10-K

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

FORM 10-K

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

For the fiscal year ended December 31, 2005
Commission File No. 1-8923

HEALTH CARE REIT, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	34-1096634 (I.R.S. Employer Identification Number)
One SeaGate, Suite 1500, Toledo, Ohio (Address of principal executive office)	43604 (Zip Code)

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

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

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $1.00 par value	New York Stock Exchange
7.875% Series D Cumulative Redeemable Preferred Stock, $1.00 par value	New York Stock Exchange
7.625% Series F Cumulative Redeemable Preferred Stock, $1.00 par value	New York Stock Exchange

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes o     No þ

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; and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

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 of this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ     Accelerated filer o     Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

The aggregate market value of the shares of voting common stock held by non-affiliates of the registrant, computed by reference to the closing sales price of such shares on the New York Stock Exchange as of the last business day of the registrant’s most recently completed second fiscal quarter was $2,031,053,494.

As of February 28, 2006, there were 58,634,601 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the annual stockholders’ meeting to be held May 4, 2006, are incorporated by reference into Part III.

HEALTH CARE REIT, INC.
2005 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page
PART I
Item  1.	Business		3
Item  1A.	Risk Factors		25
Item  1B.	Unresolved Staff Comments		29
Item  2.	Properties		30
Item  3.	Legal Proceedings		32
Item  4.	Submission of Matters to a Vote of Security Holders		32
PART II
Item  5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		33
Item  6.	Selected Financial Data		34
Item  7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Item  7A.	Quantitative and Qualitative Disclosures About Market Risk		56
Item  8.	Financial Statements and Supplementary Data		57
Item  9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		81
Item  9A.	Controls and Procedures		81
Item  9B.	Other Information		83
PART III
Item 10.	Directors and Executive Officers of the Registrant		83
Item 11.	Executive Compensation		83
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		83
Item 13.	Certain Relationships and Related Transactions		83
Item 14.	Principal Accounting Fees and Services		83
PART IV
Item 15.	Exhibits and Financial Statement Schedules		84
Exhibit 10.18 Form of Stock Option Agreement (with Dividend Equivalent Rights) for the Chief Exective Officer under the 2005 Long-Term Incentive Plan
Exhibit 10.19 Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan
Exhibit 10.20 Form of Stock Option Agreement (without Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan
Exhibit 10.21 Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan
Exhibit 10.22 Form of Restricted Stock Agreement for the Chief Executive Officer under the 2005 Long-Term Incentive Plan
Exhibit 10.23 Form of Restricted Stock Agreement for Executive Officers under the 2005 Long-Term Incentive Plan
Exhibit 10.24 Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2005 Long-Term Incentive Plan
Exhibit 10.34 Summary of Executive Compensation Program
Exhibit 10.35 Summary of Director Compensation
Exhibit 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Exhibit 21 Subsidiaries of the Company
Exhibit 23 Consent of Ernst & Young LLP, independent registered public accounting firm
Exhibit 24 Powers of Attorney
Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
Exhibit 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
Exhibit 32.1 Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer
Exhibit 32.2 Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer

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PART I

Item 1.   Business

General

Health Care REIT, Inc., a Delaware corporation, is a self-administered, equity real estate investment trust that invests in health care and senior housing facilities. Founded in 1970, we were the first real estate investment trust to invest exclusively in health care facilities. As of December 31, 2005, we had $2,858,429,000 of net real estate investments, inclusive of credit enhancements, in 442 facilities located in 36 states and managed by 54 different operators. At that date, the portfolio included 195 assisted living facilities, 203 skilled nursing facilities, 31 independent living/continuing care retirement communities and 13 specialty care facilities.

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 in properties managed by experienced operators and diversify our investment portfolio by operator and geographic location.

Depending on the availability and cost of external capital, we anticipate investing in additional facilities and entering into operating leases with, and loans to, qualified operators. Capital for future investments may be provided by borrowing under our unsecured lines of credit arrangements, public or private offerings of debt or equity securities, or the incurrence or assumption of secured indebtedness.

References herein to “we,” “us,” “our” or the “Company” refer to Health Care REIT, Inc. and its subsidiaries unless specifically noted otherwise.

Portfolio of Properties

The following table summarizes our portfolio as of December 31, 2005:

	Investments(1)		Percentage of			Revenues(2)		Percentage of			Number of		Number of		Investment per		Number of		Number of
Type of Facility	(in thousands)		Investments			(in thousands)		Revenues			Facilities		Beds/Units		Bed/Unit(3)		Operators(4)		States(4)
Assisted Living Facilities	$	962,620		34	%	$	132,935		46	%		195		11,746	$	83,066		23		31
Skilled Nursing Facilities		1,266,196		44	%		121,986		42	%		203		27,748		45,828		23		29
Independent Living/ CCRCs		425,845		15	%		17,725		6	%		31		4,400		100,872		13		15
Specialty Care Facilities		203,768		7	%		18,508		6	%		13		1,312		155,311		6		7
Totals	$	2,858,429		100	%	$	291,154		100	%		442		45,206

(1)	Investments include real estate investments and credit enhancements which amounted to $2,855,979,000 and $2,450,000, respectively.
(2)	Revenues include gross revenues and revenues from discontinued operations for the year ended December 31, 2005.
(3)	Investment per Bed/Unit was computed by using the total investment amount of $2,894,948,000 which includes real estate investments, credit enhancements and unfunded construction commitments for which initial funding has commenced which amounted to $2,855,979,000, $2,450,000 and $36,519,000, respectively.
(4)	We have investments in properties located in 36 states and managed by 54 different operators.

Property Types

Our primary property investments are skilled nursing facilities, assisted living facilities and independent living/continuing care retirement communities. We also invest in specialty care facilities. Our properties include stand-alone facilities that provide one level of service, combination facilities that provide multiple levels of service and communities or campuses that provide a wide range of services. The following is a summary of our various property types.

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Assisted Living Facilities

Assisted living facilities are state regulated rental properties that provide the same services as independent living facilities, but also provide supportive care from trained employees to residents who require assistance with activities of daily living, including management of medications, bathing, dressing, toileting, ambulating and eating.

Alzheimer’s/Dementia Care Facilities.  Certain assisted living facilities may include state licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or similar forms of dementia.

Skilled Nursing Facilities

Skilled nursing facilities are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement.

Independent Living/Continuing Care Retirement Communities

These communities may include one or more of the following property types:

Continuing Care Retirement Communities.  Continuing care retirement communities include a combination of detached homes, an independent living facility, an assisted living facility and/or a skilled nursing facility on one campus. Resident payment plans vary, but can include entrance fees, condominium fees and rental fees.

Active Adult Communities.  Active adult communities contain primarily for-sale single-family homes, townhomes, cluster homes, mobile homes and/or condominiums with no specialized services. These communities are typically restricted or targeted to adults at least 55 years of age or older. Residents generally lead an independent lifestyle. Communities may include amenities such as a clubhouse, golf course and recreational spaces.

Independent Living Facilities.  Independent living facilities are age-restricted multifamily properties with central dining facilities that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.

Specialty Care Facilities

Our specialty care facilities include acute care hospitals, long-term acute care hospitals and other specialty care hospitals. Acute care hospitals provide a wide range of inpatient and outpatient services, including, but not limited to, surgery, rehabilitation, therapy and clinical laboratories. Long-term acute care hospitals provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than that available in most skilled nursing facilities. Other specialty care hospitals provide specialized inpatient and outpatient services for specific illnesses or diseases, including, among others, orthopedic, neurosurgical and behavioral care.

Investments

We invest in health care and senior housing properties. We diversify our investment portfolio by operator and geographic location. In determining whether to invest in a facility, we focus on the following: (1) the experience of the tenant’s or borrower’s management team; (2) the historical and projected financial and operational performance of the facility; (3) the credit of the tenant or borrower; (4) the security for the lease or loan; and (5) the capital committed to the facility by the tenant or borrower. We conduct market research and analysis for all potential investments. In addition, we review the value of all facilities, the interest rates and covenant requirements of any debt to be assumed and the anticipated sources of repayment of any existing debt that is not to be assumed.

Our investments are primarily real property leased to operators under long-term operating leases or financed with operators under long-term mortgage loans. Construction financing is provided, but only as part of a long-term operating lease or mortgage loan. Substantially all of our investments are designed with escalating rate structures. 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. Operating leases and mortgage loans are normally credit enhanced by guaranties and/or letters of credit. Typically, operating leases are structured

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as master leases and mortgage loans are cross-defaulted and cross-collateralized with other mortgage loans, operating leases or agreements between us and the operator and its affiliates.

