusted for certain non-cash items, primarily
real estate depreciation, less gains/losses on sales of facilities. The
NAREIT measure may not be comparable to similarly titled measures used by
other REITs. Consequently, our funds from operations may not provide a
meaningful measure of our performance as compared to that of other REITs.
Funds from operations does not represent cash generated from operating
activities as defined by generally accepted accounting principles (funds
from operations does not include changes in operating assets and
liabilities) and, therefore, should not be considered as an alternative to
net income as the primary indicator of operating performance or to cash
flow as a measure of liquidity.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Statement Regarding Forward Looking Disclosure

Certain information contained in this report includes forward looking
statements. Forward looking statements include statements regarding our
expectations, beliefs, intentions, plans, objectives, goals, strategies, future
events or performance and underlying assumptions and other statements which are
other than statements of historical facts. These statements may be identified,
without limitation, by the use of forward looking terminology such as "may",
"will", "anticipates", "expects", "believes", "intends", "should" or comparable
terms or the negative thereof. All forward looking statements included in this
report are based on information available to us on the date hereof. Such
statements speak only as of the date hereof and we assume no obligation to
update such forward looking statements. These statements involve risks and
uncertainties that could cause actual results to differ materially from those
described in the statements. These risks and uncertainties include (without
limitation) the following: the effect of economic and market conditions and
changes in interest rates; the general distress of the healthcare industry;
government regulations, including changes in the reimbursement levels under the
Medicare and Medicaid programs; continued deterioration of the operating
results or financial condition, including bankruptcies, of the Company's
tenants; the ability of the Company to attract new operators for certain
facilities; occupancy levels at certain facilities; the ability of the Company
to sell certain facilities for their book value; the amount and yield of any
additional investments; changes in tax laws and regulations affecting real
estate investment trusts; access to the capital markets and the cost of
capital; changes in the ratings of the Company's debt securities; and the risk
factors set forth under the caption "Risk Factors" in Item 1.

Operating Results

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Minimum rent increased $6,974,000 or 6% in 2000 as compared to 1999. The
increase was primarily a result of the 5 developments completed during 2000,
combined with a full year of revenues earned by investments in additional
facilities in 1999 and a shift in the characterization of rent from additional
rent to minimum rent as a result of the new lease negotiated with Beverly
Enterprises, Inc. ("Beverly") discussed below. Interest and other income
decreased by $195,000 or 1% in 2000 as compared to 1999. The decrease was
primarily due to the payoff of a mortgage loan and the partial payoff of
another mortgage loan during the year partially offset by the interest on the
note receivable from Beverly discussed below. Additional rent and additional
interest increased by $752,000 or 5% in 2000 as compared to 1999. The increase
was attributable to increased additional rent and additional interest based on
increases in the facility revenues or the Consumer Price Index pursuant to the
Company's existing leases and mortgage loans receivable, partially offset by
the shift in the characterization of additional rent to minimum rent discussed
above.

Interest and amortization of deferred financing costs increased $6,770,000
or 13% in 2000 as compared to 1999. The increase was primarily due to the
issuance of $112,750,000 in fixed rate medium-term notes during 1999, the
interest on which is now included for a full year, increases in the average
interest rates on the Company's $100,000,000 bank line of credit and a
reduction in interest capitalized on construction projects, partially offset by
the repayment of $30,000,000 of fixed rate medium term notes during the year.
Depreciation and non-cash charges increased $1,165,000 or 3% in 2000 as
compared to 1999. The increase was attributable to increased depreciation on
the developments completed in 2000, a full year of depreciation related to
facilities acquired in 1999 and depreciation adjustments, partially offset by
the disposal of 17 facilities during 2000. General and administrative costs
increased $731,000 or 15% in 2000 as compared to 1999 due to increases in legal
fees related to three operators in bankruptcy, general cost increases and
additional costs associated with the Company's larger asset base.

Effective January 1, 2000, the Company negotiated a new lease and settlement
with Beverly that incorporates 38 of its 47 facilities leased to Beverly, most
of which were up for renewal in 2000. The other 9 facilities leased to Beverly
are on a separate lease that does not expire until 2010. The new lease provides
for

an initial five-year lease term for 18 of the 38 facilities. As part of the
renewal settlement, 2 of the 38 facilities as well as 3 other facilities that
Beverly had previously subleased to other operators were returned to Beverly.
The renewal settlement included a promissory note of approximately $16,208,000
that bears interest at 9.0% and requires Beverly to make quarterly payments
through its final maturity on December 31, 2004. The future revenues related to
the promissory note will decrease as the Company receives the quarterly
principal payments. Pursuant to the settlement, Beverly was to operate the
remaining 18 facilities at reduced rentals until the earlier of January 1, 2001
or the date the Company was able to lease the facilities to new operators. As
of December 31, 2000, the Company has leased 15 of these facilities to new
operators, has decided to sell 2 for which it expects to receive approximately
book value and anticipates having a new operator in place at the remaining
facility by March 31, 2001 at a rental rate approximately equal to that
currently being paid by Beverly; however, there is no guarantee that a new
operator will be in place by that date, that the Company will receive a rental
rate equal to the rental currently being paid by Beverly, or that the Company
will actually receive book value for the facilities it intends to sell.

The Company expects increased rental revenues and interest income due to the
addition of facilities to its property base and mortgage loans receivable over
the last twelve months. The Company also expects increased additional rent and
additional interest at individual facilities because the Company's leases and
mortgages generally contain provisions under which additional rents or interest
income increase with increases in facility revenues and/or increases in the
Consumer Price Index. Historically, revenues at the Company's facilities and
the Consumer Price Index generally have increased, although there are no
assurances that they will continue to increase in the future. Sales of
facilities or repayments of mortgages would serve to offset the aforementioned
revenue increases, and if sales and repayments exceed additional investments
this would actually reduce revenues. The Company expects that additional rent
and additional interest may decrease due to lease renewals that may result in a
shift in the characterization of revenue from additional rent to minimum rent.
There is no assurance that leases will renew at the aggregate existing rent
level, so the impact of lease renewals may be a decrease in the total rent
received by the Company. Additional investments in health care facilities would
also increase rental and/or interest income. As additional investments in
facilities are made, depreciation and/or interest expense would also increase.
Any such increases, however, are expected to be at least partially offset by
rents or interest income associated with the investments.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Minimum rent increased $19,721,000 or 19% in 1999 as compared to 1998. The
increase was primarily due to minimum rent resulting from the 19 developments
completed during 1999, combined with a full year of revenues earned by
investments in additional facilities in 1998. Interest and other income
increased by $518,000 or 2% in 1999 as compared to 1998. The increase was
primarily due to approximately $7,617,000 of working capital loans provided
during 1999. Additional rent and additional interest increased by $1,042,000 or
7% in 1999 as compared to 1998. The increase was attributable to increased
additional rent and additional interest as provided in the Company's existing
leases and mortgage loans receivable based on increases in the facility
revenues or the Consumer Price Index.

Interest and amortization of deferred financing costs increased $14,090,000
or 38% in 1999 as compared to 1998. The increase was primarily due to the
issuance of $112,750,000 in medium-term notes during 1999, a full year of
interest expense related to the issuance of $190,150,000 of medium-term notes
in 1998 and a rise in interest rates during 1999. Depreciation and non-cash
charges increased $8,155,000 or 29% in 1999 as compared to 1998. The increase
was attributable to increased depreciation due to the developments completed in
1999 and a full year of depreciation related to facilities acquired in 1998.
General and administrative costs increased $315,000 or 7% in 1999 as compared
to 1998 due to general cost increases and additional costs associated with the
Company's larger asset base.

Information Regarding Certain Operators

Over-leveraging and changes in reimbursement levels during 1999 have had an
adverse impact on the financial performance of some of the companies that
operate nursing homes owned by the Company. Three operators have filed for
protection under the United States bankruptcy laws. The table below summarizes
the filing dates of the bankruptcies, the number of the Company's owned
facilities operated by each operator, the Company's investment in facilities
subject to the bankruptcies, the percentage of the Company's revenue for 2000
relating to the facilities operated by each operator and cash deposits and
letters of credit currently held by the Company as security for each operator:

Number of Percentage
Bankruptcy Facilities Investment of 2000 Security
Operator Filing Date Operated in Facilities Revenue Deposits
-------- ---------------- ---------- ------------- ---------- ----------

Mariner Post-Acute
Network................ January 18, 2000 20 $ 60,354,000 6% $2,655,000
Sun Healthcare Group,
Inc.................... October 14, 1999 19 65,082,000 4% 1,844,000
Integrated Health
Services, Inc.......... February 2, 2000 7 35,109,000 3% 643,000
--- ------------ --- ----------
Totals................ 46 $160,545,000 13% $5,142,000
=== ============ === ==========

Under bankruptcy statutes, the tenant must either assume the Company's
leases or reject them and return the properties to the Company. If the tenant
assumes the leases, it is required to assume the leases under the existing
terms; the court cannot change the rental amount or other lease provisions that
could financially impact the Company. The tenant's decision whether to assume
leases usually is based primarily on whether the properties that are operated
by the tenant are providing positive cash flows. Only a few of the 46
facilities leased to and operated by these three companies are not providing
adequate cash flows on their own to cover the rent under the leases. The
Company's rent has been paid each month on a timely basis. While there is a
possibility that the tenants may decide to reject the leases on these
properties, the Company has identified parties interested in leasing these
facilities, however such leases may be at a lower rental rate.

In addition to the above, the Company has one mortgage loan directly with
Mariner Post-Acute Network in the amount of $7,497,000 that is secured by one
facility. The revenues from this mortgage loan represent approximately 1% of
the Company's revenues for the year ended December 31, 2000 and the mortgage
loan is secured by a cash deposit in the amount of $400,000. The Company has
not received any payments on this mortgage loan subsequent to March 2000. Under
bankruptcy statutes, the court imposes an automatic stay with respect to the
Company's actions to collect or pursue remedies with respect to mortgage loans
and the Company is precluded from exercising foreclosure or other remedies
against the borrower. Unlike a lease, a mortgage loan is not subject to
assumption or rejection. The mortgage loan may be divided into (i) a secured
loan for the portion of the mortgage loan that does not exceed the value of the
property and (ii) an unsecured loan for the portion of the mortgage loan that
exceeds the value of the property, which unsecured portion would be treated
like general unsecured claims in the bankruptcy estate. The Company would only
be entitled to the recovery of interest and costs if and to the extent that the
value of the collateral exceeds the amount owed. In addition, the courts may
modify the terms of a mortgage, including the rate of interest and timing of
principal payments.

In December 2000, Balanced Care Corporation ("BCC") notified the Company
that it would only be making a partial payment of its December rent. The
Company leased 10 facilities, in which its investment was approximately
$68,712,000, located in 6 states in the eastern United States that were all
constructed and opened during 1999 and 2000 to BCC under two master leases. The
Company immediately declared BCC in default under its master leases and
initiated steps to terminate the leases. BCC agreed to return the facilities to
the Company and the leases were terminated effective as of January 1, 2001. The
Company has identified a new operator who it anticipates will take over the
operations of the facilities effective as of January 1, 2001 at lease rates
essentially the same as those previously paid by BCC of approximately $580,000
per month. BCC is managing the facilities on an interim basis on the Company's
behalf until the facility licenses can be transferred to the name of the new
operator. The Company will avail itself of cash security deposits totaling
approximately

$2,035,000 to cover the December rent and other costs incurred related to the
default. The replacement of operators that have defaulted on lease or loan
obligations could be delayed by the approval process of any regulatory agency
necessary for the transfer of the property or the replacement of the operator
licensed to operate the facility.

Liquidity and Capital Resources

During 2000, the Company provided new construction financing of
approximately $16,793,000. Construction of five assisted living facilities was
completed in 2000, in which the Company's total aggregate investment was
approximately $44,384,000; $10,816,000 of this amount was a current year
investment included in the new construction financing amount above. Upon
completion of construction, the facilities were concurrently leased under terms
generally similar to the Company's existing leases. During 2000, the Company
also funded approximately $2,350,000 in capital improvements at certain
facilities in accordance with certain existing lease provisions. Such capital
improvements result in an increase in the minimum rents the Company earns on
these facilities. The Company funded the construction advances and capital
improvement advances with borrowings on the Company's bank line of credit and
cash on hand.

During 2000, the Company sold six skilled nursing facilities, two assisted
living facilities and one residential care facility for the elderly in six
separate transactions for aggregate proceeds of approximately $20,294,000. The
Company recognized an aggregate gain of $1,149,000 related to the disposal of
these facilities. The Company used the proceeds to repay borrowings on the
Company's bank line of credit.

During 2000, a loan with a net book value of approximately $7,509,000
secured by three skilled nursing facilities was repaid. In addition, a
$3,666,000 portion of one of the mortgage loans secured by one skilled nursing
facility was also repaid. The Company used the proceeds to repay borrowings on
the Company's bank line of credit.

During 2000, the Company repaid $30,000,000 in aggregate principal amount of
medium-term notes. The notes bore fixed interest at a weighted average interest
rate of 7.43%. The Company funded the repayment with borrowings on the
Company's bank line of credit and cash on hand. The Company has $78,150,000 of
medium-term notes maturing in 2001 that it anticipates repaying with a
combination of cash on hand, cash from operations, borrowings on the Company's
bank line of credit and potentially with any mortgage loans receivable payoffs
received or the issuance of additional medium-term notes under the shelf
registrations discussed below.

At December 31, 2000, the Company had $21,000,000 available under its
$100,000,000 unsecured bank line of credit. During the second quarter, the bank
line of credit was amended, resulting in an extension of the maturity by one
year to March 31, 2003. The amendment also modified the rates and covenants
under the bank line of credit. At the option of the Company, borrowings under
the bank line of credit bear interest at prime or LIBOR plus 1.275%. The
Company pays a facility fee of .35% per annum on the total commitment under the
bank line of credit. Under covenants contained in the credit agreement, the
Company is required to maintain, among other things: (i) a minimum net worth of
$475,000,000; (ii) a ratio of cash flow before interest expense and non-cash
expenses to regularly scheduled debt service payments on all debt of at least
2.5 to 1.0; (iii) a ratio of total liabilities to net worth of not more than
1.6 to 1.0; and (iv) a gross asset value coverage ratio of at least 1.45 to
1.0.

