Investments           Percentage of         Number of         # Beds/Units                          Investment per
Type of Property                (in thousands)          Investments         Properties          or Sq. Ft.                             metric (1)                                 States
Independent living/CCRCs       $      1,143,074                  19.3 %              62                7,410          units         $        172,012           per unit                 20
Assisted living facilities            1,225,632                  20.6 %             187               11,466          units                  115,765           per unit                 30
Skilled nursing facilities            1,595,342                  26.8 %             226               30,702           beds                   52,460            per bed                 27
Specialty care facilities               583,616                   9.8 %              28                1,629           beds                  507,430            per bed                 13
Medical office buildings              1,395,181                  23.5 %             129            5,667,516         sq. ft.                     264          per sq. ft.               23

Totals                         $      5,942,845                 100.0 %             632

(1) Investment per metric was computed by using the total committed investment amount of $6,535,360,000, which includes net real estate investments and unfunded construction commitments for which initial funding has commenced which amounted to $5,942,845,000 and $592,515,000, respectively.

Health Care Industry
The demand for health care services, and consequently health care properties, is projected to reach unprecedented levels in the near future. The Centers for Medicare and Medicaid Services projects that national health expenditures will rise to $3.8 trillion in 2015 or 18.8% of gross domestic product ("GDP"). This is up from $2 trillion or 15.9% of GDP in 2005. Health expenditures per capita are projected to rise 5.8% per year from 2005 to 2015. While demographics are the primary driver of demand, economic conditions and availability of services contribute to health care service utilization rates. We believe the health care property market is less susceptible to fluctuations and economic downturns relative to other property sectors. Investor interest in the market remains strong, especially in specific sectors such as medical office buildings, regardless of the current stringent lending environment. As a REIT, we believe we are situated to benefit from any turbulence in the capital markets due to our access to capital.
The total U.S. population is projected to increase by 19% through 2030. The elderly are an important component of health care utilization, especially independent living services, assisted living services, skilled nursing services, inpatient and outpatient hospital services and physician ambulatory care. The elderly population aged 65 and over is projected to increase by 81% through 2030. Most health care services are provided within a health care facility such as a hospital, a physician's office or a senior housing facility. Therefore, we believe there will be continued demand for companies such as ours with expertise in health care real estate.

The following chart illustrates the projected increase in the elderly population aged 65 and over:
[[Image Removed: (BAR GRAPH)]]
Source: U.S. Census Bureau
Health care real estate investment opportunities tend to increase as demand for health care services increases. We recognize the need for health care real estate as it correlates to health care service demand. Health care providers require real estate to house their businesses and expand their services. We believe that investment opportunities in health care real estate will continue to be present due to the:
• Specialized nature of the industry which enhances the credibility and experience of our company;

• Projected population growth combined with stable or increasing health care utilization rates which ensures demand; and

• On-going merger and acquisition activity.

Economic Outlook
Beginning in late 2007 and throughout 2008, the U.S. and global economy entered a serious recession. The current economic environment is characterized by a severe residential housing slump, depressed commercial real estate valuations, weakened consumer confidence, rising unemployment and concerns regarding inflation, deflation and stagflation. Numerous financial systems around the globe have become illiquid and banks have become less willing to lend to other banks and borrowers. Further, capital markets have become and remain volatile as risk is repriced and investments are revalued. Uncertainty remains in terms of the depth and duration of these adverse economic conditions.
The conditions described above have created an environment of limited capital availability and increasing capital costs. This was most evident in the credit markets, where lending institutions cut back on loans, tightened credit standards and significantly increased interest rate spreads. The equity markets were characterized by sporadic accessibility until late 2008, when share prices in most sectors declined significantly. Continued volatility in the capital markets could limit our ability to access debt or equity funds which, in turn, could impact our ability to finance future investments and react to changing economic and business conditions. This difficult operating environment also may make it more difficult for some of our operators/tenants to meet their obligations to us.
During 2008, our focus gradually shifted from investment to capital preservation. To that end, our efforts in 2009 will be directed towards:
liquidity, portfolio management and investment rationalization.
• Liquidity. Liquidity has become increasingly important and we have concentrated our efforts on further strengthening our balance sheet. We raised over $1 billion in funds during 2008 from a combination of three common stock offerings, our dividend reinvestment plan, our new equity shelf program, property sales and loan payoffs. We generated an additional $284.7 million from these sources during the three months ended March 31, 2009. As always, we will continue to closely monitor the credit and capital markets for opportunities to raise reasonably priced capital.