At December 31, 2005, 87% of our owned real property was subject to master leases. A master lease is a lease of multiple facilities to one tenant entity under a single lease agreement. From time to time, we may acquire additional facilities that are then leased to the tenant under the master lease. The tenant is required to make one monthly payment that represents rent on all the properties that are subject to the master lease. Typically, the master lease tenant can exercise its right to purchase the facilities or to renew the master lease only with respect to all leased facilities at the same time. This bundling feature benefits us because the tenant cannot limit the purchase or renewal to the better performing facilities and terminate the leasing arrangement with respect to the poorer performing facilities. This spreads our risk among the entire group of facilities within the master lease. The bundling feature may provide a similar advantage if the master lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or reject each of its leases. It is our intent that a tenant in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a facility by facility basis.

We monitor our investments through a variety of methods determined by the type of facility and operator. Our asset management process includes review of monthly financial statements and other operating data for each facility, periodic review of operator creditworthiness, periodic facility 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 facility-specific data. Additionally, we conduct extensive research to ascertain industry trends and risks.

Through asset management and research, we evaluate the operating environment in each facility’s market to determine whether payment risk is likely to increase. When we identify unacceptable levels of payment risk, we seek to mitigate, eliminate or transfer the risk. We categorize the risk as operator, facility or market risk. For operator risk, we typically find a substitute operator to run the facility. For facility risk, we usually work with the operator to institute facility-level management changes to address the risk. Finally, for market risk, we often encourage an operator to change its capital structure, including refinancing the facility or raising additional equity. Through these asset management and research efforts, we are generally 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.

Operating Leases

Each facility, which includes the land, building, improvements and related rights, owned by us is leased to an operator pursuant to a long-term operating lease. As discussed above, most of our leased properties are subject to master leases. These leases generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Each lease is a net lease requiring the tenant to pay rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair, rebuild and maintain the leased properties.

The net value of our completed leased properties aggregated approximately $2,658,019,000 at December 31, 2005. Prior to June 2004, our standard lease structure contained fixed annual rental escalators, which were generally recognized on a straight-line basis over the initial lease period. Beginning in June 2004, our new standard lease structure contains annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. This lease structure initially generates lower revenues and earnings compared to leases with fixed escalators that require straight-lining, but enables us to generate additional organic growth and minimize non-cash straight-line rent over time. This change does not affect our cash flow or our ability to pay dividends.

We currently provide for the construction of facilities for tenants as part of long-term operating leases. We capitalize certain interest costs associated with funds used to pay for the construction of properties owned by us. The amount capitalized is based upon the amount advanced during the construction period using the rate of interest that approximates our cost of financing. Our interest expense is reduced by the amount capitalized. We also typically charge a transaction fee at the commencement of construction. The construction period commences upon funding and terminates upon the earlier of the completion of the applicable facility or the end of a specified period. During the construction period, we advance funds to the operator in accordance with agreed upon terms and conditions

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which require, among other things, site visits by a Company representative prior to advancement of funds. During the construction period, we generally require an additional credit enhancement in the form of payment and performance bonds and/or completion guaranties. At December 31, 2005, we had outstanding construction investments of $3,906,000 for leased properties and were committed to providing additional funds of approximately $36,519,000 to complete construction.

Mortgage Loans

Our investments in mortgage loans are typically structured to provide us with interest income, principal amortization and transaction fees and are generally secured by a first or second mortgage lien or leasehold mortgage. At December 31, 2005, the interest yield (excluding any loans on non-accrual) averaged approximately 9.2% per annum on our outstanding mortgage loan balances. Our yield on mortgage loans depends upon a number of factors, including the stated interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments. The mortgage loans outstanding at December 31, 2005 are generally subject to three to 20-year terms with principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the term. Generally, the mortgage loans provide three to eight years of prepayment protection.

Working Capital Loans

Working capital loans are generally either unsecured or secured by the operator’s leasehold rights, corporate guaranties and/or personal guaranties. These instruments have terms generally ranging from three months to ten years. At December 31, 2005, the average interest yield (excluding any loans on non-accrual) was approximately 10.3% per annum on our outstanding working capital loan balances. At December 31, 2005, we had provided working capital loans to eight operators. Loans that were previously classified as subdebt investments have been reclassified as working capital loans.

Equity Investments

We had an investment in Atlantic Healthcare Finance L.P., a property group that specializes in the financing, through sale and leaseback transactions, of nursing and care homes located in the United Kingdom. This investment was accounted for under the equity method of accounting because we had the ability to exercise significant influence, but not control, over the company due to our 31% ownership interest. In October 2003, we sold our investment in Atlantic Healthcare Finance L.P., generating a net gain of $902,000.

Other equity investments, which consist of investments in private and public companies for which we do not have the ability to exercise influence, are accounted for under the cost method. Under the cost method of accounting, investments in private companies are carried at cost and are adjusted only for other-than-temporary declines in fair value, distributions of earnings and additional investments. For investments in public companies that have readily determinable fair market values, we classify our equity investments as available-for-sale and, accordingly, record these investments at their fair market values with unrealized gains and losses included in accumulated other comprehensive income, a separate component of stockholders’ equity. These investments represent a minimal ownership interest in these companies.

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Borrowing Policies

We utilize a combination of debt and equity to fund the purchase of new properties and to provide loan financing. Our debt and equity levels are determined by management to maintain a conservative credit profile. Generally, we intend to issue unsecured, fixed rate public debt with long-term maturities to approximate the maturities on our leases and loans. For short-term purposes, we may borrow on our unsecured lines of credit arrangements. We replace these borrowings with long-term capital such as senior unsecured notes, common stock or preferred stock. When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. It is our intent to limit secured indebtedness. In our agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.

Operator Concentrations

The following table summarizes certain information about our operator concentrations as of December 31, 2005 (dollars in thousands):

	Number of		Total		Percent of
	Facilities		Investment(1)		Investment(2)
Concentration by investment:
Emeritus Corporation		50	$	362,832		13	%
Merrill Gardens L.L.C.		13		204,907		7	%
Southern Assisted Living, Inc.		43		195,794		7	%
Life Care Centers of America, Inc.		23		195,129		7	%
Commonwealth Communities Holdings LLC		13		190,558		7	%
Remaining operators (49)		300		1,709,209		59	%
Totals		442	$	2,858,429		100	%

	Number of		Total		Percent of
	Facilities		Revenues(3)		Revenue(4)
Concentration by revenue:
Emeritus Corporation		50	$	35,425		12	%
Commonwealth Communities Holdings LLC		13		26,734		9	%
Southern Assisted Living, Inc.		43		24,611		8	%
Home Quality Management, Inc.		30		22,679		8	%
Delta Health Group, Inc.		25		17,096		6	%
Remaining operators (49)		281		164,609		57	%
Totals		442	$	291,154		100	%

(1)	Investments include real estate investments and credit enhancements which amounted to $2,855,979,000 and $2,450,000, respectively.
(2)	Investments with our top five operators comprised 45% of total investments at December 31, 2004.
(3)	Revenues include gross revenues and revenues from discontinued operations for the year ended December 31, 2005.
(4)	Revenues from our top five operators were 46% and 41% for the years ended December 31, 2004 and 2003, respectively.

Competition

We compete with other real estate investment trusts, real estate partnerships, banks, insurance companies, finance companies, government-sponsored agencies, taxable and tax-exempt bond funds and other investors in the acquisition, leasing and financing of health care and senior housing properties. We compete for investments based on a number of factors including rates, financings offered, underwriting criterion and reputation. The operators of our facilities compete on a local and regional basis with operators of facilities that provide comparable services.

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Operators compete for patients and residents based on a number of factors including quality of care, reputation, physical appearance of facilities, services offered, family preferences, physicians, staff and price.

Employees

As of December 31, 2005, we employed 42 full-time employees.

Certain Government Regulations

Health Law Matters — Generally

We invest in assisted living, skilled nursing, independent living/continuing care retirement communities and specialty care facilities, which represented approximately 34%, 44%, 15% and 7%, respectively, of our investments at December 31, 2005.