The Company has shelf registrations on file with the Securities and Exchange
Commission under which the Company may issue (a) up to $442,100,000 in
aggregate principal amount of medium-term notes and (b) up to $178,247,000 of
securities including debt, convertible debt, common and preferred stock.

The Company may make additional investments in healthcare related
facilities. However, the level of the Company's new investments has decreased
and the Company does not anticipate making additional investments beyond its
current commitments until such time as access to equity capital is under more
favorable terms.

Financing for future investments by the Company may be provided by borrowings
under the Company's bank line of credit, private placements or public offerings
of debt or equity, and the assumption of secured indebtedness. The Company
anticipates the repayment of certain mortgages and the possible sale of certain
facilities during 2001. In the event that there are mortgage repayments or
facility sales in excess of new investments, revenues may decrease. The Company
anticipates using the proceeds from any mortgage repayments or facility sales
to reduce the outstanding balance on the Company's bank line of credit. Any
such reduction would result in reduced interest expense that the Company
believes would partially offset any decrease in revenues. The Company believes
it has sufficient liquidity and financing capability to finance anticipated
future investments, maintain its current dividend level and repay borrowings at
or prior to their maturity.

Impact of New Accounting Pronouncements

During the fourth quarter of 2000, the Company was required to adopt SEC
Staff Accounting Bulletin No. 101 Revenue Recognition in Financial Statements
("SAB No. 101"). The SEC considers this pronouncement to be a clarification of
existing authoritative literature regarding revenue recognition, specifically
regarding when revenue becomes earned and realizable. SAB No. 101 provides
guidance on revenue recognition in various situations, however the portion that
is relevant to the Company relates to the recognition of contingent rental
income. The pronouncement states that contingent rental income should be
recognized as revenue when the change in the factor on which the contingent
lease payment is based actually occurs. Many of the Company's leases are
structured so that the factor on which the contingent lease payments in the
Company's leases are based is patient revenues in excess of base revenues. SAB
No. 101 requires that additional rent not be recognized in the Company's
financial statements until the customer's patient revenues for the lease year
exceed the total base revenue amount. This differs from the Company's
historical method of recognizing a portion of the contingent lease payments as
they became calculable and payable on a quarterly basis in accordance with the
Company's lease provisions based on a percentage of revenues in excess of base
amounts for the prorated portion of the lease year completed. The impact of
this pronouncement is mitigated in part by the fact that most of the Company's
leases contain provisions that do not allow total rent to decrease from one
year to the next.

SAB No. 101 requires that the Company adopt its provisions retroactively to
January 1, 2000 and show a cumulative effect of a change in accounting
principle as of that date. The adoption of this pronouncement did not have a
material impact on the Company's financial statements for the year ended
December 31, 2000, and did not result in a cumulative effect of a change in
accounting principle being recorded as of January 1, 2000. While the impact was
immaterial for the year ended December 31, 2000, SAB No. 101 does cause a
change in the additional rent amounts reported in the Company's quarterly
reports on Form 10-Q for the first, second and third quarters of 2000. These
differences are reconciled in Note 16 to the Company's financial statements for
the year ended December 31, 2000. The Company expects that the timing of the
recognition of additional rent and interest in future quarterly periods may
fluctuate due to the provisions of SAB No. 101.

Market Risk Exposure

The Company is exposed to market risks related to fluctuations in interest
rates on its mortgage loans receivable and debt. The Company does not utilize
interest rate swaps, forward or option contracts on foreign currencies or
commodities, or other types of derivative financial instruments. The purpose of
the following analyses is to provide a framework to understand the Company's
sensitivity to hypothetical changes in interest rates as of December 31, 2000.
Readers are cautioned that many of the statements contained in the "Market Risk
Exposure" paragraphs are forward looking and should be read in conjunction with
the Company's disclosures under the heading "Statement Regarding Forward
Looking Disclosure" set forth above.

The Company provides mortgage loans to operators of healthcare facilities as
part of its normal operations. The majority of the loans have fixed rates. Four
of the mortgage loans have adjustable rates; however, the rates

adjust only once or twice over the term of the loans and the minimum adjusted
rate is equal to the current rate. Therefore, all mortgage loans receivable are
treated as fixed rate notes in the table and analysis below.

The Company utilizes debt financing primarily for the purpose of making
additional investments in healthcare facilities. Historically, the Company has
made short-term borrowings on its bank line of credit to fund its acquisitions
and construction projects until market conditions were appropriate, based on
management's judgment, to issue stock or fixed rate debt to provide long-term
financing. A portion of the Company's secured debt is variable rate debt in the
form of housing revenue bonds, which were assumed in connection with the
acquisition of certain healthcare facilities. Pursuant to the associated lease
arrangements, increases or decreases in the interest rates on the housing
revenue bonds would be substantially offset by increases or decreases in the
rent received by the Company on the properties securing this debt. Therefore,
there is substantially no market risk associated with the Company's variable
rate secured debt.

For fixed rate debt, changes in interest rates generally affect the fair
market value, but not earnings or cash flows. Conversely, for variable rate
debt, changes in interest rates generally do not impact fair market value, but
do affect the future earnings and cash flows. The Company generally cannot
prepay fixed rate debt prior to maturity, therefore, interest rate risk and
changes in fair market value should not have a significant impact on the fixed
rate debt until the Company would be required to refinance such debt. Holding
the variable rate debt balance constant, and including the bank borrowings as
variable rate debt due to its nature, each one percentage point increase in
interest rates would result in an increase in interest expense for the coming
year of approximately $912,000.

The table below details the principal amount and the average interest rates
for the mortgage loans receivable and debt for each category based on the final
maturity dates. Certain of the mortgage loans receivable and certain items in
the various categories of debt require periodic principal payments prior to the
final maturity date. The fair value estimates for the mortgage loans receivable
are based on the estimates of management and on rates currently prevailing for
comparable loans. The fair market value estimates for debt securities are based
on discounting future cash flows utilizing current rates offered to the Company
for debt of the same type and remaining maturity.

Maturity Date
--------------------------------------------------------------------------
Fair
2001 2002 2003 2004 2005 Thereafter Total Value
------- ------- ------- ------- ------- ---------- -------- --------
(Dollars in thousands)

Assets
Mortgage loans
receivable............. $ 4,704 -- $ 3,189 $ 4,698 $ 5,012 $168,020 $185,623 $185,671
Average interest rate... 10.00% -- 9.94% 9.00% 11.30% 10.14% 10.15%
Liabilities
Debt
Fixed rate.............. $78,150 $50,000 $66,000 $67,750 $18,000 $398,613 $678,513 $618,204
Average interest rate... 6.89% 7.35% 7.49% 9.08% 8.66% 7.30% 7.50%
Variable rate........... -- -- -- -- -- $ 12,244 $ 12,244 $ 12,244
Average interest rate... -- -- -- -- -- 5.23% 5.23%
Bank borrowings......... -- -- $79,000 -- -- -- $ 79,000 $ 79,000
Average interest rate... -- -- 8.13% -- -- -- 8.13%

Increases in interest rates during 1999 resulted in an increase in interest
expense for the Company primarily related to the bank line of credit and
medium-term notes issued during the year at rates somewhat higher than in prior
years. Increases in interest rates during 2000 have resulted in an additional
increase in interest expense related to the Company's bank line of credit.
These interest rate increases have made it more expensive for the Company to
borrow on its bank line of credit and to access debt capital through its
medium-term note program. Any future interest rate increases will further
increase the cost of any borrowings to refinance current long-term debt as it
matures or finance future acquisitions.

Item 8. Financial Statements and Supplementary Data.

Report of Independent Public Accountants................................. 23

Consolidated Balance Sheets.............................................. 24

Consolidated Statements of Operations.................................... 25

Consolidated Statements of Stockholders' Equity.......................... 26

Consolidated Statements of Cash Flows.................................... 27

Notes to Consolidated Financial Statements............................... 28

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Directors of
Nationwide Health Properties, Inc.:

We have audited the accompanying consolidated balance sheets of Nationwide
Health Properties, Inc. (a Maryland corporation) and subsidiaries as of
December 31, 2000 and 1999, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide Health
Properties, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.

Arthur Andersen LLP

Orange County, California
January 19, 2001

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands)

December 31,
----------------------
2000 1999
---------- ----------
A S S E T S
-----------

Investments in real estate
Real estate properties:
Land................................................. $ 142,721 $ 146,712
Buildings and improvements........................... 1,182,410 1,146,921
Construction in progress............................. 8,478 37,740
---------- ----------
1,333,609 1,331,373
Less accumulated depreciation........................ (186,206) (162,671)
---------- ----------
1,147,403 1,168,702
Mortgage loans receivable, net....................... 185,623 203,362
---------- ----------
1,333,026 1,372,064
Cash and cash equivalents.............................. 6,149 16,139
Receivables............................................ 7,607 7,614
Other assets........................................... 34,225 34,239
---------- ----------
$1,381,007 $1,430,056
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Bank borrowings........................................ $ 79,000 $ 75,300
Senior notes due 2001-2038............................. 627,900 657,900
Notes and bonds payable................................ 62,857 64,048
Accounts payable and accrued liabilities............... 47,778 47,218
Commitments and contingencies
Stockholders' equity:
Preferred stock $1.00 par value; 5,000,000 shares
authorized; issued and outstanding: 1,000,000 as of
December 31, 2000 and 1999; stated at liquidation
preference of $100 per share........................ 100,000 100,000
Common stock $.10 par value; 100,000,000 shares
authorized; issued and outstanding: 46,226,484 and
46,216,484 as of December 31, 2000 and 1999,
respectively........................................ 4,623 4,622
Capital in excess of par value....................... 556,658 556,373
Cumulative net income................................ 575,619 504,457
Cumulative dividends................................. (673,428) (579,862)
---------- ----------
Total stockholders' equity......................... 563,472 585,590
---------- ----------
$1,381,007 $1,430,056
========== ==========

See accompanying notes.

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)

Years ended December 31,
----------------------------
2000 1999 1998
-------- -------- --------

Revenues:
Minimum rent................................... $130,900 $123,926 $104,205
Interest and other income...................... 23,182 23,377 22,859
Additional rent and additional interest........ 17,314 16,562 15,520
-------- -------- --------
171,396 163,865 142,584
-------- -------- --------

Expenses:
Interest and amortization of deferred financing
costs......................................... 58,391 51,621 37,531
Depreciation and non-cash charges.............. 37,296 36,131 27,976
General and administrative..................... 5,696 4,965 4,650
Impairment of long-lived assets................ -- -- 5,000
-------- -------- --------
101,383 92,717 75,157
-------- -------- --------

Income before gain (loss) on sale of facilities.. 70,013 71,148 67,427
Gain (loss) on sale of facilities................ 1,149 (335) 2,321
-------- -------- --------
Net income....................................... 71,162 70,813 69,748
Preferred stock dividends........................ (7,677) (7,677) (7,677)
-------- -------- --------
Net income available to common stockholders...... $ 63,485 $ 63,136 $ 62,071
======== ======== ========

Per share amounts:
Basic/diluted income from continuing operations
available to common stockholders.............. $ 1.35 $ 1.37 $ 1.34
======== ======== ========
Basic/diluted net income available to common
stockholders.................................. $ 1.37 $ 1.37 $ 1.39
======== ======== ========
Weighted average shares outstanding.............. 46,226 46,216 44,637
======== ======== ========

See accompanying notes.

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)

Common stock Preferred Stock Capital in Total
------------- --------------- excess of Cumulative Cumulative stockholders'
Shares Amount Shares Amount par value net income dividends equity
------ ------ ------ -------- ---------- ---------- ---------- -------------

Balances at December 31, 1997.. 43,129 $4,313 1,000 $100,000 $490,737 $363,896 $(405,900) $553,046
Issuance of common stock...... 2,761 276 -- -- 58,248 -- -- 58,524
Conversion of debentures...... 316 32 -- -- 7,013 -- -- 7,045
Net income.................... -- -- -- -- -- 69,748 -- 69,748
Preferred dividends........... -- -- -- -- -- -- (7,677) (7,677)
Common dividends.............. -- -- -- -- -- -- (75,128) (75,128)
------ ------ ----- -------- -------- -------- --------- --------
Balances at December 31, 1998.. 46,206 4,621 1,000 100,000 555,998 433,644 (488,705) 605,558
Issuance of common stock...... 10 1 -- -- 327 -- -- 328
Conversion of debentures...... -- -- -- -- 8 -- -- 8
Stock options................. -- -- -- -- 40 -- -- 40
Net income.................... -- -- -- -- -- 70,813 -- 70,813
Preferred dividends........... -- -- -- -- -- -- (7,677) (7,677)
Common dividends.............. -- -- -- -- -- -- (83,480) (83,480)
------ ------ ----- -------- -------- -------- --------- --------
Balances at December 31, 1999.. 46,216 4,622 1,000 100,000 556,373 504,457 (579,862) 585,590
Issuance of common stock...... 10 1 -- -- 225 -- -- 226
Stock options................. -- -- -- -- 60 -- -- 60
Net income.................... -- -- -- -- -- 71,162 -- 71,162
Preferred dividends........... -- -- -- -- -- -- (7,677) (7,677)
Common dividends.............. -- -- -- -- -- -- (85,889) (85,889)
------ ------ ----- -------- -------- -------- --------- --------
Balances at December 31, 2000.. 46,226 $4,623 1,000 $100,000 $556,658 $575,619 $(673,428) $563,472
====== ====== ===== ======== ======== ======== ========= ========

See accompanying notes.