• Portfolio Management. Our investment approach has produced a portfolio that is very diverse with strong property level payment coverages. Yet, today's adverse economic conditions can negatively impact even the strongest portfolio. Our portfolio management program is designed to maintain our portfolio's strength through a combination of extensive industry research, stringent origination and underwriting protocols and a rigorous asset management process.

• Investment Strategy. For the short-term, we expect to fund our ongoing development projects and will evaluate new investments selectively and only when funding sources are clearly identified. However, we will continue to strengthen our existing customer relationships and begin to cultivate new relationships. As we begin 2009, we remain focused on preserving liquidity, but we intend to take advantage of what we believe will be increasingly attractive investment opportunities over time.

Business Strategy
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in rental and interest income and portfolio growth. To meet these objectives, we invest across a broad spectrum of senior housing and health care real estate and diversify our investment portfolio by property type, operator/tenant and geographic location.
Substantially all of our revenues and sources of cash flows from operations are derived from operating lease rentals and interest earned on outstanding loans receivable. These items represent our primary source of liquidity to fund distributions and are dependent upon our obligors' continued ability to make contractual rent and interest payments to us. To the extent that our obligors experience operating difficulties and are unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property and operator/tenant. Our asset management process includes review of monthly financial statements, periodic review of obligor credit, periodic property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. In monitoring our portfolio, our personnel use a proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive research to ascertain industry trends and risks. Through these asset management and research efforts, we are typically able to intervene at an early stage to address payment risk, and in so doing, support both the collectibility of revenue and the value of our investment.
With respect to our investment properties, we also structure our investments to help mitigate payment risk. Operating leases and loans are normally credit enhanced by guaranties and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other loans, operating leases or agreements between us and the obligor and its affiliates.
For the three months ended March 31, 2009, rental income and interest income represented 92% and 7%, respectively, of total gross revenues (including revenues from discontinued operations). Substantially all of our operating leases are designed with either fixed or contingent escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectibility assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments.
Depending upon the availability and cost of external capital, we anticipate investing in additional properties. New investments are generally funded from temporary borrowings under our unsecured line of credit arrangement, internally generated cash and the proceeds from sales of real property. Our investments generate internal cash from rent and interest receipts and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under the unsecured line of credit arrangement, is expected to be provided through a combination of public and private offerings of debt and equity securities and the incurrence or assumption of secured debt. We believe our liquidity and various sources of available capital are sufficient to fund operations, meet debt service obligations (both principal and interest), make dividend distributions and finance future investments.
Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. During the three months ended March 31, 2009, we completed $173,764,000 of gross investments and $44,268,000 of investment payoffs, resulting in $129,496,000 of net new investments. We expect to complete gross new investments of approximately $600,000,000 during 2009, comprised of funded new development. We anticipate the sale of real property and the repayment of loans receivable totaling approximately $200,000,000 to $300,000,000 resulting in net new investments of approximately $300,000,000 to $400,000,000 during 2009. It is possible that additional loan repayments or sales of real property may occur in the future. To the extent that loan repayments and real property sales exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any loan repayments and real property sales in new investments. To the extent that new investment requirements exceed our available cash on hand, we expect to borrow under our unsecured line of credit arrangement. At March 31, 2009, we had $19,180,000 of cash and cash equivalents, $16,358,000 of restricted cash and $815,000,000 of available borrowing capacity under our unsecured line of credit arrangement.