Typically, operators of assisted living and independent living facilities do not receive significant funding from governmental programs and are regulated by the states, not the federal government. Operators of skilled nursing and specialty care facilities are subject to federal and state laws that regulate the type and quality of the medical and/or nursing care provided, ancillary services (e.g., respiratory, occupational, physical and infusion therapies), qualifications of the administrative personnel and nursing staff, the adequacy of the physical plant and equipment, distribution of pharmaceuticals, reimbursement and rate setting and operating policies. In addition, as described below, some of our facility operators are subject to extensive laws and regulations pertaining to health care fraud and abuse, including kickbacks, physician self-referrals and false claims.

Licensing and Certification

The primary regulations that affect assisted living facilities are the states’ licensing laws. In granting and renewing these licenses, the regulatory authorities consider numerous factors relating to a facility’s physical plant and operations including, but not limited to, admission and discharge standards and staffing and training. A decision to grant or renew a license is also affected by a facility’s record with respect to consumer rights and medication guidelines and rules.

Generally, our skilled nursing and specialty care facilities are required to be licensed on an annual or bi-annual basis and to be certified for participation in the Medicare and Medicaid programs. The failure of our operators to maintain or renew any required license or regulatory approval or the failure to correct serious survey deficiencies could prevent them from continuing operations at a property. In addition, if a facility is found out of compliance with the conditions of participation in Medicare, Medicaid or other health care programs, the facility may be barred from participation in government reimbursement programs. Any of these occurrences may impair the ability of our operators to meet their obligations to us. If we have to replace a facility operator, our ability to replace the operator may be affected by federal and state rules and policies governing changes in control. This may result in payment delays, an inability to find a replacement operator, a significant working capital commitment from us to a new operator or other difficulties.

Reimbursement

Assisted Living Facilities.  Approximately 46% of our revenues for the year ended December 31, 2005, were attributable to assisted living facilities. The majority of the revenues received by the operators of our assisted living facilities are from private pay sources. The remaining revenue source is primarily Medicaid waiver programs. As a part of the Omnibus Budget Reconciliation Act (“OBRA”) of 1981, Congress established a waiver program under Medicaid to offer an alternative to institutional long-term care services. The provisions of OBRA and the subsequent OBRA Acts of 1987 and 1990 allow states flexibility in developing cost-effective alternatives to long-term care, including assisted living and home health. At December 31, 2005, seven of our 23 assisted living operators utilized Medicaid waivers. For the 12 months ended September 30, 2005, approximately 12% of the revenues at our assisted living facilities were from Medicaid reimbursement.

Rates paid by self-pay residents are set by the facilities and are largely determined by local market conditions and operating costs. Generally, facilities receive a higher payment per day for a private pay resident than for a

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Medicaid beneficiary who requires a comparable level of care. The level of Medicaid reimbursement varies from state to state. Thus, the revenues generated by operators of our assisted living facilities may be adversely affected by payor mix, acuity level and changes in Medicaid eligibility and reimbursement levels. Changes in revenues could in turn have a material adverse effect on an operator’s ability to meet its obligations to us.

Skilled Nursing Facilities and Specialty Care Facilities.  Skilled nursing and specialty care facilities typically receive most of their revenues from Medicare and Medicaid, with the balance representing private pay, including private insurance. Consequently, changes in federal or state reimbursement policies may also adversely affect an operator’s ability to cover its expenses, including our rent or debt service. Skilled nursing and specialty care facilities are subject to periodic pre- and post-payment reviews and other audits by federal and state authorities. A review or audit of claims of a facility operator could result in recoupments, denials or delays of payments in the future, which could have a material adverse effect on the operator’s ability to meet its obligations to us. Due to the significant judgments and estimates inherent in payor settlement accounting, no assurance can be given as to the adequacy of any reserves maintained by our facility operators for potential adjustments to reimbursements for payor settlements. Due to budgetary constraints, governmental payors may limit or reduce payments to skilled nursing and specialty care facilities. As a result of government reimbursement programs being subject to such budgetary pressures and legislative and administrative actions, an operator’s ability to meet its obligations to us may be significantly impaired.

Medicare Reimbursement and Skilled Nursing Facilities.  For the 12 months ended September 30, 2005, approximately 29% of the revenues at our skilled nursing facilities (which comprised 42% of our revenues for the year ended December 31, 2005) were from Medicare reimbursement. In an effort to reduce federal spending on health care, the Balanced Budget Act of 1997 (“BBA”) fundamentally altered Medicare payment methodologies for skilled nursing facilities by mandating the institution of the skilled nursing facility prospective payment system. The prospective payment system caused Medicare per diem reimbursement for skilled nursing facility services to decrease. The reductions in Medicare payments resulted in immediate financial difficulties for skilled nursing facilities and caused a number of operators to seek bankruptcy protection. The federal government subsequently passed legislation to lessen the negative financial impact from the prospective payment system. These payment increases have since expired.

Skilled nursing facilities received a 3.1% inflationary market basket increase in Medicare payments for federal fiscal year 2006, which represents $530 million of additional Medicare spending. However, aggregate Medicare expenditures in federal fiscal year 2006 are expected to increase by only $20 million because the market basket increase will be largely offset by the refinement of the resource utilization group (“RUG”) system. Effective January 1, 2006, the Centers for Medicare and Medicaid Services (“CMS”) introduced nine new payment categories, increasing the number of RUGs from 44 to 53. The new categories are intended to compensate providers for the care of medically complex patients. Concurrent with the RUG refinement, CMS increased the rates for all RUGs to reflect variations in non-therapy ancillary costs that were not fully captured in the RUG refinement. This adjustment increases aggregate Medicare payments by roughly 3% and represents a permanent payment increase that will be integrated into the base line spending levels. However, due to a decrease of 6% from the loss of temporary payment adjustments that will cease as a result of the new classification system, the overall increase is only 0.1%. On average, we expect Medicare rates in our portfolio to decrease slightly in 2006. The net impact varies by facility depending on geographical region, RUG distribution, urban versus non-urban location, freestanding versus hospital-based, and the operator’s ability to adapt to the new RUGs.

The moratorium on the therapy caps for Part B outpatient rehabilitation services which had applied through December 31, 2005 expired. The therapy caps were mandated by the BBA. The annual payment cap of $1,740 per patient applies to occupational and physical therapy and a separate $1,740 cap applies to speech therapy. Patients exceeding the cap will be able to obtain additional Medicare coverage if the therapy is deemed medically necessary. Otherwise, the patient would need to use private funds to pay for the cost of therapy above the caps.

Medicare Reimbursement and Specialty Care Facilities.  For the 12 months ended September 30, 2005, approximately 50% of the revenues at our specialty care facilities (which comprised 6% of our revenues for the year ended December 31, 2005) were from Medicare. Specialty care facilities generally are reimbursed by Medicare under either the diagnosis related group prospective payment system reimbursement methodology for inpatient

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hospitals, or the long-term acute care hospital prospective payment system for long-term acute care hospitals. Acute care hospitals provide a wide range of inpatient and outpatient services including, but not limited to, surgery, rehabilitation, therapy and clinical laboratories. Long-term acute care hospitals provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than that available in most skilled nursing facilities. Some of our other specialty care facilities provide specialized inpatient and outpatient services for specific illnesses or diseases including, among others, orthopedic, neurosurgical and behavioral care services.

With respect to Medicare’s diagnosis related group/outpatient prospective payment system methodology for regular hospitals, reimbursement for inpatient services is on the basis of a fixed, prospective rate based on the principal diagnosis of the patient. Diagnoses are grouped into more than 500 diagnosis related groups. In some cases, a hospital might be able to qualify for an outlier payment if the hospital’s losses exceed a threshold.

On January 19, 2006, the CMS released its proposed payment rule for long-term acute care hospitals (“LTACHs”) for fiscal year 2007, which begins on July 1, 2006. Among other changes, the proposed rule would eliminate the market basket increase and change the payment rates for outliers. CMS projects that the proposed rule will reduce aggregate Medicare LTACH payments by approximately 11% in fiscal 2007. The proposal is subject to a 60 day comment period. Our portfolio includes nine LTACHs with an investment balance of $124,668,000, which represents 4% of our total investment balance.

Congress has limited increases in diagnosis related groups or outpatient prospective payment system payments. These limited increases may not be sufficient to cover specialty care facilities’ increasing costs of providing care. Failure to increase reimbursement to cover increased costs, or reductions or freezes in payment rates, will have an adverse impact on operators of our specialty care facilities.