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Years ended December 31,
-------------------------------
2000 1999 1998
--------- --------- ---------

Cash flows from operating activities:
Net income.................................. $ 71,162 $ 70,813 $ 69,748
Depreciation and non-cash charges........... 37,296 36,131 27,976
(Gain) loss on sale of properties........... (1,149) 335 (2,321)
Impairment of long-lived assets............. -- -- 5,000
Amortization of deferred financing costs.... 1,011 940 980
Net change in other assets and liabilities.. (8,380) (13,560) 4,684
--------- --------- ---------
Net cash provided by operating
activities............................... 99,940 94,659 106,067
--------- --------- ---------

Cash flows from investing activities:
Investment in real estate properties........ (20,843) (110,590) (279,384)
Disposition of real estate properties....... 21,004 23,669 5,496
Investment in mortgage loans receivable..... (2,929) (5,011) (18,711)
Principal payments on mortgage loans
receivable................................. 14,026 2,179 9,631
--------- --------- ---------
Net cash provided by (used in) investing
activities............................... 11,258 (89,753) (282,968)
--------- --------- ---------

Cash flows from financing activities:
Bank borrowings............................. 180,800 262,600 308,800
Repayment of bank borrowings................ (177,100) (229,300) (286,400)
Issuance of common stock, net............... 53,062
Issuance of senior unsecured debt........... -- 112,750 190,150
Issuance of notes and bonds................. -- -- 4,507
Repayments of senior unsecured debt......... (30,000) -- --
Principal payments on convertible
debentures, notes and bonds................ (1,082) (58,470) (2,729)
Dividends paid.............................. (93,566) (91,157) (82,805)
Deferred financing costs.................... (240) (1,372) (1,694)
--------- --------- ---------
Net cash provided by (used in) financing
activities............................... (121,188) (4,949) 182,891
--------- --------- ---------

Increase (decrease) in cash and cash
equivalents.................................. (9,990) (43) 5,990
Cash and cash equivalents, beginning of
period....................................... 16,139 16,182 10,192
--------- --------- ---------
Cash and cash equivalents, end of period...... $ 6,149 $ 16,139 $ 16,182
========= ========= =========
Supplemental schedule of cash flow
information:
Cash interest paid.......................... $ 57,995 $ 49,402 $ 38,402
========= ========= =========

See accompanying notes.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2000, 1999 and 1998

1. Organization

Nationwide Health Properties, Inc. (the "Company") was incorporated on
October 14, 1985 in the State of Maryland. The Company operates as a real
estate investment trust specializing in investments in health care related
properties and as of December 31, 2000 had investments in 328 health care
facilities, including 182 skilled nursing facilities, 127 assisted living
facilities, 14 continuing care retirement communities, 2 residential care
facilities for the elderly, 2 rehabilitation hospitals and 1 medical clinic. At
December 31, 2000, the Company owned 146 skilled nursing facilities, 120
assisted living facilities, 10 continuing care retirement communities, 2
residential care facilities for the elderly, 2 rehabilitation hospitals and 1
medical clinic. The Company also held 35 mortgage loans secured by 36 skilled
nursing facilities, 7 assisted living facilities, 4 continuing care retirement
communities and 4 parcels of land. In addition, at December 31, 2000, the
Company had 1 assisted living facility under construction. The Company has no
foreign facilities or operations.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries and its investment in its majority owned and
controlled joint ventures. All material intercompany accounts and transactions
have been eliminated.

Land, Buildings and Improvements

The Company records properties at cost and uses the straight-line method of
depreciation for buildings and improvements over their estimated remaining
useful lives of up to 40 years. The Company reviews and adjusts facility useful
lives based on management's estimates.

Cash and Cash Equivalents

Cash in excess of daily requirements is invested in money market mutual
funds, commercial paper and repurchase agreements with original maturities of
three months or less. Such investments are deemed to be cash equivalents for
purposes of presentation in the financial statements.

Federal Income Taxes

The Company qualifies as a real estate investment trust under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended. The Company
intends to continue to qualify as such and therefore to distribute at least 95%
of its real estate investment trust taxable income to its stockholders.
Accordingly, the Company will not be subject to Federal income taxes on its
income that is distributed to stockholders. Therefore, no provisions for
Federal income taxes have been made in the Company's financial statements. The
net difference in the tax basis and the reported amounts of the Company's
assets and liabilities as of December 31, 2000 is approximately $19,087,000.

Revenue Recognition

Rental income from operating leases is accrued as earned over the life of
the lease agreements in accordance with generally accepted accounting
principles. There are generally no step rent provisions in the lease
agreements. Interest income on real estate mortgages is recognized using the
effective interest method based upon the expected payments over the lives of
the mortgages. Additional rent and additional interest are

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

generally computed as a percentage of facility net patient revenues in excess
of base amounts or as a percentage of the increase in the Consumer Price Index.
Additional rent and interest are generally calculated and payable monthly or
quarterly, and most of the Company's leases contain provisions such that total
rent cannot decrease from one year to the next. While the calculations and
payments are generally made on a quarterly basis, SEC Staff Accounting Bulletin
No. 101 Revenue Recognition in Financial Statements ("SAB No. 101"), which the
Company adopted during the fourth quarter of 2000, and which is discussed in
detail below under the heading Impact of New Accounting Pronouncements, does
not allow for the recognition of such revenue until all possible contingencies
have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles 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 period. Actual results could differ from those estimates.

Accounting for Stock-Based Compensation

In 1999, the Company adopted the accounting provisions of SFAS No. 123
Accounting for Stock-Based Compensation. This Statement established a fair
value based method of accounting for stock-based compensation. Accounting for
stock-based compensation under this Statement causes the fair value of stock
options granted to be amortized into expense over the vesting period of the
stock and causes any dividend equivalents earned to be treated as dividends for
financial reporting purposes. Previously, the Company provided footnote
disclosure of the pro forma effect of options granted as calculated under the
provisions of SFAS No. 123.

Capitalization of Interest

The Company capitalizes interest on facilities under construction. The
capitalization rates used are based on rates for the Company's senior unsecured
notes and bank line of credit, as applicable. Capitalized interest in 2000,
1999 and 1998 was $1,245,000, $4,190,000 and $4,693,000, respectively.

Impact of New Accounting Pronouncements

During the fourth quarter of 2000, the Company was required to adopt SAB No.
101. The SEC considers this pronouncement to be a clarification of existing
authoritative literature regarding revenue recognition, specifically regarding
when revenue becomes earned and realizable. SAB No. 101 provides guidance on
revenue recognition in various situations, however the portion that is relevant
to the Company relates to the recognition of contingent rental income. The
pronouncement states that contingent rental income should be recognized as
revenue when the change in the factor on which the contingent lease payment is
based actually occurs. As discussed above, many of the Company's leases are
structured so that the factor on which the contingent lease payments in the
Company's leases are based is patient revenues in excess of base revenues. SAB
No. 101 requires that additional rent not be recognized in the Company's
financial statements until the customer's patient revenues for the lease year
exceed the total base revenue amount. This differs from the Company's
historical method of recognizing a portion of the contingent lease payments as
they became calculable and payable on a quarterly basis in accordance with the
Company's lease provisions based on a percentage of revenues in excess of base
amounts for the prorated portion of the lease year completed. The impact of
this pronouncement is mitigated in part by the fact that most of the Company's
leases contain provisions that do not allow total rent to decrease from one
year to the next.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

SAB No. 101 requires that the Company adopt its provisions retroactively to
January 1, 2000 and show a cumulative effect of a change in accounting
principle as of that date. The adoption of this pronouncement did not have a
material impact on the Company's financial statements for the year ended
December 31, 2000, and did not result in a cumulative effect of a change in
accounting principle being recorded as of January 1, 2000. While the impact was
immaterial for the year ended December 31, 2000, SAB No. 101 does cause a
change in the additional rent amounts reported in the Company's quarterly
reports on Form 10-Q for the first, second and third quarters of 2000. These
differences are reconciled in Note 16 "Quarterly Financial Data". The Company
expects that the timing of the recognition of additional rent and interest in
future quarterly periods may fluctuate due to the provisions of SAB No. 101.

3. Earnings Per Share

Basic earnings per share is computed by dividing income from continuing
operations available to common stockholders by the weighted average common
shares outstanding. Income available to common stockholders is calculated by
deducting dividends declared on preferred stock from income from continuing
operations and net income. Diluted earnings per share includes the effect of
the potential shares outstanding; dilutive stock options. The table below
details the components of the basic and diluted earnings per share from
continuing operations calculations:

Years Ended December 31,
-----------------------------------------------
2000 1999 1998
--------------- --------------- ---------------
Income Shares Income Shares Income Shares
------- ------ ------- ------ ------- ------
(Amounts in thousands)

Income before gain (loss) on
sale of facilities........... $70,013 $71,148 $67,427
Less: preferred stock
dividends.................... (7,677) (7,677) (7,677)
------- ------ ------- ------ ------- ------
Basic EPS..................... 62,336 46,226 63,471 46,216 59,750 44,637
Effect of dilutive securities:
Stock options............... -- 2 -- -- -- 8
------- ------ ------- ------ ------- ------
Amounts used to calculate
Diluted EPS.................. $62,336 46,228 $63,471 46,216 $59,750 44,645
======= ====== ======= ====== ======= ======

4. Real Estate Properties

Substantially all of the Company's owned facilities are leased under "net"
leases which are accounted for as operating leases. The leases generally have
initial terms ranging from 5 to 19 years, and generally the leases have two or
more multiple-year renewal options. The Company earns fixed monthly minimum
rents and may earn periodic additional rents. The additional rent payments are
generally computed as a percentage of facility net patient revenues in excess
of base amounts or as a percentage of the increase in the Consumer Price Index.
Additional rents are generally calculated and payable monthly or quarterly, but
are not recognized as revenue until any contingencies are resolved. Most leases
contain provisions such that the total rent cannot decrease from one year to
the next. In addition, most leases contain cross-collateralization and cross-
default provisions tied to other leases with the same lessee, as well as
grouped lease renewals and grouped purchase options. Obligations under the
leases have corporate guarantees, and leases covering 197 facilities are backed
by irrevocable letters of credit or cash security deposits that cover 1 to 12
months of monthly minimum rents. Under the terms of the leases, the lessee is
responsible for all maintenance, repairs, taxes and insurance on the leased
properties.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

Minimum future rentals on non-cancelable leases as of December 31, 2000 are
as follows:

Minimum Minimum
Year Rentals Year Rentals
---- -------------- ---- -------------
(In thousands) (In thousands)

2001............ $131,358 2007........ 83,323
2002............ 129,630 2008........ 73,489
2003............ 122,402 2009........ 60,816
2004............ 118,798 2010........ 42,359
2005............ 105,869 Thereafter.. 79,498
2006............ 97,189

During 2000, the Company provided new construction financing of
approximately $16,793,000. Construction of five assisted living facilities was
completed in 2000, in which the Company's total aggregate investment was
$44,384,000; $10,816,000 of this amount was a current year investment included
in the new construction financing amount above. Upon completion of
construction, the facilities were concurrently leased under terms generally
similar to the Company's existing leases. The Company also funded approximately
$2,350,000 in capital improvements at certain facilities in accordance with
certain existing lease provisions. Such capital improvements result in an
increase in the minimum rents earned by the Company on these facilities.

During 2000, the Company sold six skilled nursing facilities, two assisted
living facilities, and one residential care facility for the elderly in six
separate transactions for aggregate proceeds of approximately $20,294,000. The
Company recognized an aggregate gain of $1,149,000 related to the disposal of
these facilities. The Company also sold 3 skilled nursing facilities during
2000 with an aggregate net book value of approximately $6,343,000 for which it
provided mortgage financing in the amount of $6,080,000. In addition, the
Company acquired two skilled nursing facilities and one continuing care
retirement community for an aggregate amount of approximately $15,357,000, for
which it had previously provided mortgage financing of $14,260,000.

The following table lists the Company's real estate properties as of
December 31, 2000:

Buildings Notes and
Number of and Total Accumulated Bonds
Facility Location Facilities Land Improvements Investment(1) Depreciation Payable
----------------- ---------- ------- ------------ ------------- ------------ ---------

(Dollar amounts in thousands)
Assisted Living
Facilities:
Alabama............... 2 $ 1,681 $ 4,272 $ 5,953 $ 487 $ --
Arizona............... 2 1,024 6,844 7,868 769 --
Arkansas.............. 1 182 1,968 2,150 109 --
California............ 13 15,105 64,473 79,578 9,866 --
Colorado.............. 6 3,465 42,150 45,615 3,538 --
Delaware.............. 1 345 4,956 5,301 217 --
Florida............... 20 12,581 80,319 92,900 5,816 --
Idaho................. 1 544 11,256 11,800 1,259 --
Illinois.............. 1 603 10,473 11,076 1,047 --
Indiana............... 1 805 3,861 4,666 257 --
Kansas................ 4 1,885 11,585 13,470 918 --
Kentucky.............. 1 110 2,547 2,657 200 --
Louisiana............. 1 831 6,553 7,384 191 --

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

(Dollar amounts in thousands)
Assisted Living Facilities (Continued):
Maryland............................. 1 $ 533 $ 4,629 $ 5,162 $ 155 $ --
Massachusetts........................ 1 1,758 9,249 11,007 573 --
Michigan............................. 1 300 7,006 7,306 1,161 --
Nevada............................... 2 1,219 12,397 13,616 985 6,630
New Jersey........................... 1 655 3,430 4,085 193 --
North Carolina....................... 1 385 2,531 2,916 174 --
Ohio................................. 11 3,623 34,971 38,594 2,604 --
Oklahoma............................. 3 745 7,355 8,100 1,249 --
Oregon............................... 6 2,078 26,753 28,831 3,705 8,843
Pennsylvania......................... 2 1,066 13,562 14,628 571 --
Rhode Island......................... 3 2,877 27,043 29,920 650 --
South Carolina....................... 4 779 10,262 11,041 615 --
Tennessee............................ 5 2,664 21,870 24,534 1,179 --
Texas................................ 16 7,283 67,962 75,245 4,702 --
Virginia............................. 2 1,651 11,318 12,969 195 --
Washington........................... 4 1,841 21,094 22,935 1,986 --
West Virginia........................ 1 705 5,305 6,010 152 --
Wisconsin............................ 2 4,843 24,218 29,061 2,064 18,521
--- ------- -------- -------- ------- -------
Subtotals.......................... 120 74,166 562,212 636,378 47,587 33,994
--- ------- -------- -------- ------- -------