Key Transactions in 2009
We have completed the following key transactions to date in 2009:
• our Board of Directors approved a quarterly cash dividend of $0.68 per share, which is consistent with the quarterly dividend paid for 2008. The dividend declared for the quarter ended March 31, 2009 represents the 152nd consecutive quarterly dividend payment;

• we completed $173,764,000 of gross investments and had $44,268,000 of investment payoffs during the three months ended March 31, 2009;

• we were added to the S&P 500 Index in January 2009;

• we closed a public offering of 5,816,870 shares of common stock with net proceeds of approximately $210,911,000 in February 2009; and

• we completed a $133,000,000 first mortgage loan secured by 12 senior housing properties with multiple levels of service in April 2009. The 10-year debt has a fixed interest rate of 6.10%. KeyBank Capital Markets, Inc. originated the loan and intends to sell it to Freddie Mac.

Key Performance Indicators, Trends and Uncertainties We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, concentration risk and credit strength. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions and for budget planning purposes.
Operating Performance. We believe that net income attributable to common stockholders ("NICS") is the most appropriate earnings measure. Other useful supplemental measures of our operating performance include funds from operations ("FFO") and net operating income ("NOI"); however, these supplemental measures are not defined by U.S. generally accepted accounting principles ("U.S. GAAP"). Please refer to the section entitled "Non-GAAP Financial Measures" for further discussion and reconciliations of FFO and NOI. These earnings measures and their relative per share amounts are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies. The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands, except per share data):

                                                                             Three Months Ended
                                        March 31,          June 30,           September 30,          December 31,          March 31,
                                          2008               2008                 2008                   2008                2009

Net income attributable to
common stockholders                    $  29,249          $ 155,410          $      53,589          $     21,850          $  61,119
Funds from operations                     68,710             76,785                 82,573                30,799             85,322
Net operating income                     124,607            129,495                135,126               136,907            134,819

Per share data (fully diluted):
Net income attributable to
common stockholders                    $    0.34          $    1.73          $        0.55          $       0.21          $    0.56
Funds from operations                       0.79               0.85                   0.85                  0.30               0.79

Credit Strength. We measure our credit strength both in terms of leverage ratios and coverage ratios. Our leverage ratios include debt to book capitalization and debt to market capitalization. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt. The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain investment grade ratings with Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Ratings. The coverage ratios are based on earnings before interest, taxes, depreciation and amortization ("EBITDA") which is discussed in further detail, and reconciled to net income, below in "Non-GAAP Financial Measures." Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented:

                                                                          Three Months Ended
                                       March 31,          June 30,         September 30,         December 31,        March 31,
                                          2008              2008                2008                 2008               2009

Debt to book capitalization
ratio                                        52 %              53 %                  45 %                47 %              43 %
Debt to undepreciated book
capitalization ratio                         47 %              49 %                  41 %                43 %              39 %
Debt to market capitalization
ratio                                        39 %              41 %                  31 %                38 %              41 %

Interest coverage ratio                    2.86 x            6.17 x                3.50 x              2.70 x            3.88 x
Fixed charge coverage ratio                2.37 x            5.15 x                2.91 x              2.24 x            3.18 x

Concentration Risk. We evaluate our concentration risk in terms of asset mix, investment mix, customer mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our investments could be at risk if certain sectors were to experience downturns. Asset mix measures the portion of our investments that are real property. In order to qualify as an equity REIT, at least 75% of our real estate investments must be real property whereby each property, which includes the land, buildings, improvements, intangibles and related rights, is owned by us and leased to a tenant pursuant to a long-term operating lease. Investment mix measures the portion of our investments that relate to our various property types. Customer mix measures the portion of our investments that relate to our top five customers. Geographic mix measures the portion of our investments that relate to our top five states. The following table reflects our recent historical trends of concentration risk for the periods presented:

                                         March 31,         June 30,         September 30,         December 31,        March 31,
                                            2008             2008               2008                  2008               2009

Asset mix:
Real property                                  92 %            91 %                 91 %                 92 %               92 %
Real estate loans receivable                    8 %             9 %                  9 %                  8 %                8 %

Investment mix:
Independent living/CCRCs                       16 %            17 %                 18 %                 19 %               19 %
Assisted living facilities                     21 %            21 %                 20 %                 20 %               21 %
Skilled nursing facilities                     31 %            29 %                 28 %                 27 %               27 %
Specialty care facilities                       7 %            10 %                 10 %                 11 %               10 %
Medical office buildings                       25 %            23 %                 24 %                 23 %               23 %

Customer mix:
Senior Living Communities, LLC                  4 %             5 %                  6 %                  6 %                6 %
Signature Healthcare LLC                        6 %             6 %                  6 %                  5 %                5 %
Brookdale Senior Living Inc                     5 %             5 %                  5 %                  5 %                5 %
Life Care Centers of America, Inc.              5 %             5 %                  5 %                  5 %                5 %
Emeritus Corporation                            7 %             5 %                  5 %                  4 %                4 %
Remaining customers                            73 %            74 %                 73 %                 75 %               75 %

Geographic mix:
Florida                                        15 %            14 %                 14 %                 14 %               14 %
Texas                                          13 %            12 %                 12 %                 11 %               11 %
California                                      7 %             8 %                  8 %                  8 %                8 %
Massachusetts                                   7 %             7 %                  7 %                  7 %                7 %
Tennessee                                       6 %             6 %                  6 %                  6 %                5 %
Remaining states                               52 %            53 %                 53 %                 54 %               55 %

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in "Forward-Looking Statements and Risk Factors" and other sections of this Quarterly Report on Form 10-Q. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2008, under the headings "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion of these risk factors.

Portfolio Update
   Net operating income. The primary performance measure for our properties is
net operating income ("NOI") as discussed below in "Non-GAAP Financial
Measures." The following table summarizes our net operating income for the
periods indicated (in thousands):

                                                                             Three Months Ended
                                        March 31,          June 30,           September 30,          December 31,          March 31,
                                          2008               2008                 2008                   2008                2009

Net operating income:
Investment properties                  $ 102,321          $ 107,515          $     112,200          $    114,773          $ 112,960
Medical office buildings                  22,076             21,865                 22,351                21,341             21,483
Non-segment/corporate                        210                115                    575                   793                376

Net operating income                   $ 124,607          $ 129,495          $     135,126          $    136,907          $ 134,819

Payment coverage. Payment coverage of the operators in our investment property portfolio continues to remain strong. Our overall payment coverage is at 1.97 times. The table below reflects our recent historical trends of portfolio coverage. Coverage data reflects the 12 months ended for the periods presented. CBMF represents the ratio of our customers' earnings before interest, taxes, depreciation, amortization, rent and management fees to contractual rent or interest due us. CAMF represents the ratio of our customers' earnings before interest, taxes, depreciation, amortization and rent (but after imputed management fees) to contractual rent or interest due us.

                                      December 31, 2006                  December 31, 2007                  December 31, 2008
                                    CBMF             CAMF              CBMF             CAMF              CBMF             CAMF
Independent living/CCRCs            1.39x            1.19x             1.45x            1.23x             1.29x            1.09x
Assisted living facilities          1.56x            1.35x             1.59x            1.37x             1.56x            1.33x
Skilled nursing facilities          2.19x            1.57x             2.26x            1.66x             2.25x            1.64x
Specialty care facilities           2.77x            2.21x             2.64x            2.07x             2.36x            1.95x

Weighted averages                   1.94x            1.51x             1.99x            1.55x             1.97x            1.53x

Corporate Governance
Maintaining investor confidence and trust has become increasingly important in today's business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of . . .