Medicaid Reimbursement.  Medicaid is a major payor source for residents in our skilled nursing and specialty care facilities. For the 12 months ended September 30, 2005, approximately 55% of the revenues of our skilled nursing facilities and 23% of the revenues of our specialty care facilities were attributable to Medicaid payments. The federal government and the states share responsibility for financing Medicaid. The federal matching rate, known as the Federal Medical Assistance Percentage, varies by state based on relative per capita income. On average, Medicaid is the largest component of total state spending, representing approximately 22% of total state spending. The percentage of Medicaid dollars used for long-term care varies from state to state due in part to different ratios of elderly population and eligibility requirements. With certain federal guidelines, states have a wide range of discretion to determine eligibility and reimbursement methodology. Many states reimburse long-term care facilities using fixed daily rates, which are applied prospectively based on the historical costs incurred in providing patient care. Reasonable costs typically include allowances for staffing, administrative and general, and property and equipment (e.g., depreciation and fair rental).

In most states, Medicaid does not fully reimburse the cost of providing skilled nursing services. Certain states are attempting to slow the rate of growth in Medicaid expenditures by freezing rates or restricting eligibility and benefits. States in which we have skilled nursing facility investments increased their per diem Medicaid rates roughly 3% on average for fiscal year 2006. None of our states reduced Medicaid rates across the board in fiscal year 2006, although certain facilities experienced reduced rates due to changes in acuity. In addition, nine of our states effectively froze rates in fiscal year 2006, which impacts profitability to the extent that expenses continue to rise. In addition, Medicaid rates may decline if revenues in a particular state are not sufficient to fund budgeted expenditures.

The Medicare Part D drug benefit became effective January 1, 2006. The direct impact on nursing facilities is that residents dually eligible for Medicare and Medicaid now receive drugs through Medicare Part D rather than through Medicaid. Participants began enrolling in the new Part D prescription drug plans on November 15, 2005. Part D will result in increased administrative responsibilities for nursing home operators because residents have the choice of multiple prescription drug plans. Operators may also experience increased expenses to the extent that patients’ drugs are not covered by their prescription drug plan formulary.

The reimbursement methodologies applied to health care facilities continue to evolve. Federal and state authorities have considered and may seek to implement new or modified reimbursement methodologies that may

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negatively impact health care facility operations. The impact of any such change, if implemented, may result in a material adverse effect on our skilled nursing and specialty care facility operations. No assurance can be given that current revenue sources or levels will be maintained. Accordingly, there can be no assurance that payments under a government reimbursement program are currently or will, in the future, be sufficient to fully reimburse the facility operators for their operating and capital expenses. As a result, an operator’s ability to meet its obligations to us could be adversely impacted.

Other Related Laws

Skilled nursing and specialty care facilities (and assisted living facilities that receive Medicaid payments) are subject to federal, state and local laws and regulations which govern the operations and financial and other arrangements that may be entered into by health care providers. Certain of these laws prohibit direct or indirect payments of any kind for the purpose of inducing or encouraging the referral of patients for medical products or services reimbursable by governmental programs. Other laws require providers to furnish only medically necessary services and submit to the government valid and accurate statements for each service. Still other laws require providers to comply with a variety of safety, health and other requirements relating to the condition of the licensed facility and the quality of care provided. Sanctions for violation of these laws and regulations may include, but are not limited to, criminal and/or civil penalties and fines and a loss of licensure and immediate termination of governmental payments. In certain circumstances, violation of these rules (such as those prohibiting abusive and fraudulent behavior) with respect to one facility may subject other facilities under common control or ownership to sanctions, including disqualification from participation in the Medicare and Medicaid programs. In the ordinary course of its business, a facility operator is regularly subjected to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations.

Each skilled nursing and specialty care facility (and any assisted living facility that receives Medicaid payments) is subject to the federal anti-kickback statute that generally prohibits persons from offering, providing, soliciting or receiving remuneration to induce either the referral of an individual or the furnishing of a good or service, for which payment may be made under a federal health care program such as the Medicare and Medicaid programs. Skilled nursing and specialty care facilities are also subject to the federal Ethics in Patient Referral Act of 1989, commonly referred to as the Stark Law. The Stark Law generally prohibits the submission of claims to Medicare for payment if the claim results from a physician referral for certain designated services and the physician has a financial relationship with the health service provider that does not qualify under one of the exceptions for a financial relationship under the Stark Law. Similar prohibitions on physician self-referrals and submission of claims apply to state Medicaid programs. Further, skilled nursing and specialty care facilities (and assisted living facilities that receive Medicaid payments) are subject to substantial financial penalties under the Civil Monetary Penalties Act and the False Claims Act and, in particular, actions under the False Claims Act’s “whistleblower” provisions. Private enforcement of health care fraud has increased due in large part to amendments to the False Claims Act that encourage private individuals to sue on behalf of the government. These whistleblower suits by private individuals, known as qui tam actions, may be filed by almost anyone, including present and former patients, nurses and other employees. Prosecutions, investigations or qui tam actions could have a material adverse effect on a facility operator’s liquidity, financial condition and results of operations which could adversely affect the ability of the operator to meet its obligations to us. Finally, various state false claim and anti-kickback laws also may apply to each facility operator. Violation of any of the foregoing statutes can result in criminal and/or civil penalties that could have a material adverse effect on the ability of an operator to meet its obligations to us.

The Health Insurance Portability and Accountability Act of 1996, which became effective January 1, 1997, greatly expanded the definition of health care fraud and related offenses and broadened its scope to include private health care plans in addition to government payors. It also greatly increased funding for the Department of Justice, Federal Bureau of Investigation and the Office of the Inspector General of the Department of Health and Human Services to audit, investigate and prosecute suspected health care fraud.

Additionally, the administrative simplification provisions of this law provide for communication of health information through standard electronic transaction formats and for the privacy and security of health information. In order to comply with the regulations, health care providers must undergo significant operational and technical changes.

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Finally, government investigation and enforcement of health care laws has increased dramatically over the past several years and is expected to continue. Some of these enforcement actions represent novel legal theories and expansions in the application of false claims laws. The costs for an operator of a health care facility associated with both defending such enforcement actions and the undertakings in settlement agreements can be substantial and could have a material adverse effect on the ability of an operator to meet its obligations to us.

Taxation

Federal Income Tax Considerations

The following summary of the taxation of the Company and the material federal tax consequences to the holders of our debt and equity securities is for general information only and is not tax advice. This summary does not address all aspects of taxation that may be relevant to certain types of holders of stock or securities (including, but not limited to, insurance companies, tax-exempt entities, financial institutions or broker-dealers, persons holding shares of common stock as part of a hedging, integrated conversion or constructive sale transaction or a straddle, traders in securities that use a mark-to-market method of accounting for their securities, investors in pass-through entities and foreign corporations and persons who are not citizens or residents of the United States).

This summary does not discuss all of the aspects of U.S. federal income taxation that may be relevant to you in light of your particular investment or other circumstances. In addition, this summary does not discuss any state or local income taxation or foreign income taxation or other tax consequences. This summary is based on current U.S. federal income tax law. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of purchasing, owning and disposing of our securities as set forth in this summary. Before you purchase our securities, you should consult your own tax advisor regarding the particular U.S. federal, state, local, foreign and other tax consequences of acquiring, owning and selling our securities.

General

We elected to be taxed as a real estate investment trust (or “REIT”) commencing with our first taxable year. We intend to continue to operate in such a manner as to qualify as a REIT, but there is no guarantee that we will qualify or remain qualified as a REIT for subsequent years. Qualification and taxation as a REIT depends upon our ability to meet a variety of qualification tests imposed under federal income tax law with respect to income, assets, distribution level and diversity of share ownership as discussed below under “— Qualification as a REIT.” There can be no assurance that we will be owned and organized and will operate in a manner so as to qualify or remain qualified.

In any year in which we qualify as a REIT, in general, we will not be subject to federal income tax on that portion of our REIT taxable income or capital gain that is distributed to stockholders. We may, however, be subject to tax at normal corporate rates on any taxable income or capital gain not distributed. If we elect to retain and pay income tax on our net long-term capital gain, stockholders are required to include their proportionate share of our undistributed long-term capital gain in income, but they will receive a refundable credit for their share of any taxes paid by us on such gain.