Skilled Nursing Facilities:
Arizona.............................. 1 650 2,890 3,540 906 --
Arkansas............................. 9 2,745 33,187 35,932 3,186 2,185
California........................... 8 7,053 19,428 26,481 5,397 --
Connecticut.......................... 2 810 5,382 6,192 1,483 --
Florida.............................. 8 3,640 25,656 29,296 6,724 --
Georgia.............................. 2 1,363 10,322 11,685 1,520 --
Idaho................................ 1 15 777 792 272 --
Illinois............................. 2 157 5,392 5,549 1,692 --
Indiana.............................. 7 751 26,583 27,334 8,339 --
Kansas............................... 9 760 13,159 13,919 3,266 --
Maryland............................. 4 845 21,388 22,233 8,692 --
Massachusetts........................ 17 7,488 67,604 75,092 11,971 --
Minnesota............................ 7 1,973 26,179 28,152 9,315 --
Mississippi.......................... 1 750 3,595 4,345 231 --
Missouri............................. 1 51 2,689 2,740 1,153 --
Nevada............................... 1 740 3,294 4,034 762 --
New Jersey........................... 1 360 6,448 6,808 4,176 --
North Carolina....................... 1 116 2,244 2,360 962 --
Ohio................................. 6 1,316 28,235 29,551 9,271 --
Oklahoma............................. 3 98 3,841 3,939 1,422 --
Oregon............................... 1 100 1,115 1,215 534 --
Tennessee............................ 10 2,354 33,152 35,506 5,980 --

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

(Dollar amounts in thousands)
Skilled Nursing Facilities (Continued):
Texas................................ 25 $ 5,270 $ 55,289 $ 60,559 $ 13,299 $ --
Virginia............................. 4 1,036 17,532 18,568 7,516 --
Washington........................... 7 2,973 26,404 29,377 4,721 --
Wisconsin............................ 8 1,571 18,121 19,692 7,335 --
--- -------- ---------- ---------- -------- -------
Subtotals.......................... 146 44,985 459,906 504,891 120,125 2,185
--- -------- ---------- ---------- -------- -------

Continuing Care Retirement Communities:
California........................... 1 1,600 10,827 12,427 1,689 --
Colorado............................. 1 400 2,715 3,115 611 --
Georgia.............................. 1 723 10,769 11,492 564 --
Kansas............................... 1 687 12,517 13,204 1,187 2,500
Massachusetts........................ 1 1,351 12,941 14,292 853 --
Tennessee............................ 1 174 3,004 3,178 25 --
Texas................................ 2 2,681 34,655 37,336 3,054 --
Wisconsin............................ 2 11,057 53,294 64,351 5,125 24,178
--- -------- ---------- ---------- -------- -------
Subtotals.......................... 10 18,673 140,722 159,395 13,108 26,678
--- -------- ---------- ---------- -------- -------

Rehabilitation Hospitals:
Arizona.............................. 2 1,517 15,309 16,826 3,863 --
--- -------- ---------- ---------- -------- -------

Residential Care Facilities for the
Elderly:
California........................... 2 63 262 325 55 --
--- -------- ---------- ---------- -------- -------

Medical Clinics:
Alabama.............................. 1 248 2,185 2,433 1,451 --
--- -------- ---------- ---------- -------- -------
Construction In Progress: 1,000 8,478 9,478 -- --
-------- ---------- ---------- -------- -------

Land Parcels:
Kentucky............................. -- 578 -- 578 -- --
New Hampshire........................ -- 638 98 736 -- --
Ohio................................. -- 253 1506 1759 16
Texas................................ -- 600 210 810 1 --
--- -------- ---------- ---------- -------- -------
Subtotals.......................... -- 2,069 1,814 3,883 17 --
--- -------- ---------- ---------- -------- -------

Total Facilities....................... 281 $142,721 $1,190,888 $1,333,609 $186,206 $62,857
=== ======== ========== ========== ======== =======

--------
(1) Also represents the approximate aggregate cost for Federal income tax
purposes.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

Three operators of nursing homes owned by the Company have filed for
protection under the United States bankruptcy laws. Under bankruptcy statutes,
the tenant must either assume the Company's leases or reject them and return
the properties to the Company. If the tenant assumes the leases, it is required
to assume the leases under the existing terms; the court cannot change the
rental amount or other lease provisions that could financially impact the
Company. The Company's rent has been paid each month on a timely basis. While
there is a possibility that the tenants may decide to reject the leases on
these properties, the Company has identified parties interested in leasing
these facilities, however such leases may be at a lower rental rate. The table
below summarizes the filing dates of the bankruptcies, the number of the
Company's owned facilities operated by each operator, the Company's investment
in facilities subject to the bankruptcies, the percentage of the Company's
revenue for 2000 relating to the facilities operated by each operator and cash
deposits and letters of credit currently held by the Company as security for
each operator:

Bankruptcy Number of Investment Percentage
Filing Facilities in of 2000 Security
Operator Date Operated Facilities Revenue Deposits
-------- ---------------- ---------- ------------ ---------- ----------

The Company leased 10 assisted living facilities, in which its investment
was approximately $68,712,000, to Balanced Care Corporation ("BCC") under two
master leases. BCC didn't make their December rent payment and the Company
immediately declared BCC in default under its master leases and initiated steps
to terminate the leases. BCC agreed to return the facilities to the Company and
the leases were terminated effective as of January 1, 2001. The Company is in
negotiations with a new operator to take over the operations of the facilities
at lease rates essentially the same as those previously paid by BCC. BCC is
managing the facilities on an interim basis on the Company's behalf until the
facility licenses can be transferred to the name of the new operator. The
Company will avail itself of cash security deposits totaling approximately
$2,035,000 to cover the December rent and other costs incurred related to the
default.

5. Mortgage Loans Receivable

During 2000, the Company financed the sale of 3 skilled nursing facilities
in 2 separate transactions with an aggregate principal amount of $6,080,000. In
addition, the Company funded an additional $2,929,000 on existing mortgage
loans. Such additional amounts funded will result in an increase in interest
income earned by the Company. During 2000, a loan with a net book value of
approximately $7,509,000 secured by 3 skilled nursing facilities was repaid, as
was a $3,666,000 portion of another mortgage loan secured by 1 facility. The
Company also acquired two skilled nursing facilities and one assisted living
facility for which it previously provided mortgage financing in the amount of
$14,260,000. At December 31, 2000, the Company had 35 mortgage loans receivable
secured by 36 skilled nursing facilities, 7 assisted living facilities, 4
continuing care retirement communities and 4 parcels of land. The loans have an
aggregate principal balance of approximately $191,020,000 and are reflected in
the Company's financial statements net of an aggregate discount of
approximately $5,397,000. The principal balances of mortgage loans receivable
as of December 31, 2000 mature approximately as follows: $7,896,000 in 2001,
$2,774,000 in 2002, $7,360,000 in 2003, $7,280,000 in 2004, $6,134,000 in 2005
and $159,576,000 thereafter.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

The following table lists the Company's mortgage loans receivable at
December 31, 2000:

Final Estimated Original Face Carrying
Number of Interest Maturity Balloon Amount of Amount of
Location of Facilities Facilities Rate Date Payment(1) Mortgages Mortagages(2)
---------------------- ---------- -------- -------- ---------- ------------- -------------

(Dollar amounts in thousands)
Assisted Living
Facilities:
Alabama............... -- 9.00% 06/04 $ 710 $ 710 $ 710
Florida............... 2 10.31% 09/20 -- 7,230 7,202
Florida............... -- 9.00% 04/04 1,013 1,013 1,013
Michigan.............. -- 9.00% 06/04 1,675 1,675 1,675
North Carolina........ 2 10.44% 05/07 2,950 2,950 2,950
Pennsylvania.......... -- 9.00% 06/04 1,300 1,300 1,300
Pennsylvania.......... 1 9.09% 09/08 2,900 2,900 2,900
South Carolina........ 1 9.09% 09/08 2,955 2,955 2,955
Washington............ 1 9.95% 12/15 6,432 6,557 6,557
--- ------ ------- -------
Subtotals........... 7 19,935 27,290 27,262
--- ------ ------- -------

Skilled Nursing
Facilities:
Arkansas.............. 3 10.00% 12/06 4,946 5,500 5,102
California............ 1 10.00% 05/25 1,489 8,200 8,063
California............ 2 9.50% 03/09 5,336 7,841 7,140
Connecticut........... 2 10.00% 06/22 -- 8,862 7,008
Florida............... -- 11.15% 07/03 -- 4,400 558
Florida............... 1 11.45% 07/06 4,400 4,400 4,400
Florida............... 2 10.00% 12/01 4,850 4,850 4,704
Florida............... 1 10.00% 12/03 1,028 1,230 1,113
Illinois.............. 1 9.00% 01/24 -- 9,500 8,504
Indiana............... 1 11.15% 07/03 -- 785 304
Kansas................ 1 9.50% 09/03 1,169 1,550 1,214
Louisiana............. 1 10.89% 04/15 2,407 3,850 3,758
Maryland.............. 1 10.90% 06/21 -- 7,800 7,497
Massachusetts......... 1 8.75% 02/24 -- 9,000 7,687
Michigan.............. 2 13.16% 01/05 2,506 3,000 2,560
Michigan.............. 1 9.00% 01/05 1,231 1,800 1,463
Missouri.............. 6 10.87% 08/11 13,619 17,725 13,619
South Dakota.......... 1 10.75% 05/05 -- 4,275 603
Tennessee............. 1 10.44% 01/07 8,550 8,550 8,550
Texas................. 1 12.00% 03/08 -- 1,460 927
Virginia.............. 1 10.50% 04/13 10,192 16,250 15,754
Washington............ 4 11.00% 10/19 112 6,000 5,605
Wisconsin............. 1 10.75% 05/05 -- 1,350 386
--- ------ ------- -------
Subtotals........... 36 61,835 138,178 116,519
--- ------ ------- -------

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

(Dollar amounts in thousands)
Continuing Care
Retirement Communities:
California............ 1 9.50% 03/09 $ 2,831 $ 4,159 $ 3,788
Florida............... 1 10.00% 06/09 15,821 15,821 15,821
Massachusetts......... 1 9.52% 06/23 -- 12,350 12,025
Oklahoma.............. 1 9.55% 03/24 2,250 11,200 10,208
--- -------- -------- --------
Subtotals........... 4 20,902 43,530 41,842
--- -------- -------- --------
Total................... 47 $102,672 $208,998 $185,623
=== ======== ======== ========

--------
(1) Most loans require monthly principal and interest payments at level
amounts over life to maturity. Some loans have interest rates which
periodically adjust, but cannot decrease, which results in varying
principal and interest payments over life to maturity, in which case the
balloon payments reflected are an estimate. Five of the loans have
decreasing principal and interest payments over the life of the loans.
Most loans require a prepayment penalty based on a percentage of principal
outstanding or a penalty based upon a calculation maintaining the yield
the Company would have earned if prepayment had not occurred. Seven loans
have a provision that no prepayments are acceptable.

(2) Also represents the approximate aggregate cost for Federal income tax
purposes.

The skilled nursing facility loan listed above in the state of Maryland
with a carrying amount of $7,497,000 is directly with Mariner Post-Acute
Network, which filed for protection under the United States bankruptcy laws on
January 18, 2000. The revenues from this mortgage loan represent approximately
1% of the Company's revenues for the year ended December 31, 2000, and the
mortgage loan is secured by a cash deposit in the amount of $400,000. The
Company has not received any payments on this mortgage loan subsequent to
March 2000, and has not recorded a reserve.

The following table summarizes the changes in mortgage loans receivable
during 2000, 1999 and 1998:

2000 1999 1998
-------- -------- --------
(In thousands)

Balance at January 1,.......................... $203,362 $206,613 $199,819
New mortgage loans........................... 9,009 5,011 18,711
New discounts on mortgage loans.............. (263) -- --
Accretion of discount on loans............... 1,801 1,217 1,214
Reclassification of loans to leases.......... (14,260) (7,300) (3,500)
Collection of principal...................... (14,026) (2,179) (9,631)
-------- -------- --------
Balance at December 31,........................ $185,623 $203,362 $206,613
======== ======== ========

6. Bank Borrowings

The Company has a $100,000,000 unsecured credit agreement with certain
banks that matures on March 31, 2003. The terms of the bank line of credit
include an option to extend the bank line of credit by one year with
concurrence of the bank group. At the option of the Company, borrowings under
the agreement bear interest at prime (9.5% at December 31, 2000) or LIBOR plus
1.275% (7.84% at December 31, 2000). The Company pays a facility fee of .35%
per annum on the total commitment under the agreement.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

Under covenants contained in the credit agreement, the Company is required
to maintain, among other things: (i) a minimum net worth of $475,000,000; (ii)
a ratio of cash flow before interest expense and non-cash expenses to regularly
scheduled debt service payments on all debt of at least 2.5 to 1.0; and (iii) a
ratio of total liabilities to net worth of not more than 1.6 to 1.0; and (iv) a
gross asset value coverage ratio of at least 1.45 to 1.0.

7. Notes and Bonds Payable

Notes and bonds payable are due through the year 2035, at interest rates
ranging from 4.3% to 10.5% and are secured by real estate properties with an
aggregate net book value as of December 31, 2000 of approximately $108,669,000.
The principal balances of the notes and bonds payable as of December 31, 2000
mature approximately as follows: $1,162,000 in 2001, $1,239,000 in 2002,
$1,313,000 in 2003, $1,411,000 in 2004, $1,508,000 in 2005, and $56,224,000
thereafter.

8. Senior Unsecured Notes Due 2001-2038

During 2000, the Company repaid $30,000,000 in aggregate principal amount of
medium term notes. The aggregate principal amount of Senior Notes outstanding
at December 31, 2000 was $627,900,000. The weighted average interest rate on
the Senior Notes was 7.51% and the weighted average maturity was 10.7 years.
The principal balances of the Senior Notes as of December 31, 2000 mature
approximately as follows: $78,150,000 in 2001, $50,000,000 in 2002, $66,000,000
in 2003, $67,750,000 in 2004, $18,000,000 in 2005 and $348,000,000 thereafter.

