Health Care REITs

Nationwide Health Properties

The Company

In addition to the macro characteristics of the health care industry, like the fact that health care is largely recession resistant and that the over 80 age group is the fastest growing segment of the population, numerous sub-groups within the industry are experiencing favorable trends as well. Historically, overbuilding has not been a problem with respect to nursing homes, due to the need for a "certificate of need" (CON) license in most states. This is because private payments account for only 10-15% of the revenues in a skilled nursing facility.

This is in contrast to "assisted living," which are 95-100% private payments, hence there are only 14 states that require a CON for those to be established. The supply and demand characteristics for this segment are extremely high. It is estimated that by the end of 1997, demand for assisted living units will grow to 350,000 units, up from the present supply of 50,000 units. On a national scale the specter of overbuilding in this market is some years away.

Nationwide Health Properties <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NHP)") else Response.Write("(NYSE: NHP)") end if %> is well positioned in this market going forward. The company is a hybrid REIT, providing both leaseback and loan financing. As of December 31, 1996, the company had investments in 231 facilities located in 30 states. The facilities include 183 long-term health care facilities, 46 assisted living facilities, and two rehabilitation hospitals.

Latest Financials

Funds From Operations for the second quarter ending June 30, 1997, increased 7% on a per share basis to $19,608,000 or $0.47 per share, compared with $17,153,000, or $0.44 per share in the second quarter of 1996. Net income increased to $14,914,000 or $0.36 per share, compared with $13,009,000 or $0.33 per share for the second quarter a year ago. Revenues for the quarter increased 17% to $27,198,000 compared with the second quarter of last year.

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