Despite the REIT election, we may be subject to federal income and excise tax as follows:

•  To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates;

•  We may be subject to the “alternative minimum tax” on certain items of tax preference to the extent that this tax exceeds our regular tax;

•  If we have net income from the sale or other disposition of “foreclosure property” that is held primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we will be subject to tax at the highest corporate rate on this income;

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•  Any net income from prohibited transactions (which are, in general, sales or other dispositions of property held primarily for sale to customers in the ordinary course of business, other than dispositions of foreclosure property and dispositions of property due to an involuntary conversion) will be subject to a 100% tax;

•  If we fail to satisfy either the 75% or 95% gross income tests (as discussed below), but nonetheless maintain our qualification as a REIT because certain other requirements are met, we will be subject to a 100% tax on an amount equal to (1) the gross income attributable to the greater of (i) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% gross income test (discussed below) or (ii) 95% of our gross income (90% of our gross income for taxable years beginning on or before October 22, 2004) over the amount of qualifying gross income for purposes of the 95% gross income test (discussed below) multiplied by (2) a fraction intended to reflect our profitability;

•  If we fail to distribute during each year at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for such year (other than capital gain that we elect to retain and pay tax on) and (3) any undistributed taxable income from preceding periods, we will be subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed; and

•  We will also be subject to a tax of 100% on the amount of any rents from real property, deductions or excess interest paid to us by any of our “taxable REIT subsidiaries” that would be reduced through reallocation under certain federal income tax principles in order to more clearly reflect income of the taxable REIT subsidiary. See “— Qualification as a REIT — Investments in Taxable REIT Subsidiaries.”

If we acquire any assets from a corporation which is or has been a “C” corporation in a carryover basis transaction, we could be liable for specified liabilities that are inherited from the “C” corporation. A “C” corporation is generally defined as a corporation that is required to pay full corporate level federal income tax. If we recognize gain on the disposition of the assets during the ten-year period beginning on the date on which the assets were acquired by us, then to the extent of the assets’ “built-in gain” (i.e., the excess of the fair market value of the asset over the adjusted tax basis in the asset, in each case determined as of the beginning of the ten-year period), we will be subject to tax on the gain at the highest regular corporate rate applicable. The results described in this paragraph with respect to the recognition of built-in gain assume that the built-in gain assets, at the time the built-in gain assets were subject to a conversion transaction (either where a “C” corporation elected REIT status or a REIT acquired the assets from a “C” corporation), were not treated as sold to an unrelated party and gain recognized.

Qualification as a REIT

A REIT is defined as a corporation, trust or association:

(1)	which is managed by one or more trustees or directors;
(2)	the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;
(3)	which would be taxable as a domestic corporation but for the federal income tax law relating to REITs;
(4)	which is neither a financial institution nor an insurance company;
(5)	the beneficial ownership of which is held by 100 or more persons in each taxable year of the REIT except for its first taxable year;
(6)	not more than 50% in value of the outstanding stock of which is owned during the last half of each taxable year, excluding its first taxable year, directly or indirectly, by or for five or fewer individuals (which includes certain entities) (the “Five or Fewer Requirement”); and
(7)	which meets certain income and asset tests described below.

Conditions (1) to (4), inclusive, must be met during the entire taxable year and condition (5) must be met during at least 335 days of a taxable year of 12 months or during a proportionate part of a taxable year of less than 12 months. For purposes of conditions (5) and (6), pension funds and certain other tax-exempt entities are treated as individuals, subject to a “look-through” exception in the case of condition (6).

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Based on publicly available information, we believe we have satisfied the share ownership requirements set forth in (5) and (6) above. In addition, Article VI of our Amended and Restated By-Laws provides for restrictions regarding ownership and transfer of shares. These restrictions are intended to assist us in continuing to satisfy the share ownership requirements described in (5) and (6) above. These restrictions, however, may not ensure that we will, in all cases, be able to satisfy the share ownership requirements described in (5) and (6) above.

We have complied with, and will continue to comply with, regulatory rules to send annual letters to certain of our stockholders requesting information regarding the actual ownership of our stock. If despite sending the annual letters, we do not know, or after exercising reasonable diligence would not have known, whether we failed to meet the Five or Fewer Requirement, we will be treated as having met the Five or Fewer Requirement. If we fail to comply with these regulatory rules, we will be subject to a monetary penalty. If our failure to comply was due to intentional disregard of the requirement, the penalty would be increased. However, if our failure to comply were due to reasonable cause and not willful neglect, no penalty would be imposed.

We may own a number of properties through wholly owned subsidiaries. A corporation will qualify as a “qualified REIT subsidiary” if 100% of its stock is owned by a REIT and the REIT does not elect to treat the subsidiary as a taxable REIT subsidiary. A “qualified REIT subsidiary” will not be treated as a separate corporation, and all assets, liabilities and items of income, deductions and credits of a “qualified REIT subsidiary” will be treated as assets, liabilities and items (as the case may be) of the REIT. A “qualified REIT subsidiary” is not subject to federal income tax, and our ownership of the voting stock of a qualified REIT subsidiary will not violate the restrictions against ownership of securities of any one issuer which constitute more than 10% of the value or total voting power of such issuer or more than 5% of the value of our total assets, as described below under “— Asset Tests.”

If we invest in a partnership, a limited liability company or a trust taxed as a partnership or as a disregarded entity, we will be deemed to own a proportionate share of the partnership’s, limited liability company’s or trust’s assets. Likewise, we will be treated as receiving our share of the income and loss of the partnership, limited liability company or trust, and the gross income will retain the same character in our hands as it has in the hands of the partnership, limited liability company or trust. These “look-through” rules apply for purposes of the income tests and assets tests described below.

Income Tests.  There are two separate percentage tests relating to our sources of gross income that we must satisfy for each taxable year.

•  At least 75% of our gross income (excluding gross income from certain sales of property held primarily for sale) must be directly or indirectly derived each taxable year from “rents from real property,” other income from investments relating to real property or mortgages on real property or certain income from qualified temporary investments.

•  At least 95% of our gross income (excluding gross income from certain sales of property held primarily for sale) must be directly or indirectly derived each taxable year from any of the sources qualifying for the 75% gross income test and from dividends (including dividends from taxable REIT subsidiaries) and interest.

For taxable years beginning on or before October 22, 2004, (1) payments to us under an interest rate swap or cap agreement, option, futures contract, forward rate agreement or any similar financial instrument entered into by us to reduce interest rate risk on indebtedness incurred or to be incurred and (2) gain from the sale or other disposition of any such investment are treated as income qualifying under the 95% gross income test. As to transactions entered into in taxable years beginning after October 22, 2004, any of our income from a “clearly identified” hedging transaction that is entered into by us in the normal course of business, directly or indirectly, to manage the risk of interest rate movements, price changes or currency fluctuations with respect to borrowings or obligations incurred or to be incurred by us, or such other risks that are prescribed by the Internal Revenue Service, is excluded from the 95% gross income test. In general, a hedging transaction is “clearly identified” if (1) the transaction is identified as a hedging transaction before the end of the day on which it is entered into and (2) the items or risks being hedged are identified “substantially contemporaneously” with the hedging transaction. An identification is not substantially contemporaneous if it is made more than 35 days after entering into the hedging transaction.

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Rents received by us will qualify as “rents from real property” for purposes of satisfying the gross income tests for a REIT only if several conditions are met:

•  The amount of rent must not be based in whole or in part on the income or profits of any person, although rents generally will not be excluded merely because they are based on a fixed percentage or percentages of receipts or sales.

•  Rents received from a tenant will not qualify as rents from real property if the REIT, or an owner of 10% or more of the REIT, also directly or constructively owns 10% or more of the tenant, unless the tenant is our taxable REIT subsidiary and certain other requirements are met with respect to the real property being rented.

•  If rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as “rents from real property.”

•  For rents to qualify as rents from real property, we generally must not furnish or render services to tenants, other than through a taxable REIT subsidiary or an “independent contractor” from whom we derive no income, except that we may directly provide services that are “usually or customarily rendered” in the geographic area in which the property is located in connection with the rental of real property for occupancy only, or are not otherwise considered “rendered to the occupant for his convenience.”

For taxable years beginning after August 5, 1997, a REIT has been permitted to render a de minimis amount of impermissible services to tenants and still treat amounts received with respect to that property as rent from real property. The amount received or accrued by the REIT during the taxable year for the impermissible services with respect to a property may not exceed 1% of all amounts received or accrued by the REIT directly or indirectly from the property. The amount received for any service or management operation for this purpose shall be deemed to be not less than 150% of the direct cost of the REIT in furnishing or rendering the service or providing the management or operation. Furthermore, impermissible services may be furnished to tenants by a taxable REIT subsidiary subject to certain conditions, and we may still treat rents received with respect to the property as rent from real property.