There are $55,000,000 of medium term notes due in 2037 which may be put back
to the Company at their face amount at the option of the holder on October 1st
of any of the following years: 2004, 2007, 2009, 2012, 2017, or 2027. There are
$41,500,000 of medium term notes due in 2028 which may be put back to the
Company at their face amount at the option of the holder on November 20th of
any of the following years: 2003, 2008, 2013, 2018, or 2023. There are
$40,000,000 of medium term notes due in 2038 which may be put back to the
Company at their face amount at the option of the holder on July 7th of any of
the following years: 2003, 2008, 2013, 2018, 2023, or 2028.

9. Convertible Debentures

During 1993, the Company issued $65,000,000 of 6.25% unsecured convertible
debentures due January 1, 1999. The debentures were convertible at any time
prior to maturity into shares of the Company's common stock at a conversion
price of $22.4125 per share. During 1999, $8,000 of such debentures converted
into 356 shares of common stock and the remaining debentures, totaling
$57,423,000, were repaid. During 1998, $7,081,000 of such debentures converted
into 315,921 shares of common stock.

10. Preferred Stock

During 1997, the Company sold 1,000,000 shares of 7.677% Series A Cumulative
Preferred Step-Up REIT securities ("Preferred Stock") with a liquidation
preference of $100 per share. Dividends on the Preferred Stock are cumulative
from the date of original issue and are payable quarterly in arrears,
commencing December 31, 1997 at the rate of 7.677% per annum of the liquidation
preference per share (equivalent to $7.677 per annum per share) through
September 30, 2012 and at a rate of 9.677% of the liquidation preference per
annum per share (equivalent to $9.677 per annum per share) thereafter. The
Preferred Stock is not redeemable prior to September 30, 2007. On or after
September 30, 2007, the Preferred Stock may be redeemed for cash at the option
of the Company, in whole or in part, at a redemption price of $100 per share,
plus accrued and unpaid dividends, if any, thereon.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

11. Stock Incentive Plan

Under the terms of a stock incentive plan (the "Plan"), the Company has
reserved for issuance 1,600,000 shares of common stock. Under the Plan, as
amended, the Company may issue stock options, restricted stock, dividend
equivalents and stock appreciation rights. The Company began accounting for the
Plan under SFAS No. 123 Accounting for Stock-Based Compensation during 1999 for
options granted in 1999 and thereafter. Prior to 1999, the Company accounted
for the Plan under Accounting Principles Board Opinion No. 25 Accounting for
Stock Issued to Employees. Had compensation cost for the Plan been determined
consistent with SFAS No. 123 Accounting for Stock-Based Compensation for the
years prior to 1999, the Company's net income and net income per share in 2000,
1999 and 1998 would have been the following pro forma amounts:

2000 1999 1998
----------- ----------- -----------

Net income available to common
stockholders:
As reported......................... $63,485,000 $63,136,000 $62,071,000
Pro forma........................... 63,387,000 62,977,000 61,840,000

Basic/diluted net income per share:
As reported......................... $ 1.37 $ 1.37 $ 1.39
Pro forma........................... 1.37 1.36 1.39

Because the pro forma calculation reflects only amounts attributable to
options granted since January 1, 1995, and the Company adopted SFAS No. 123
during 1999, the pro forma affect has fully amortized at the end of 2000. A
summary of the status of the Plan at December 31, 2000, 1999 and 1998 and
changes during the years then ended are as follows:

2000 1999 1998
---------------- ----------------- ----------------
Wtd Avg Wtd Avg
Ex Wtd Avg Ex
Shares Price Shares Ex Price Shares Price
------- ------- ------- -------- ------- -------

Options:
Outstanding at beginning
of year.................. 404,000 $22.53 279,000 $23.42 179,000 $21.89
Granted................... 125,000 14.38 125,000 20.56 100,000 26.14
Exercised................. -- -- -- -- -- --
Forfeited................. -- -- -- -- -- --
Expired................... -- -- -- -- -- --
------- ------- -------
Outstanding at end of
year..................... 529,000 20.61 404,000 22.53 279,000 23.42
======= ======= =======
Exercisable at end of
year..................... 287,334 $22.70 182,327 $22.50 89,328 $21.52
Weighted average fair
value of options
granted.................. $ 0.45 $ 1.04 $ 2.69

Restricted Stock:
Outstanding at beginning
of year.................. 53,000 73,400 94,900
Awarded................... 10,000 10,000 12,000
Vested.................... (37,000) (30,400) (33,500)
Forfeited................. -- -- --
------- ------- -------
Outstanding at end of
year..................... 26,000 53,000 73,400
======= ======= =======
Weighted average fair
value of restricted stock
awarded.................. $ 14.38 $ 20.56 $ 26.12

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

Stock options granted under the Plan become exercisable each year following
the date of grant in annual increments of one-third and are exercisable at the
market price of the Company's common stock on the date of grant. Options at
December 31, 2000 have a weighted average contractual life of 7 years.

The fair value of each option grant is estimated on the date of grant using
the Black Scholes option pricing model with the following weighted average
assumptions:

2000 1999 1998
----- ----- -----

Risk free rate of return................................ 6.79% 5.18% 6.30%
Dividend yield.......................................... 12.52% 8.75% 6.43%
Option term............................................. 10 10 10
Volatility.............................................. 22.21% 18.96% 16.45%

The restricted stock awards are granted at no cost. Restricted stock awards
vest at the third anniversary of the award date with respect to non-employee
directors and at the fifth anniversary with respect to officers and employees.
Subsequent to 1995, only non-employee directors receive restricted stock
awards, and the remaining restricted stock issued to officers and employees
fully vested in 2000. The restricted stock awards are amortized over their
respective vesting periods. Expense is determined based upon the market value
at the date of award of the restricted stock and is recognized over the vesting
period. Expense recorded in 2000, 1999 and 1998 related to restricted stock
awards was approximately $226,000, $325,000 and $440,000, respectively.

Awards of dividend equivalents accompany the stock option grants beginning
in 1996 on a one-for-one basis. Such dividend equivalents are payable in cash
until such time as the corresponding stock option is exercised, based upon a
formula approved by the Compensation Committee of the Board of Directors. That
formula depends on the Company's performance measured for a minimum of a three-
year period and up to a five-year period by total return to stockholders
(increase in stock price and dividends paid) compared to peer companies and
other select financial measures compared to peer companies, in each case as
selected by the Compensation Committee. SFAS No. 123 provides that payments
related to the dividend equivalents are treated as dividends.

No stock appreciation rights have been issued under the Plan.

12. Pension Plan

During 1991, the Company adopted an unfunded benefit pension plan covering
the current non-employee members of its Board of Directors upon completion of
five years of service on the Board. The benefits, limited to the number of
years of service on the Board, are based upon the then current annual retainer
in effect.

The following tables set forth the amounts recognized in the Company's
financial statements:

12/31/00 12/31/99
---------- --------

Actuarial present value of benefit obligations:
Vested benefit obligation.............................. $ 882,000 $684,000
========== ========
Accumulated benefit obligation......................... $ 908,000 $695,000
========== ========
Projected benefit obligation........................... $ 965,000 $764,000
Unrecognized prior service cost........................ (19,000) (47,000)
Unrecognized net gain.................................. 87,000 264,000
---------- --------
Accrued pension cost................................... $1,033,000 $981,000
========== ========

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

Net pension cost for the year included the following components:

2000 1999 1998
-------- -------- --------

Current service cost........................... $ 48,000 $ 54,000 $ 43,000
Interest cost.................................. 59,000 53,000 61,000
Amortization of prior service cost............. 5,000 19,000 27,000
-------- -------- --------
Net periodic pension cost...................... $112,000 $126,000 $131,000
======== ======== ========

Discount rates of 8.0%, 6.75% and 7.0% in 2000, 1999 and 1998, respectively,
and a 5.0% increase in the annual retainer every other year, were used in
determining the actuarial present value of the projected benefit obligation.

13. Transactions with Alterra Healthcare Corporation and Beverly Enterprises,
Inc.

As of December 31, 2000, 53 of the owned facilities are leased to and
operated by subsidiaries of Alterra Healthcare Corporation ("Alterra").
Additionally, Alterra is the borrower on 1 of the Company's mortgage loans.
Revenues from Alterra were approximately $19,148,000, $19,117,000 and
$17,114,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

As of December 31, 2000, 29 of the owned facilities are leased to and
operated by subsidiaries of Beverly Enterprises, Inc. ("Beverly").
Additionally, Beverly is the borrower on 4 of the Company's mortgage loans.
Revenues from Beverly were approximately $21,514,000, $21,211,000 and
$21,161,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

Effective January 1, 2000, the Company negotiated a new lease and settlement
with Beverly Enterprises, Inc. ("Beverly") that incorporated 38 of its 47
facilities then leased to Beverly, which were up for renewal at various dates
from December 1998 to December 2000. As a result of the renewal and settlement,
Beverly continued to lease 18 of the 38 facilities for an initial five-year
lease term. The Company also returned 5 facilities to Beverly, including 2 of
the 38 facilities above and 3 other facilities that Beverly had previously
subleased to other operators. In addition, the Company released Beverly as a
guarantor of facilities that it had previously subleased to other operators and
Beverly was not required to renew the leases on the remaining 18 facilities.
Beverly continued to operate 15 of the remaining 18 facilities at reduced
rentals until the Company was able to lease the facilities to new operators,
and continues to operate 1 of the 3 remaining facilities. The Company has
decided to sell 2 of the 3 remaining facilities, for which it expects to
receive approximately book value, and anticipates leasing the third for
approximately the current rental. As a part of the renewal settlement, the
Company recorded a note receivable from Beverly of approximately $16,208,000,
net of deferred income of approximately $8,165,000 that is being recognized
under the installment method. Such revenues are included in additional rent on
the accompanying income statements. The promissory note bears interest at 9.0%
and requires Beverly to make quarterly payments through its final maturity on
December 31, 2004.

One of the directors of the Company is also an officer and director of
Beverly.

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

14. Impairment of Long-lived Assets

During 1998, the Company recorded a provision of $5,000,000 as a reduction
in the value of the Company's investment in three medical clinics constructed
for and leased to a company that declared bankruptcy. The fair value of the
medical clinics was determined based on discounted estimated future cash flows.
During 1999, the Company disposed of two of the medical clinics and continues
to look for another party to whom it may lease or sell the remaining facility.

15. Dividends

Dividend payments by the Company to the common stockholders were
characterized in the following manner for tax purposes:

2000 1999 1998
----- ----- -----

Ordinary income............................................ $1.25 $1.30 $1.63
Capital gain............................................... .19 .10 .05
Return of capital.......................................... .40 .40 --
----- ----- -----
Total dividends paid..................................... $1.84 $1.80 $1.68
===== ===== =====

16. Quarterly Financial Data (unaudited)

Three months ended
---------------------------------------------
March 31, June 30, September 30, December 31,
--------- -------- ------------- ------------
(In thousands except per share amounts)

2000:
Revenues as reported........... $42,816 $42,813 $42,891 $42,876
SAB No. 101 adjustment......... (395) 253 166 (24)
------- ------- ------- -------
Restated revenue............... 42,421 43,066 43,057 42,852

Net income available to common
stockholders.................. 16,014 16,127 15,646 15,699
SAB No. 101 adjustment......... (395) 253 166 (24)
------- ------- ------- -------
Restated net income available
to common stockholders........ 15,619 16,380 15,812 15,675

Basic/diluted net income per
share......................... .35 .35 .34 .34
SAB No. 101 adjustment......... (.01) .01 -- --
------- ------- ------- -------
Restated basic/diluted net
income per share.............. .34 .36 .34 .34

Dividends per share............ .46 .46 .46 .46

1999:
Revenues....................... $39,309 $40,871 $41,525 $42,160
Net income available to common
stockholders.................. 15,811 15,305 15,775 16,246
Basic/diluted net income per
share......................... .34 .33 .34 .35
Dividends per share............ .45 .45 .45 .45

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 2000, 1999 and 1998

Year to date
----------------------------------------------
March 31, June 30, September 30, December 31,
--------- -------- ------------- ------------
(In thousands except per share amounts)

2000:
Revenues as reported........... $42,816 $85,629 $128,520 $171,396
SAB No. 101 adjustment......... (395) (142) 24 --
------- ------- -------- --------
Restated revenue............... 42,421 85,487 128,544 171,396

Net income available to common
stockholders.................. 16,014 32,140 47,786 63,485
SAB No. 101 adjustment......... (395) (142) 24 --
------- ------- -------- --------
Restated net income available
to common stockholders........ 15,619 31,998 47,810 63,485

Basic/diluted net income per
share......................... .35 .70 1.03 1.37
SAB No. 101 adjustment......... (.01) -- -- --
------- ------- -------- --------
Restated basic/diluted net
income per share.............. .34 .70 1.03 1.37

17. Disclosures About Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

Cash and Cash Equivalents

The carrying amount approximates fair value because of the short maturity of
those instruments.

Mortgage Loans Receivable

Fair values are based upon the estimates of management and on rates
currently prevailing for comparable loans.

Long-Term Debt

The fair value of long-term debt is estimated based on discounting future
cash flows utilizing current rates offered to the Company for debt of the same
type and remaining maturity.

The estimated fair values of the Company's financial instruments are as
follows:

2000 1999
------------------- -------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------
(In millions)

Cash and cash equivalents............ $ 6 $ 6 $ 16 $ 16
Mortgage loans receivable............ 186 186 203 190
Long-term debt....................... 770 709 797 706

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Directors
of Nationwide Health Properties, Inc.:

We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Nationwide Health Properties,
Inc.'s annual report to shareholders included in this Form 10-K, and have
issued our report thereon dated January 19, 2001. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in the index of consolidated financial statements is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation to the
basic consolidated financial statements taken as a whole.