The term “interest” generally does not include any amount if the determination of the amount depends in whole or in part on the income or profits of any person, although an amount generally will not be excluded from the term “interest” solely by reason of being based on a fixed percentage of receipts or sales.

If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may nevertheless qualify as a REIT for such year if we are eligible for relief. For taxable years beginning on or before October 22, 2004, these relief provisions generally will be available if (1) our failure to meet such tests was due to reasonable cause and not due to willful neglect; (2) we attach a schedule of the sources of our income to our return; and (3) any incorrect information on the schedule was not due to fraud with intent to evade tax. For taxable years beginning after October 22, 2004, these relief provisions generally will be available if (1) following our identification of the failure, we file a schedule for such taxable year describing each item of our gross income and (2) the failure to meet such tests was due to reasonable cause and not due to willful neglect.

It is not now possible to determine the circumstances under which we may be entitled to the benefit of these relief provisions. If these relief provisions apply, a 100% tax is imposed on an amount equal to (a) the gross income attributable to (1) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% income test and (2) 95% of our gross income (90% of our gross income for taxable years beginning on or before October 22, 2004) over the amount of qualifying gross income for purposes of the 95% income test, multiplied by (b) a fraction intended to reflect our profitability.

Asset Tests.  Within 30 days after the close of each quarter of our taxable year, we must also satisfy several tests relating to the nature and diversification of our assets determined in accordance with generally accepted accounting principles. At least 75% of the value of our total assets must be represented by real estate assets, cash, cash items (including receivables arising in the ordinary course of our operation), government securities and qualified temporary investments. Although the remaining 25% of our assets generally may be invested without restriction, we are prohibited from owning securities representing more than 10% of either the vote (the “10% vote

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test”) or value (the “10% value test”) of the outstanding securities of any issuer other than a qualified REIT subsidiary, another REIT or a taxable REIT subsidiary. Further, no more than 20% of the total assets may be represented by securities of one or more taxable REIT subsidiaries (the “20% asset test”) and no more than 5% of the value of our total assets may be represented by securities of any non-governmental issuer other than a qualified REIT subsidiary (the “5% asset test”), another REIT or a taxable REIT subsidiary. Each of the 10% vote test, the 10% value test and the 20% and 5% asset tests must be satisfied at the end of each quarter. There are special rules which provide relief if the value related tests are not satisfied due to changes in the value of the assets of a REIT.

For taxable years beginning after December 31, 2000, certain items are excluded from the 10% value test, including (1) straight debt securities of an issuer (including straight debt that provides certain contingent payments); (2) any loan to an individual or an estate; (3) any rental agreement described in Section 467 of the Internal Revenue Code, other than with a “related person”; (4) any obligation to pay rents from real property; (5) certain securities issued by a state or any subdivision thereof, the District of Columbia, a foreign government, or any political subdivision thereof, or the Commonwealth of Puerto Rico; (6) any security issued by a REIT; and (7) any other arrangement that, as determined by the Secretary of the Treasury, is excepted from the definition of security (“excluded securities”). Special rules apply to straight debt securities issued by corporations and entities taxable as partnerships for federal income tax purposes. If a REIT, or its taxable REIT subsidiary, holds (1) straight debt securities of a corporate or partnership issuer and (2) securities of such issuer that are not excluded securities and have an aggregate value greater than 1% of such issuer’s outstanding securities, the straight debt securities will be included in the 10% value test.

For taxable years beginning after December 31, 2000, a REIT’s interest as a partner in a partnership is not treated as a security for purposes of applying the 10% value test to securities issued by the partnership. Further, any debt instrument issued by a partnership will not be a security for purposes of applying the 10% value test (1) to the extent of the REIT’s interest as a partner in the partnership and (2) if at least 75% of the partnership’s gross income (excluding gross income from prohibited transactions) would qualify for the 75% gross income test. For taxable years beginning after October 22, 2004, for purposes of the 10% value test, a REIT’s interest in a partnership’s assets is the REIT’s proportionate interest in any securities issued by the partnership (other than the excluded securities described in the preceding paragraph).

With respect to corrections of failures for which the requirements for corrections are satisfied after October 22, 2004, regardless of whether such failures occurred in taxable years beginning on, before or after such date, as to violations of the 10% vote test, the 10% value test or the 5% asset test, a REIT may avoid disqualification as a REIT by disposing of sufficient assets to cure a violation that does not exceed the lesser of 1% of the REIT’s assets at the end of the relevant quarter or $10,000,000, provided that the disposition occurs within six months following the last day of the quarter in which the REIT first identified the assets. For violations of any of the REIT asset tests due to reasonable cause and not willful neglect that exceed the thresholds described in the preceding sentence, a REIT can avoid disqualification as a REIT after the close of a taxable quarter by taking certain steps, including disposition of sufficient assets within the six month period described above to meet the applicable asset test, paying a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying assets during the period of time that the assets were held as non-qualifying assets and filing a schedule with the Internal Revenue Service that describes the non-qualifying assets.

Investments in Taxable REIT Subsidiaries.  For taxable years beginning after December 31, 2000, REITs may own more than 10% of the voting power and value of securities in taxable REIT subsidiaries. We and any taxable corporate entity in which we own an interest are allowed to jointly elect to treat such entity as a “taxable REIT subsidiary.”

Several of our subsidiaries have elected to be treated as a taxable REIT subsidiary. Taxable REIT subsidiaries are subject to full corporate level federal taxation on their earnings but are permitted to engage in certain types of activities that cannot be performed directly by REITs without jeopardizing their REIT status. Our taxable REIT subsidiaries will attempt to minimize the amount of these taxes, but there can be no assurance whether or the extent to which measures taken to minimize taxes will be successful. To the extent our taxable REIT subsidiaries are required to pay federal, state or local taxes, the cash available for distribution as dividends to us from our taxable REIT subsidiaries will be reduced.

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The amount of interest on related-party debt that a taxable REIT subsidiary may deduct is limited. Further, a 100% tax applies to any interest payments by a taxable REIT subsidiary to its affiliated REIT to the extent the interest rate is not commercially reasonable. A taxable REIT subsidiary is permitted to deduct interest payments to unrelated parties without any of these restrictions.

The Internal Revenue Service may reallocate costs between a REIT and its taxable REIT subsidiary where there is a lack of arm’s-length dealing between the parties. Any deductible expenses allocated away from a taxable REIT subsidiary would increase its tax liability. Further, any amount by which a REIT understates its deductions and overstates those of its taxable REIT subsidiary will, subject to certain exceptions, be subject to a 100% tax. Additional taxable REIT subsidiary elections may be made in the future for additional entities in which we own an interest.

Annual Distribution Requirements.  In order to avoid being taxed as a regular corporation, we are required to make distributions (other than capital gain distributions) to our stockholders which qualify for the dividends paid deduction in an amount at least equal to (1) the sum of (i) 90% of our “REIT taxable income” (computed without regard to the dividends paid deduction and our net capital gain) and (ii) 90% of the after-tax net income, if any, from foreclosure property, minus (2) a portion of certain items of non-cash income. These distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for that year and if paid on or before the first regular distribution payment after such declaration. The amount distributed must not be preferential. This means that every stockholder of the class of stock to which a distribution is made must be treated the same as every other stockholder of that class, and no class of stock may be treated otherwise than in accordance with its dividend rights as a class. To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates. Finally, as discussed above, we may be subject to an excise tax if we fail to meet certain other distribution requirements. We intend to make timely distributions sufficient to satisfy these annual distribution requirements.

It is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement, or to distribute such greater amount as may be necessary to avoid income and excise taxation, due to, among other things, (1) timing differences between (i) the actual receipt of income and actual payment of deductible expenses and (ii) the inclusion of income and deduction of expenses in arriving at our taxable income, or (2) the payment of severance benefits that may not be deductible to us. In the event that timing differences occur, we may find it necessary to arrange for borrowings or, if possible, pay dividends in the form of taxable stock dividends in order to meet the distribution requirement.

Under certain circumstances, in the event of a deficiency determined by the Internal Revenue Service, we may be able to rectify a resulting failure to meet the distribution requirement for a year by paying “deficiency dividends” to stockholders in a later year, which may be included in our deduction for distributions paid for the earlier year. Thus, we may be able to avoid being taxed on amounts distributed as deficiency distributions; however, we will be required to pay applicable penalties and interest based upon the amount of any deduction taken for deficiency distributions.