Arthur Andersen LLP

Orange County, California
January 19, 2001

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Gross Amount at which Carried at
Initial Cost Costs Close of Period (1)
to Building Capitalized ------------------------------------- Original
and Subsequent to Buildings and Accum. Construction Date
Facility Type and Location Improvements Acquisition Land (2) Improvements Total Depr. Date Acquired
-------------------------- ------------ ------------- ---------- -------------- ---------- ------ ------------ --------

Skilled Nursing
Facilities:
Benton AR $4,659 $ 4 $ 685 $ 4,663 $ 5,348 $ 335 1992 1998
Bryant AR 4,889 4 320 4,893 5,213 347 1989 1998
Hot Springs AR 2,320 -- 54 2,320 2,374 956 1972 1986
Lake Village AR 4,317 15 261 4,332 4,593 251 1997 1998
Monticello AR 3,295 8 300 3,303 3,603 210 1993 1998
Morrilton AR 4,995 2 308 4,997 5,305 329 1996 1998
Morrilton AR 3,703 2 250 3,705 3,955 268 1988 1998
Wilmot AR 787 20 240 807 1,047 193 1964 1998
Wynne (3) AR 4,165 2 327 4,167 4,494 297 1990 1998
Scottsdale AZ 2,790 100 650 2,890 3,540 906 1963 1991
Chowchilla CA 1,119 -- 109 1,119 1,228 371 1964 1987
Gilroy CA 1,892 -- 714 1,892 2,606 583 1968 1991
Hayward CA 1,222 221 795 1,443 2,238 430 1968 1991
Orange CA 5,059 -- 1,141 5,059 6,200 1,065 1987 1992
Pomona CA 1,247 -- 365 1,247 1,612 535 1963 1985
San Diego CA 4,925 -- 842 4,925 5,767 1,327 1965 1992
San Jose CA 1,136 571 1,595 1,707 3,302 488 1968 1991
Santa Cruz CA 1,596 440 1,492 2,036 3,528 598 1964 1991
Bloomfield CT 2,827 -- 670 2,827 3,497 589 1967 1994
Torrington CT 2,555 -- 140 2,555 2,695 894 1969 1987
Dania FL 1,962 954 178 2,916 3,094 439 1970 1997
Ft. Pierce FL 2,758 280 125 3,038 3,163 1,238 1965 1985
Jacksonville FL 2,787 -- 498 2,787 3,285 410 1965 1996
Jacksonville FL 1,759 -- 1,503 1,759 3,262 158 1997 1997
Lakeland FL 5,029 -- 1,000 5,029 6,029 1,048 1982 1994
Live Oak FL 3,217 1,750 50 4,967 5,017 1,442 1983 1986
Maitland FL 3,327 -- 209 3,327 3,536 1,370 1983 1986
Pensacola FL 1,833 -- 77 1,833 1,910 619 1969 1987
Flowery Branch GA 3,115 665 562 3,780 4,342 185 1970 1997
Lawrenceville GA 3,993 2,549 801 6,542 7,343 1,335 1988 1991
Buhl ID 777 -- 15 777 792 272 1913 1986
Lasalle IL 2,703 -- 127 2,703 2,830 848 1975 1991
Litchfield IL 2,689 -- 30 2,689 2,719 844 1972 1991
Brookville IN 4,120 -- 80 4,120 4,200 841 1987 1992
Evansville IN 5,324 -- 280 5,324 5,604 1,671 1968 1991
New Castle IN 5,173 -- 43 5,173 5,216 1,624 1972 1991
Petersburg IN 2,352 -- 33 2,352 2,385 969 1968 1986
Richmond IN 2,519 -- 114 2,519 2,633 1,038 1974 1986
Rochester IN 4,055 250 161 4,305 4,466 1,320 1969 1991
Wabash IN 2,790 -- 40 2,790 2,830 876 1974 1991
Belleville KS 1,887 -- 213 1,887 2,100 487 1977 1993
Colby KS 599 117 50 716 766 236 1974 1986
Derby KS 2,482 -- 133 2,482 2,615 724 1978 1992
Hiawatha KS 788 35 150 823 973 51 1974 1998
Hutchinson KS 1,855 161 75 2,016 2,091 456 1964 1994
Kensington KS 639 63 6 702 708 361 1965 1986
Onaga KS 652 88 6 740 746 286 1959 1986
Salina KS 2,463 135 27 2,598 2,625 592 1981 1994
Topeka KS 1,137 58 100 1,195 1,295 73 1973 1998
Amesbury MA 4,241 607 229 4,848 5,077 538 1971 1997

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Skilled Nursing Facilities (continued):
Beverly MA $,3,748 $ 92 $ 392 $ 3,840 $ 4,232 $ 192 1998 1998
Brighton MA 2,212 -- 300 2,212 2,512 1,134 1969 1994
Brockton MA 3,591 16 525 3,607 4,132 862 1971 1993
Buzzards Bay MA 4,815 144 415 4,959 5,374 2092 1911 1985
Danvers MA 4,248 143 392 4,391 4,783 217 1998 1998
Danvers MA 3,211 1,144 327 4,355 4,682 460 1962 1997
Danvers MA 2,891 487 305 3,378 3,683 381 1969 1997
Haverhill MA 5,707 1,764 660 7,471 8,131 1,441 1973 1993
Haverhill MA 1,414 3 775 1,417 2,192 338 1962 1993
Melrose MA 4,029 531 432 4,560 4,992 358 1965 1998
N. Bellerica MA 3,137 300 800 3,437 4,237 751 1969 1994
New Bedford MA 2,357 52 93 2,409 2,502 1,021 1889 1985
Northborough MA 2,509 451 300 2,960 3,260 196 1969 1998
Saugus MA 5,262 514 374 5,776 6,150 644 1967 1997
Sharon MA 1,097 4,369 844 5,466 6,310 286 1975 1996
Wellesley MA 2,435 83 325 2,518 2,843 1,060 1962 1985
Clinton MD 5,017 -- 400 5,017 5,417 1,714 1965 1987
Cumberland MD 5,260 -- 150 5,260 5,410 2,255 1968 1985
Hagerstown MD 4,140 176 215 4,316 4,531 1,810 1972 1985
Westminster MD 6,795 -- 80 6,795 6,875 2,913 1974 1985
Duluth MN 7,047 -- 1,014 7,047 8,061 763 1971 1997
Faribault MN 2,785 116 90 2,901 2,991 1,497 1967 1985
Minneapolis MN 5,752 284 333 6,036 6,369 2,777 1973 1985
Minneapolis MN 4,184 -- 436 4,184 4,620 1,951 1961 1985
Ostrander MN 947 47 8 994 1,002 354 1968 1986
Owatonna MN 2,140 107 59 2,247 2,306 785 1965 1986
Willmar MN 2,582 188 33 2,770 2,803 1,188 1905 1985
Maryville MO 2,689 -- 51 2,689 2,740 1,153 1979 1985
Columbus MS 3,520 75 750 3,595 4,345 231 1976 1998
Hendersonville NC 2,244 -- 116 2,244 2,360 962 1978 1985
Lakewood NJ 6,448 -- 360 6,448 6,808 4,176 1966 1987
Sparks NV 3,294 -- 740 3,294 4,034 762 1988 1991
Alliance OH 1,862 -- 83 1,862 1,945 584 1962 1991
Boardman OH 7,046 -- 60 7,046 7,106 2211 1962 1991
Columbus OH 4,333 -- 343 4,333 4,676 1,552 1984 1988
Galion OH 3,419 -- 24 3,419 3,443 1,073 1967 1991
Warren OH 7,489 -- 450 7,489 7,939 2,350 1967 1991
Wash Ct House OH 4,086 -- 356 4,086 4,442 1,501 1984 1988
Maud OK 803 -- 12 803 815 283 1960 1986
Sapulpa OK 2,243 -- 68 2,243 2,311 785 1970 1986
Tonkawa OK 795 -- 18 795 813 354 1962 1987
Portland OR 1,115 -- 100 1,115 1,215 534 1954 1985
Brownsville TN 2,957 -- 100 2,957 3,057 706 1970 1993
Celina TN 853 -- 150 853 1,003 204 1972 1993
Clarksville TN 3,479 -- 350 3,479 3,829 831 1970 1993
Columbia TN 2,240 -- 225 2,240 2,465 459 1984 1993
Decatur TN 3,330 -- 193 3,330 3,523 238 1981 1998
Hohenwald TN 3,732 -- 90 3,732 3,822 892 1975 1993
Jonesborough TN 2,551 3 65 2,554 2,619 610 1981 1993

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Skilled Nursing Facilities (continued):
Madison TN $ 6,415 $ -- $ 1,120 $ 6,415 $ 7,535 $ 412 1967 1998
Martin TN 4,121 -- 33 4,121 4,154 985 1977 1993
Selmer TN 2,263 1,208 28 3,471 3,499 643 1985 1993
Baytown TX 2,388 -- 90 2,388 2,478 612 1975 1990
Baytown TX 1,902 -- 61 1,902 1,963 487 1966 1990
Bogota TX 1,820 -- 14 1,820 1,834 750 1963 1986
Center TX 1,424 -- 22 1,424 1,446 365 1970 1990
Eagle Lake TX 1,833 -- 25 1,833 1,858 470 1972 1990
El Paso TX 1,888 -- 166 1,888 2,054 665 1980 1988
Garland TX 1,619 -- 238 1,619 1,857 415 1970 1990
Gilmer TX 3,033 1,785 248 4,818 5,066 225 1990 1998
Gladewater TX 2,018 -- 125 2,018 2,143 510 1971 1993
Houston TX 4,155 -- 408 4,155 4,563 1,062 1986 1993
Humble TX 1,821 -- 140 1,821 1,961 467 1973 1990
Huntsville TX 1,930 -- 135 1,930 2,065 494 1968 1990
Linden TX 2,520 -- 25 2,520 2,545 637 1968 1993
Marshall TX 865 -- 19 865 884 445 1964 1986
McKinney TX 4,797 -- 1,263 4,797 6,060 133 1967 2000
McKinney TX 1,456 -- 1,318 1,456 2,774 500 1967 1987
Mount Pleasant TX 2,505 -- 40 2,505 2,545 633 1970 1993
Nacogdoches TX 1,104 -- 135 1,104 1,239 283 1973 1990
New Boston TX 2,366 -- 44 2,366 2,410 598 1966 1993
Omaha TX 1,579 -- 28 1,579 1,607 399 1970 1993
San Antonio TX 2,033 -- 32 2,033 2,065 521 1963 1990
San Antonio TX 1,636 -- 221 1,636 1,857 419 1965 1990
Sherman TX 2,075 -- 67 2,075 2,142 525 1971 1993
Texarkana TX 1,244 -- 87 1,244 1,331 512 1983 1986
Waxahachie TX 3,493 -- 319 3,493 3,812 1,172 1976 1987
Annandale VA 7,752 -- 487 7,752 8,239 3,324 1961 1985
Charlottesville VA 4,620 -- 362 4,620 4,982 1,981 1966 1985
Petersburg VA 2,945 -- 94 2,945 3,039 1,262 1977 1985
Petersburg VA 2,215 -- 93 2,215 2,308 949 1973 1985
Battleground WA 2,226 -- 84 2,226 2,310 779 1963 1986
Kennewick WA 4,459 -- 297 4,459 4,756 495 1959 1997
Moses Lake WA 4,307 1,326 304 5,633 5,937 909 1972 1994
Moses Lake WA 2,385 -- 164 2,385 2,549 503 1988 1994
Seattle WA 5,752 -- 1,223 5,752 6,975 935 1993 1994
Shelton WA 4,382 -- 326 4,382 4,708 228 1998 1998
Tacoma WA 1,503 64 575 1,567 2,142 872 1939 1987
Chilton WI 2,275 148 55 2,423 2,478 967 1963 1986
Florence WI 1,529 -- 15 1,529 1,544 630 1970 1986
Green Bay WI 2,255 -- 300 2,255 2,555 929 1968 1986
Sheboygan WI 1,697 -- 219 1,697 1,916 695 1968 1986
Shorewood WI 5,744 368 706 6,112 6,818 2,426 1971 1986
St. Francis WI 535 -- 80 535 615 219 1964 1986
Tomah WI 1,745 128 115 1,873 1,988 774 1974 1985
Wisconsin Dells WI 1,697 -- 81 1,697 1,778 695 1972 1986
-------- ------- ---------- ----------- ----------- --------
434,689 25,217 44,985 459,906 504,891 120,125
-------- ------- ---------- ----------- ----------- --------

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Gross Amount at which Carried at
Initial Cost Costs Close of Period (1)
to Building Capitalized -------------------------------------- Original
and Subsequent to Buildings and Accum. Construction Date
Facility Type and Location Improvements Acquisition Land (2) Improvements Total Depr. Date Acquired
-------------------------- ------------ ------------- ---------- -------------- ----------- ------ ------------ --------

Assisted Living Facilities:
Decatur AL $ 1,825 $ -- $ 1,484 $ 1,825 $ 3,309 $ 222 1987 1996
Hanceville AL 2,447 -- 197 2,447 2,644 265 1996 1996
Benton AR 1,479 489 182 1,968 2,150 109 1988 1998
Chandler AZ 2,753 -- 505 2,753 3,258 166 1998 1998
Mesa AZ 1,391 2,700 519 4,091 4,610 603 1985 1996
Carmichael CA 7,929 755 1,500 8,684 10,184 1,590 1983 1995
Chula Vista CA 6,281 72 950 6,353 7,303 932 1989 1995
Encinitas CA 5,017 126 1,000 5,143 6,143 879 1984 1995
Mission Viejo CA 3,544 89 900 3,633 4,533 578 1985 1995
Novato CA 3,658 403 2,500 4,061 6,561 685 1978 1995
Placentia CA 3,801 184 1,320 3,985 5,305 721 1983 1995
Rancho Cucamonga CA 4,156 269 610 4,425 5,035 692 1987 1995
San Dimas CA 3,577 225 1,700 3,802 5,502 633 1975 1995
San Jose CA 7,252 -- 850 7,252 8,102 499 1998 1998
San Juan Capistrano CA 6,344 235 700 6,579 7,279 934 1985 1995
San Juan Capistrano CA 3,834 172 1,225 4,006 5,231 637 1985 1995
Santa Maria CA 2,649 118 1,500 2,767 4,267 473 1977 1995
Vista CA 3,701 82 350 3,783 4,133 613 1980 1996
Aurora CO 10,119 -- 715 10,119 10,834 443 1999 1999
Aurora CO 7,923 -- 919 7,923 8,842 1,320 1983 1995
Boulder CO 4,811 -- 833 4,811 5,644 601 1985 1995
Boulder CO 4,738 -- 184 4,738 4,922 677 1992 1995
Brighton CO 2,158 -- 210 2,158 2,368 189 1997 1997
Lakewood CO 12,401 -- 604 12,401 13,005 308 2000 2000
Hockessin DE 4,956 -- 345 4,956 5,301 217 1999 1999
Gainesville FL 2,699 -- 356 2,699 3,055 231 1997 1997
Gainsville FL 3,313 -- 310 3,313 3,623 166 1998 1998
Hudson FL 8,139 550 1,665 8,689 10,354 1,176 1987 1996
Jacksonville FL 2,770 -- 226 2,770 2,996 225 1997 1997
Jacksonville FL 2,376 -- 366 2,376 2,742 223 1997 1997
LeHigh Acres FL 2,600 -- 307 2,600 2,907 206 1997 1997
Naples FL 10,797 -- 1,140 10,797 11,937 495 1999 1999
Naples FL 4,084 -- 1,182 4,084 5,266 349 1997 1997
Palm Coast FL 2,580 -- 406 2,580 2,986 193 1997 1997
Panama City FL 2,659 -- 353 2,659 3,012 161 1998 1998
Pensacola FL 5,626 -- 408 5,626 6,034 193 1999 1999
Pensacola FL 1,580 400 170 1,980 2,150 353 1979 1996
Port Charlotte FL 2,655 -- 245 2,655 2,900 221 1997 1997
Punta Gorda FL 2,691 -- 210 2,691 2,901 230 1997 1997
Rotunda FL 2,628 -- 267 2,628 2,895 197 1997 1997
St. Petersburg FL 2,396 985 2,000 3,381 5,381 413 1993 1995
Tallahassee FL 9,084 -- 696 9,084 9,780 290 1999 1999
Travares FL 2,466 -- 156 2,466 2,622 226 1997 1997
Titusville FL 4,706 -- 1,742 4,706 6,448 67 1987 2000
Venice FL 2,535 -- 376 2,535 2,911 201 1997 1997
Boise ID 5,586 5,670 544 11,256 11,800 1,259 1978 1995
Oak Park IL 10,473 -- 603 10,473 11,076 1,047 1993 1997
Carmel IN 3,861 -- 805 3,861 4,666 257 1998 1998

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Assisted Living Facilities (continued):
Lawrence KS $3,822 $ -- $ 932 $ 3,822 $ 4,754 $ 255 1995 1998
Salina KS 2,887 -- 329 2,887 3,216 220 1989 1998
Salina KS 1,921 -- 200 1,921 2,121 180 1996 1997
Topeka KS 2,955 -- 424 2,955 3,379 263 1986 1998
Murray KY 2,547 -- 110 2,547 2,657 200 1998 1998
Mandeville LA 6,553 -- 831 6,553 7,384 191 1999 1999
Pittsfield MA 9,052 197 1,758 9,249 11,007 573 1998 1998
Hagerstown MD 3,785 844 533 4,629 5,162 155 1999 1999
Riverview MI 6,939 67 300 7,006 7,306 1,161 1987 1995
Hickory NC 2,531 -- 385 2,531 2,916 174 1997 1998
Deptford NJ 3,430 -- 655 3,430 4,085 193 1998 1998
Sparks (4) NV 7,278 -- 714 7,278 7,992 546 1993 1997
Sparks (5) NV 5,119 -- 505 5,119 5,624 439 1991 1997
Dayton OH 1,916 -- 270 1,916 2,186 148 1997 1997
Dublin OH 5,793 9 356 5,802 6,158 351 1998 1998
Fairfield OH 1,917 -- 270 1,917 2,187 164 1997 1997
Greenville OH 2,311 -- 215 2,311 2,526 197 1997 1997
Hillard OH 7,056 1,387 652 8,443 9,095 311 1999 1999
Lancaster OH 2,084 -- 350 2,084 2,434 122 1998 1998
Newark OH 2,047 -- 225 2,047 2,272 179 1997 1997
Sharonville OH 4,013 37 225 4,050 4,275 671 1987 1995
Springdale OH 2,092 -- 440 2,092 2,532 170 1997 1997
Urbana OH 2,118 -- 150 2,118 2,268 168 1997 1997
Youngstown OH 2,191 -- 470 2,191 2,661 123 1998 1998
Broken Arrow OK 1,445 -- 178 1,445 1,623 144 1996 1997
Oklahoma City OK 3,897 482 392 4,379 4,771 952 1982 1994
Oklahoma City OK 1,531 -- 175 1,531 1,706 153 1996 1997
Albany OR 3,657 4,531 511 8,188 8,699 1,142 1968 1995
Albany (6) OR 2,465 -- 92 2,465 2,557 411 1984 1995
Forest Grove (7) OR 3,152 -- 401 3,152 3,553 450 1994 1995
Gresham OR 4,647 -- -- 4,647 4,647 664 1988 1995
McMinnville (8) OR 3,976 -- 760 3,976 4,736 497 1989 1995
Medford OR 4,325 -- 314 4,325 4,639 541 1990 1995
Bridgeville PA 8,023 1,077 653 9,100 9,753 368 1999 1999
York PA 3,790 672 413 4,462 4,875 203 1999 1999
East Greenwich RI 8,277 -- 1,200 8,277 9,477 206 2000 2000
Lincoln RI 9,612 -- 477 9,612 10,089 160 2000 2000
Portsmouth RI 9,154 -- 1,200 9,154 10,354 284 1999 1999
Clinton SC 2,560 -- 87 2,560 2,647 144 1997 1998
Columbia SC 2,664 1 210 2,665 2,875 183 1997 1998
Greenwood SC 2,648 -- 107 2,648 2,755 149 1998 1998
Greer SC 2,389 -- 375 2,389 2,764 139 1998 1998
Brentwood TN 2,302 -- 600 2,302 2,902 321 1995 1995
Bristol TN 4,130 807 406 4,937 5,343 210 1999 1999
Germantown TN 4,623 9 755 4,632 5,387 270 1998 1998
Johnson City TN 4,289 687 404 4,976 5,380 177 1999 1999
Murfreesboro TN 4,240 783 499 5,023 5,522 201 1999 1999
Corsicana TX 1,494 -- 117 1,494 1,611 153 1996 1996
Dallas TX 3,500 718 308 4,218 4,526 906 1982 1994
Denton TX 1,425 -- 185 1,425 1,610 145 1996 1996

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Assisted Living Facilities (continued):
Ennis TX $ 1,409 $ -- $ 119 $ 1,409 $ 1,528 $ 144 1996 1996
Houston TX 8,945 -- 985 8,945 9,930 391 1999 1999
Houston TX 7,184 -- 1,089 7,184 8,273 299 1999 1999
Houston TX 7,194 -- 1,235 7,194 8,429 450 1998 1998
Houston TX 7,052 -- 1,089 7,052 8,141 309 1999 1999
Lakeway TX 10,542 -- 579 10,542 11,121 505 1999 1999
Lewisville TX 1,892 -- 260 1,892 2,152 169 1997 1997
Mansfield TX 1,575 -- 225 1,575 1,800 157 1996 1997
Paris TX 1,465 -- 166 1,465 1,631 150 1996 1996
Pearland TX 7,892 -- 493 7,892 8,385 493 1998 1998
Richland Hills TX 2,211 252 65 2,463 2,528 123 1998 1998
Richland Hills TX 1,616 -- 223 1,616 1,839 162 1996 1997
Weatherford TX 1,596 -- 145 1,596 1,741 146 1996 1997
Martinsville VA 3,049 -- 1,001 3,049 4,050 38 2000 2000
Midlothian VA 8,269 -- 650 8,269 8,919 157 2000 2000
Bellevue WA 4,467 -- 766 4,467 5,233 270 1998 1998
Richland WA 6,052 119 172 6,171 6,343 876 1990 1995
Tacoma WA 5,208 -- 403 5,208 5,611 456 1997 1997
Yakima WA 5,248 -- 500 5,248 5,748 384 1998 1998
Menomonee Falls (9) WI 13,190 -- 4,161 13,190 17,351 1,225 1990 1997
West Allis (10) WI 8,117 2,911 682 11,028 11,710 839 1996 1997
Hurricane WV 4,475 830 705 5,305 6,010 152 1999 1999
-------- ------- ---------- ----------- ----------- -------
532,268 29,944 74,166 562,212 636,378 47,587
-------- ------- ---------- ----------- ----------- -------

CCRCs:
Palm Desert CA 9,097 1,730 1,600 10,827 12,427 1,689 1989 1994
Sterling CO 2,715 -- 400 2,715 3,115 611 1979 1994
Lawrenceville GA 10,769 -- 723 10,769 11,492 564 1988 1998
Andover (11) KS 12,517 -- 687 12,517 13,204 1,187 1987 1997
Norton MA 8,272 4,669 1,351 12,941 14,292 853 1968 1996
Trenton TN 3,004 -- 174 3,004 3,178 25 1974 2000
College Station TX 6,008 125 833 6,133 6,966 723 1994 1998
Corpus Christi TX 14,929 13,593 1,848 28,522 30,370 2,331 1985 1997
Glendale (12) WI 22,905 -- 3,824 22,905 26,729 2,051 1988 1997
Waukesha (13) WI 28,562 1,827 7,233 30,389 37,622 3,074 1973 1997
-------- ------- ---------- ----------- ----------- -------
118,778 21,944 18,673 140,722 159,395 13,108
-------- ------- ---------- ----------- ----------- -------
RCFE's:
Murrietta CA 144 -- 35 144 179 47 1990 1998
Murrietta CA 118 -- 28 118 146 8 1990 1998
-------- ------- ---------- ----------- ----------- -------
262 -- 63 262 325 55
-------- ------- ---------- ----------- ----------- -------
Rehab:
Scottsdale AZ 5,874 -- 242 5,874 6,116 1,848 1986 1988
Tucson AZ 9,435 -- 1,275 9,435 10,710 2,015 1992 1992
-------- ------- ---------- ----------- ----------- -------
15,309 -- 1,517 15,309 16,826 3,863
-------- ------- ---------- ----------- ----------- -------
Clinic:
Heflin AL 2,100 85 248 2,185 2,433 1,451 1997 1997
-------- ------- ---------- ----------- ----------- -------

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Gross Amount at which Carried at
Close of Period (1)
Initial Cost Costs --------------------------------
to Building Capitalized Buildings Original
and Subsequent to and Accum. Construction Date
Facility Type and Location Improvements Acquisition Land (2) Improvements Total Depr. Date Acquired
-------------------------- ------------ ------------- -------- ------------ ---------- -------- ------------ --------

Land:
Florence KY $ -- $ -- $ 578 $ -- $ 578 $ --
Derry NH 98 -- 638 98 736 --
Akron OH 1,506 -- 253 1,506 1,759 16
Bastrop TX 210 -- 600 210 810 1
---------- ------- -------- ---------- ---------- --------
1,814 -- 2,069 1,814 3,883 17
---------- ------- -------- ---------- ---------- --------
Construction in Progress 8,478 -- 1,000 8,478 9,478 --
---------- ------- -------- ---------- ---------- --------
GRAND TOTAL $1,113,698 $77,190 $142,721 $1,190,888 $1,333,609 $186,206
========== ======= ======== ========== ========== ========

-------
(1) Also represents the approximate cost for Federal income tax purposes.

(2) Gross amount at which land is carried at close of period also represents
initial cost to the Company.

(3) Real estate is security for notes payable in the aggregate of $2,185,000
at 12/31/00.

(4) Real estate is security for notes payable in the aggregate of $3,085,000
at 12/31/00.

(5) Real estate is security for notes payable in the aggregate of $3,545,000
at 12/31/00.

(6) Real estate is security for notes payable in the aggregate of $2,053,000
at 12/31/00.

(7) Real estate is security for notes payable in the aggregate of $3,305,000
at 12/31/00.

(8) Real estate is security for notes payable in the aggregate of $3,485,000
at 12/31/00.

(9) Real estate is security for notes payable in the aggregate of $10,418,000
at 12/31/00.

(10) Real estate is security for notes payable in the aggregate of $8,103,000
at 12/31/00.

(11) Real estate is security for notes payable in the aggregate of $2,500,000
at 12/31/00.

(12) Real estate is security for notes payable in the aggregate of $12,898,000
at 12/31/00.

(13) Real estate is security for notes payable in the aggregate of $11,280,000
at 12/31/00.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION
NATIONWIDE HEALTH PROPERTIES, INC.
December 31, 2000
(Dollar amounts in thousands)

Real
Estate Accumulated
Properties Depreciation
---------- ------------
(in thousands)

Balances at December 31, 1997:......................... $ 960,531 $107,077
---------- --------
Acquisitions......................................... 261,702 26,193
Improvements......................................... 26,800 1,016
Reclassifications.................................... 3,500 --
Impairment of long-lived assets...................... (5,000) --
Sales................................................ (4,145) (970)

Balances at December 31, 1998:......................... 1,243,388 133,316
---------- --------
Acquisitions......................................... 99,572 33,876
Improvements......................................... 11,100 1,381
Reclassifications.................................... 7,300 --
Sales................................................ (29,987) (5,902)
---------- --------

Balances at December 31, 1999:......................... 1,331,373 162,671
---------- --------
Acquisitions......................................... 21,547 33,293
Improvements......................................... 15,114 2,364
Reclassifications.................................... 10,851 --
Sales................................................ (45,276) (12,122)
---------- --------

Balances at December 31, 2000:......................... $1,333,609 $186,206
========== ========

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant.

Incorporated herein by reference to the information under the caption
"Election of Directors" in the Company's definitive proxy statement for the
Annual Meeting of Stockholders to be held on April 20, 2001, filed or to be
filed pursuant to Regulation 14A.

Item 11. Executive Compensation.

Incorporated herein by reference to the information under the caption
"Executive Compensation" in the Company's definitive proxy statement for the
Annual Meeting of Stockholders to be held on April 20, 2001, filed or to be
filed pursuant to Regulation 14A.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Incorporated herein by reference to the information under the caption "Stock
Ownership" in the Company's definitive proxy statement for the Annual Meeting
of Stockholders to be held on April 20, 2001, filed or to be filed pursuant to
Regulation 14A.