Failure to Qualify as a REIT

If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates. Distributions to stockholders in any year in which we fail to qualify as a REIT will not be deductible nor will any particular amount of distributions be required to be made in any year. All distributions to stockholders will be taxable as ordinary income to the extent of current and accumulated earnings and profits allocable to these distributions and, subject to certain limitations, will be eligible for the dividends received deduction for corporate stockholders. Unless entitled to relief under specific statutory provisions, we also will be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost. It is not possible to state whether in all circumstances we would be entitled to statutory relief. Failure to qualify for even one year could result in our need to incur indebtedness or liquidate investments in order to pay potentially significant resulting tax liabilities.

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In addition to the relief described above under “— Income Tests” and ‘‘— Asset Tests,” relief is available in the event that we violate a provision of the Internal Revenue Code that would result in our failure to qualify as a REIT if (1) the violation is due to reasonable cause and not due to willful neglect, (2) we pay a penalty of $50,000 for each failure to satisfy the provision, and (3) the violation does not include a violation described under “— Income Tests” or “— Asset Tests” above. It is not now possible to determine the circumstances under which we may be entitled to the benefit of these relief provisions.

Federal Income Taxation of Holders of Our Stock

Treatment of Taxable U.S. Stockholders.  The following summary applies to you only if you are a “U.S. stockholder.” A “U.S. stockholder” is a stockholder of shares of stock who, for United States federal income tax purposes, is:

•  a citizen or resident of the United States;

•  a corporation, partnership or other entity classified as a corporation or partnership for these purposes, created or organized in or under the laws of the United States or of any political subdivision of the United States, including any state;

•  an estate, the income of which is subject to United States federal income taxation regardless of its source; or

•  a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to control all of the trust’s substantial decisions.

So long as we qualify for taxation as a REIT, distributions on shares of our stock made out of the current or accumulated earnings and profits allocable to these distributions (and not designated as capital gain dividends) will be includable as ordinary income for federal income tax purposes. None of these distributions will be eligible for the dividends received deduction for U.S. corporate stockholders.

Generally, for taxable years ending after May 6, 2003 through December 31, 2008, the maximum marginal rate of tax payable by individuals on dividends received from corporations that are subject to a corporate level of tax is 15%. Except in limited circumstances, this tax rate will not apply to dividends paid to you by us on our shares, because generally we are not subject to federal income tax on the portion of our REIT taxable income or capital gains distributed to our stockholders. The reduced maximum federal income tax rate will apply to that portion, if any, of dividends received by you with respect to our shares that are attributable to: (1) dividends received by us from non-REIT corporations or other taxable REIT subsidiaries; (2) income from the prior year with respect to which we were required to pay federal corporate income tax during the prior year (if, for example, we did not distribute 100% of our REIT taxable income for the prior year); or (3) the amount of any earnings and profits that were distributed by us and accumulated in a non-REIT year.

Distributions that are designated as capital gain dividends will be taxed as long-term capital gains (to the extent they do not exceed our actual net capital gain for the taxable year), without regard to the period for which you held our stock. However, if you are a corporation, you may be required to treat a portion of some capital gain dividends as ordinary income.

If we elect to retain and pay income tax on any net long-term capital gain, you would include in income, as long-term capital gain, your proportionate share of this net long-term capital gain. You would also receive a refundable tax credit for your proportionate share of the tax paid by us on such retained capital gains and you would have an increase in the basis of your shares of our stock in an amount equal to your includable capital gains less your share of the tax deemed paid.

You may not include in your federal income tax return any of our net operating losses or capital losses. Federal income tax rules may also require that certain minimum tax adjustments and preferences be apportioned to you. In addition, any distribution declared by us in October, November or December of any year on a specified date in any such month shall be treated as both paid by us and received by you on December 31 of that year, provided that the distribution is actually paid by us no later than January 31 of the following year.

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We will be treated as having sufficient earnings and profits to treat as a dividend any distribution up to the amount required to be distributed in order to avoid imposition of the 4% excise tax discussed under “— General” and “— Qualification as a REIT  —  Annual Distribution Requirements” above. As a result, you may be required to treat as taxable dividends certain distributions that would otherwise result in a tax-free return of capital. Moreover, any “deficiency dividend” will be treated as a dividend (an ordinary dividend or a capital gain dividend, as the case may be), regardless of our earnings and profits. Any other distributions in excess of current or accumulated earnings and profits will not be taxable to you to the extent these distributions do not exceed the adjusted tax basis of your shares of our stock. You will be required to reduce the tax basis of your shares of our stock by the amount of these distributions until the basis has been reduced to zero, after which these distributions will be taxable as capital gain, if the shares of our stock are held as a capital asset. The tax basis as so reduced will be used in computing the capital gain or loss, if any, realized upon sale of the shares of our stock. Any loss upon a sale or exchange of shares of our stock which were held for six months or less (after application of certain holding period rules) will generally be treated as a long-term capital loss to the extent you previously received capital gain distributions with respect to these shares of our stock.

Upon the sale or exchange of any shares of our stock to or with a person other than us or a sale or exchange of all shares of our stock (whether actually or constructively owned) with us, you will generally recognize capital gain or loss equal to the difference between the amount realized on the sale or exchange and your adjusted tax basis in these shares of our stock. This gain will be capital gain if you held these shares of our stock as a capital asset.

If we redeem any of your shares in us, the treatment can only be determined on the basis of particular facts at the time of redemption. In general, you will recognize gain or loss (as opposed to dividend income) equal to the difference between the amount received by you in the redemption and your adjusted tax basis in your shares redeemed if such redemption results in a “complete termination” of your interest in all classes of our equity securities, is a “substantially disproportionate redemption” or is “not essentially equivalent to a dividend” with respect to you. In applying these tests, there must be taken into account your ownership of all classes of our equity securities (e.g., common stock, preferred stock, depositary shares and warrants). You also must take into account any equity securities that are considered to be constructively owned by you.

If, as a result of a redemption by us of your shares, you no longer own (either actually or constructively) any of our equity securities or only own (actually and constructively) an insubstantial percentage of our equity securities, then it is probable that the redemption of your shares would be considered “not essentially equivalent to a dividend” and, thus, would result in gain or loss to you. However, whether a distribution is “not essentially equivalent to a dividend” depends on all of the facts and circumstances, and if you rely on any of these tests at the time of redemption, you should consult your tax advisor to determine their application to the particular situation.

Generally, if the redemption does not meet the tests described above, then the proceeds received by you from the redemption of your shares will be treated as a distribution taxable as a dividend to the extent of the allocable portion of current or accumulated earnings and profits. If the redemption is taxed as a dividend, your adjusted tax basis in the redeemed shares will be transferred to any other shareholdings in us that you own. If you own no other shareholdings in us, under certain circumstances, such basis may be transferred to a related person, or it may be lost entirely.

Gain from the sale or exchange of our shares held for more than one year is taxed at a maximum long-term capital gain rate, which is currently 15%. Pursuant to Internal Revenue Service guidance, we may classify portions of our capital gain dividends as gains eligible for the long-term capital gains rate or as gain taxable to individual stockholders at a maximum rate of 25%.

Treatment of Tax-Exempt U.S. Stockholders.  Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts (“Exempt Organizations”), generally are exempt from federal income taxation. However, they are subject to taxation on their unrelated business taxable income (“UBTI”). The Internal Revenue Service has issued a published revenue ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute UBTI, provided that the shares of the REIT are not otherwise used in an unrelated trade or business of the exempt employee pension trust. Based on this ruling, amounts distributed by us to Exempt Organizations generally should not constitute UBTI. However, if an Exempt Organization finances its acquisition of the shares of our stock with debt, a portion of its income from us will constitute UBTI pursuant to the

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“debt financed property” rules. Likewise, a portion of the Exempt Organization’s income from us would constitute UBTI if we held a residual interest in a real estate mortgage investment conduit.

In addition, in certain circumstances, a pension trust that owns more than 10% of our stock is required to treat a percentage of our dividends as UBTI. This rule applies to a pension trust holding more than 10% of our stock only if (1) the percentage of our income that is UBTI (determined as if we were a pension trust) is at least 5%, (2) we qualify as a REIT by reason of the modification of the Five or Fewer Requirement that allows beneficiaries of the pension trust to be treated as holding shares in proportion to their actuarial interests in the pension trust, and (3) either (i) one pension trust owns more than 25% of the value of our stock or (ii) a group of pension trusts individually holding more than 10% of the value of our stock collectively own more than 50% of the value of our stock.