Item 13. Certain Relationships and Related Transactions.

Incorporated herein by reference to the information under the captions
"Certain Relationships and Related Transactions" and "Compensation Committee
Interlocks and Insider Participation" in the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held on April 20, 2001,
filed or to be filed pursuant to Regulation 14A.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)(1) Financial Statements.

Report of Independent Public Accountants.................................. 23
Consolidated Balance Sheets at December 31, 2000 and 1999................. 24
Consolidated Statements of Operations for the years ended December 31,
2000, 1999 and 1998 ..................................................... 25
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2000, 1999 and 1998......................................... 26
Consolidated Statements of Cash Flows for the years ended December 31,
2000, 1999 and 1998 ..................................................... 27
Notes to Consolidated Financial Statements................................ 28

(2) Financial Statement Schedules

Report of Independent Public Accountants.................................. 43
Schedule III Real Estate and Accumulated Depreciation..................... 44

(b) Reports on Form 8-K

A form 8-K dated December 14, 2000 was filed with respect to the default
under two master leases by Balanced Care Corporation ("Balanced Care"). The
filing stated that Balanced Care proposed certain rent concessions, but the
Company was unwilling to accept any rent concessions and would proceed with all
available legal remedies.

Exhibit No. Description
----------- -----------

Plan of Acquisition, Reorganization, Arrangement, Liquidation or
2. Succession

2.1 Agreement to Merge, dated August 19, 1997, among the Company,
Laureate Investments, Inc. and Laureate Properties, Inc., filed as
Exhibit 2.1 to the Company's Form 8-K dated October 7, 1997, and
incorporated herein by this reference.

3. Articles of Incorporation and Bylaws

3.1(a) Restated Articles of Incorporation, filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-11 (No. 33-1128),
effective December 19, 1985, and incorporated herein by this
reference.

3.1(b) Articles of Amendment of Amended and Restated Articles of
Incorporation of the Company, filed as Exhibit 3.1 to the
Company's Form 10-Q for the quarter ended March 31, 1989, and
incorporated herein by this reference.

3.1(c) Articles of Amendment of Amended and Restated Articles of
Incorporation of the Company, filed as Exhibit 3.1(c) to the
Company's Registration Statement on Form S-11 (No. 33-32251),
effective January 23, 1990, and incorporated herein by this
reference.

3.1(d) Articles of Amendment of Amended and Restated Articles of
Incorporation of the Company, filed as Exhibit 3.1(d) to the
Company's Form 10-K for the year ended December 31, 1994, and
incorporated herein by this reference.

3.1(e) Articles Supplementary to the Registrant's Amended and Restated
Articles of Incorporation, dated September 24, 1997, filed as
Exhibit 3.1 to the Company's Form 8-K dated September 24, 1997,
and incorporated herein by this reference.

3.2 Bylaws of the Company as amended January 19, 1996, filed as
Exhibit 3.2 to the Company's Form 10-K for the year ended December
31, 1995, and incorporated herein by this reference.

3.3 Amended and Restated Bylaws of the Company, filed as Exhibit 3.1
to the Company's Form 10-Q for the quarter ended September 30,
1998, and incorporated herein by this reference.

4. Instruments Defining Rights of Security Holders, Including
Indentures

4.1 Indenture dated as of November 16, 1992, between Nationwide Health
Properties, Inc., Issuer to The Chase Manhattan Bank (National
Association), Trustee, filed as Exhibit 4.1 to the Company's
Form S-3 (No. 33-54870) dated November 24, 1992, and incorporated
herein by this reference.

4.2 Indenture dated as of June 30, 1993, between the Company and First
Interstate Bank of California, as Trustee, filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-3 (No. 33-64798),
effective July 12, 1993, and incorporated herein by this
reference.

4.3 First Supplemental Indenture dated November 15, 1993, between the
Company and First Interstate Bank of California, as Trustee, filed
as Exhibit 4.1 to the Company's Form 8-K dated November 15, 1993,
and incorporated by reference herein.

4.4 Indenture dated as of January 12, 1996, between the Company and
The Bank of New York, as Trustee, filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (No 33-65423) dated
December 27, 1995, and incorporated herein by this reference.

4.5 Indenture dated as of January 13, 1999, between the Company and
Chase Manhattan Bank and Trust Company, National Association, as
Trustee, filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-3 (No. 333-70707) dated January 15, 1999, and
incorporated herein by this reference.

10. Material Contracts

10.1 Master Lease Document--General Terms and Conditions dated December
30, 1985, for Leases between various subsidiaries of Beverly as
Lessees and the Company as Lessor, filed as Exhibit 10.3 to the
Company's Form 10-K for the year ended December 31, 1985, and
incorporated herein by this reference.

Exhibit No. Description
----------- -----------

10.2 1989 Stock Option Plan of the Company as Amended and Restated
January 19, 1996, filed as Exhibit 10.6 to the Company's 10-K for
the year ended December 31, 1996, and incorporated herein by this
reference.

10.2(a) Amended Stock Option Plan filed as Exhibit 10.1 to the Company's
Form 10-Q for the quarter ended September 30, 1999, and
incorporated herein by this reference.

10.3 The Company's Retirement Plan for Directors effective July 26,
1991 filed as Exhibit 10.13 to the Company's Form 10-K for the
year ended December 31, 1991, and incorporated herein by this
reference.

10.4 Deferred Compensation Plan of the Company effective September 1,
1991 filed as Exhibit 10.14 to the Company's Form 10-K for the
year ended December 31, 1991, and incorporated herein by this
reference.

10.5 Commercial and Multi-family Mortgage Loan Sale Agreement dated as
of June 5, 1992 by and between Resolution Trust Corporation, as
Receiver, and Nationwide Health Properties, Inc. filed as Exhibit
A to the Company's Form 8-K dated May 29, 1992, and incorporated
herein by this reference.

10.6 Amended and Restated Credit Agreement dated as of July 27, 1999
between the Company and Wells Fargo Bank National Association,
Bank of America, N.A., The Bank of New York and KBC Bank N.V.
filed as Exhibit 10.2 to the Company's Form 10-Q for the quarter
ended June 30, 1999, and incorporated herein by this reference.

10.7 Amendment Number One to Amended and Restated Credit Agreement
dated as of May 15, 2000 filed as Exhibit 10.1 to the Company's
Form 10-Q for the quarter ended June 30, 2000 and incorporated
herein by this reference.

10.8 Form of Indemnity Agreement between officers and directors of the
Company including John C. Argue, David R. Banks, Sam A. Brooks,
Jr., William K. Doyle, Charles D. Miller and Jack D. Samuelson, R.
Bruce Andrews, Mark L. Desmond, Stephen J. Insoft, Don M. Pearson,
Gary E. Stark, and T. Andrew Stokes, and John J. Sheehan, Jr.,
filed as Exhibit 10.11 to the Company's Form 10-K for the year
ended December 31, 1995, and incorporated herein by this
reference.

10.9 Executive Employment Security Policy, filed as Exhibit 10.12 to
the Company's Form 10-K for the year ended December 31, 1995, and
incorporated herein by this reference.

10.10 Employment agreement entered into by and between Nationwide Health
Properties, Inc. and R. Bruce Andrews dated as of February 25,
1998, filed as Exhibit 10.13 to the Company's Form 10-K for the
year ended December 31, 1998, and incorporated herein by this
reference.

10.11 Employment agreement entered into by and between Nationwide Health
Properties, Inc. and T. Andrew Stokes dated as of February 25,
1998, filed as Exhibit 10.14 to the Company's Form 10-K for the
year ended December 31, 1998 and incorporate herein by this
reference.

10.11(a) First Amendment to Employment Agreement of T. Andrew Stokes dated
as of January 19, 2001.

10.12 Employment agreement entered into by and between Nationwide Health
Properties, Inc. and Mark L. Desmond dated as of February 25,
1998, filed as Exhibit 10.15 to the Company's Form 10-K for the
year ended December 31, 1998, and incorporated herein by this
reference.

10.12(a) First Amendment to Employment Agreement of Mark L. Desmond dated
as of January 19, 2001.

10.13 Settlement and Amendment Agreement between Beverly Health and
Rehabilitation Services, Inc. and the Company effective as of
January 1, 2000.

21. Subsidiaries of the Company

23. Consents of Experts and Counsel

23.1 Consent of Arthur Andersen LLP

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.

NATIONWIDE HEALTH PROPERTIES, INC.

/s/ R. Bruce Andrews
By: _________________________________
R. Bruce Andrews
President and Chief Executive
Officer

Dated: March 22, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Charles D. Miller Chairman and Director March 22, 2001
____________________________________
Charles D. Miller

/s/ R. Bruce Andrews President, Chief Executive March 22, 2001
____________________________________ Officer and Director
R. Bruce Andrews (Principal Executive
Officer)

/s/ Mark L. Desmond Senior Vice President and March 22, 2001
____________________________________ Chief Financial Officer
Mark L. Desmond (Principal Financial and
Accounting Officer)

/s/ John C. Argue Director March 22, 2001
____________________________________
John C. Argue

/s/ David R. Banks Director March 22, 2001
____________________________________
David R. Banks

/s/ William K. Doyle Director March 22, 2001
____________________________________
William K. Doyle

/s/ Jack D. Samuelson Director March 22, 2001
____________________________________
Jack D. Samuelson

APPENDIX 1

BEVERLY ENTERPRISES, INC.

SET FORTH BELOW IS CERTAIN CONDENSED FINANCIAL DATA OF BEVERLY ENTERPRISES,
INC. ("BEVERLY") WHICH IS TAKEN FROM BEVERLY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1999 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT"), AND THE BEVERLY QUARTERLY REPORT ON FORM 10-Q FOR
THE QUARTER ENDED SEPTEMBER 30, 2000 AS FILED WITH THE COMMISSION.

The information and financial data contained herein concerning Beverly was
obtained and has been condensed from Beverly's public filings under the
Exchange Act. The Beverly financial data presented includes only the most
recent interim and fiscal year end reporting periods. The Company can make no
representation as to the accuracy and completeness of Beverly's public filings
but has no reason not to believe the accuracy and completeness of such filings.
It should be noted that Beverly has no duty, contractual or otherwise, to
advise the Company of any events subsequent to such dates which might affect
the significance or accuracy of such information.

Beverly is subject to the information filing requirements of the Exchange
Act, and in accordance therewith, is obligated to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information may be inspected at the offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and should also be available at the
following Regional Offices of the Commission: 7 World Trade Center, New York,
N.Y. 10048, and 500 West Madison Street, Suite 1400, Chicago, IL 60661. Such
reports and other information concerning Beverly can also be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, Room 1102, New
York, New York 10005.

I-1

BEVERLY ENTERPRISES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

September 30, December 31,
2000 1999
------------- ------------

Total current assets................................. $ 488,661 $ 493,796
Property and equipment, net.......................... 1,082,763 1,110,065
Total other assets................................... 372,439 379,019
---------- ----------
Total assets ...................................... $1,943,863 $1,982,880
========== ==========

Total current liabilities............................ $ 385,148 $ 388,054
Long-term debt....................................... 718,008 746,164
Other liabilities and deferred items................. 210,074 207,538
Total stockholders' equity........................... 630,633 641,124
---------- ----------
Total liabilities and stockholders' equity......... $1,943,863 $1,982,880
========== ==========

I-2

BEVERLY ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)

Nine months
ended Years ended December 31,
September 30, --------------------------
2000 1999 1998
------------- ------------ ------------

Revenues............................. $1,968,704 $ 2,551,007 $ 2,822,940
Costs and expenses:
Operating and administrative....... 1,838,696 2,354,328 2,633,135
Interest........................... 59,942 72,578 65,938
Depreciation and amortization...... 75,171 99,160 93,722
Workforce reductions, asset
impairments, transaction costs and
other unusual items............... 4,627 23,818 69,443
Year 2000 remediation.............. -- 12,402 9,719
Investigation costs................ -- 202,447 1,865
---------- ------------ ------------
1,978,436 2,764,733 2,873,822
Income (loss) before provision for
income taxes and extraordinary
charge.............................. (9,732) (213,726) (50,882)
Provision for (benefit from) income
taxes............................... (2,044) (79,079) (25,936)
---------- ------------ ------------
Income (loss) before extraordinary
charge and cumulative effect of
change in accounting................ (7,688) (134,647) (24,946)
---------- ------------ ------------
Extraordinary charge, net of income
taxes............................... -- -- (1,660)
Cumulative effect of change in
accounting, net of income taxes..... (4,415)
---------- ------------ ------------
Net income (loss).................... $ (7,688) $ (134,647) $ (31,021)
========== ============ ============
Income (loss) per share of common
stock:
Basic and diluted:
Before extraordinary charge and
cumulative effect of change in
accounting....................... $ (.08) $ (1.31) $ (.24)
Extraordinary charge.............. -- -- (.02)
Cumulative effect of change in
accounting....................... -- -- (.04)
---------- ------------ ------------
Net income per share............... $ (.08) $ (1.31) $ (.30)
========== ============ ============
Shares used to compute per share
amounts............................. 102,027 102,491 103,762
========== ============ ============

I-3

BEVERLY ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Nine months Years ended
Ended December 31,
September 30, --------------------
2000 1999 1998
------------- --------- ---------

Cash flows from operating activities:
Net income (loss)........................ $(7,688) $(134,647) $ (31,021)
------- --------- ---------

Adjustments to reconcile net income to
net cash
provided by operating activities........ 42,829 323,788 37,810
------- --------- ---------

Net cash provided by operating
activities............................... 35,141 189,141 6,789
------- --------- ---------

Net cash provided by (used for) investing
activities............................... (40,961) (71,537) (230,586)
------- --------- ---------

Net cash provided by (used for) financing
activities............................... (4,418) (110,230) 135,845
------- --------- ---------

Net increase (decrease) in cash and cash
equivalents.............................. (10,238) 7,374 (87,952)
Cash and cash equivalents at beginning of
period................................... 24,652 17,278 105,230
------- --------- ---------

Cash and cash equivalents at end of
period................................... $14,414 $ 24,652 $ 17,278
======= ========= =========

I-4