Backup Withholding and Information Reporting.  Under certain circumstances, you may be subject to backup withholding at applicable rates on payments made with respect to, or cash proceeds of a sale or exchange of, shares of our stock. Backup withholding will apply only if you: (1) fail to provide a correct taxpayer identification number, which if you are an individual, is ordinarily your social security number; (2) furnish an incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you have failed to properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury, that you have furnished a correct taxpayer identification number and that the Internal Revenue Service has not notified you that you are subject to backup withholding.

Backup withholding will not apply with respect to payments made to certain exempt recipients, such as corporations and tax-exempt organizations. You should consult with a tax advisor regarding qualification for exemption from backup withholding, and the procedure for obtaining an exemption. Backup withholding is not an additional tax. Rather, the amount of any backup withholding with respect to payment to a stockholder will be allowed as a credit against such stockholder’s United States federal income tax liability and may entitle such stockholder to a refund, provided that the required information is provided to the Internal Revenue Service. In addition, withholding a portion of capital gain distributions made to stockholders may be required for stockholders who fail to certify their non-foreign status.

Taxation of Foreign Stockholders.  The following summary applies to you only if you are a foreign person. The federal taxation of foreign persons is a highly complex matter that may be affected by many considerations.

Except as discussed below, distributions to you of cash generated by our real estate operations in the form of ordinary dividends, but not by the sale or exchange of our capital assets, generally will be subject to U.S. withholding tax at a rate of 30%, unless an applicable tax treaty reduces that tax and you file with us the required form evidencing the lower rate.

In general, you will be subject to United States federal income tax on a graduated rate basis rather than withholding with respect to your investment in our stock if such investment is “effectively connected” with your conduct of a trade or business in the United States. A corporate foreign stockholder that receives income that is, or is treated as, effectively connected with a United States trade or business may also be subject to the branch profits tax, which is payable in addition to regular United States corporate income tax. The following discussion will apply to foreign stockholders whose investment in us is not so effectively connected. We expect to withhold United States income tax, as described below, on the gross amount of any distributions paid to you unless (1) you file an Internal Revenue Service Form W-8ECI with us claiming that the distribution is “effectively connected” or (2) certain other exceptions apply.

Distributions by us that are attributable to gain from the sale or exchange of a United States real property interest will be taxed to you under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) as if these distributions were gains “effectively connected” with a United States trade or business. Accordingly, you will be taxed at the normal capital gain rates applicable to a U.S. stockholder on these amounts, subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. Distributions subject to FIRPTA may also be subject to a branch profits tax in the hands of a corporate foreign stockholder that is not entitled to treaty exemption.

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We will be required to withhold from distributions subject to FIRPTA, and remit to the Internal Revenue Service, 35% of designated capital gain dividends, or, if greater, 35% of the amount of any distributions that could be designated as capital gain dividends. In addition, if we designate prior distributions as capital gain dividends, subsequent distributions, up to the amount of the prior distributions not withheld against, will be treated as capital gain dividends for purposes of withholding.

For taxable years beginning after October 22, 2004, any capital gain dividend with respect to any class of stock that is “regularly traded” on an established securities market will be treated as an ordinary dividend if the foreign stockholder did not own more than 5% of such class of stock at any time during the taxable year. Once this provision takes effect, foreign stockholders generally will not be required to report distributions received from us on U.S. federal income tax returns and all distributions treated as dividends for U.S. federal income tax purposes including any capital gain dividend will be subject to a 30% U.S. withholding tax (unless reduced under an applicable income tax treaty) as discussed above. In addition, the branch profits tax will no longer apply to such distributions.

Unless our shares constitute a “United States real property interest” within the meaning of FIRPTA or are effectively connected with a U.S. trade or business, a sale of our shares by you generally will not be subject to United States taxation. Our shares will not constitute a United States real property interest if we qualify as a “domestically controlled REIT.” We do, and expect to continue to, qualify as a domestically controlled REIT. A domestically controlled REIT is a REIT in which at all times during a specified testing period less than 50% in value of its shares is held directly or indirectly by foreign stockholders. However, if you are a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions apply, you will be subject to a 30% tax on such capital gains. In any event, a purchaser of our shares from you will not be required under FIRPTA to withhold on the purchase price if the purchased shares are “regularly traded” on an established securities market or if we are a domestically controlled REIT. Otherwise, under FIRPTA, the purchaser may be required to withhold 10% of the purchase price and remit such amount to the Internal Revenue Service.

Backup withholding tax and information reporting will generally not apply to distributions paid to you outside the United States that are treated as (1) dividends to which the 30% or lower treaty rate withholding tax discussed above applies; (2) capital gains dividends; or (3) distributions attributable to gain from the sale or exchange by us of U.S. real property interests. Payment of the proceeds of a sale of stock within the United States or conducted through certain U.S. related financial intermediaries is subject to both backup withholding and information reporting unless the beneficial owner certifies under penalties of perjury that he or she is not a U.S. person (and the payor does not have actual knowledge that the beneficial owner is a U.S. person) or otherwise established an exemption. You may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the Internal Revenue Service.

U.S. Federal Income Taxation of Holders of Depositary Shares

Owners of our depositary shares will be treated as if you were owners of the series of preferred stock represented by the depositary shares. Thus, you will be required to take into account the income and deductions to which you would be entitled if you were a holder of the underlying series of preferred stock.

Conversion or Exchange of Shares for Preferred Stock.  No gain or loss will be recognized upon the withdrawal of preferred stock in exchange for depositary shares and the tax basis of each share of preferred stock will, upon exchange, be the same as the aggregate tax basis of the depositary shares exchanged. If you held your depositary shares as a capital asset at the time of the exchange for shares of preferred stock, the holding period for your shares of preferred stock will include the period during which you owned the depositary shares.

U.S. Federal Income and Estate Taxation of Holders of Our Debt Securities

The following is a general summary of the United States federal income tax consequences and, in the case that you are a holder that is a non-U.S. holder, as defined below, the United States federal estate tax consequences, of purchasing, owning and disposing of debt securities periodically offered under one or more indentures, the forms of which have been filed as exhibits to this registration statement (the “notes”). This summary assumes that you hold the notes as capital assets. This summary applies to you only if you are the initial holder of the notes and you acquire

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the notes for a price equal to the issue price of the notes. The issue price of the notes is the first price at which a substantial amount of the notes is sold other than to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. In addition, this summary does not consider any foreign, state, local or other tax laws that may be applicable to us or a purchaser of the notes.

U.S. Holders

The following summary applies to you only if you are a U.S. holder, as defined below.

Definition of a U.S. Holder.  A “U.S. holder” is a beneficial owner of a note or notes that is for United States federal income tax purposes:

•  a citizen or resident of the United States;

•  a corporation or partnership, or other entity classified as a corporation or partnership for these purposes, created or organized in or under the laws of the United States or of any political subdivision of the United States, including any state;

•  an estate, the income of which is subject to United States federal income taxation regardless of its source; or

•  a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to control all of the trust’s substantial decisions.

Payments of Interest.  Stated interest on the notes generally will be taxed as ordinary interest income from domestic sources at the time it is paid or accrues in accordance with your method of accounting for tax purposes.

Sale, Exchange or Other Disposition of Notes.  The adjusted tax basis in your note acquired at a premium will generally be your cost. You generally will recognize taxable gain or loss when you sell or otherwise dispose of your notes equal to the difference, if any, between:

•  the amount realized on the sale or other disposition, less any amount attributable to any accrued interest, which will be taxable in the manner described under “— Payments of Interest” above; and

•  your adjusted tax basis in the notes.

Your gain or loss generally will be capital gain or loss. This capital gain or loss will be long-term capital gain or loss if at the time of the sale or other disposition you have held the notes for more than one year. Subject to limited exceptions, your capital losses cannot be used to offset your ordinary income.

Backup Withholding and Information Reporting.  In general, “backup withholding” may apply to any payments made to you of principal and interest on your note, and to payment of the proceeds of a sale or other disposition of your note before maturity, if you are a non-corporate U.S. holder and (1) fail to provide a correct taxpayer identification number, which if you are an individual, is ordinarily your social security number; (2) furnish an incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you have failed to properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury, that you have furnished a correct taxpayer identification number and that the Internal Revenue Service has not notified you that you are subject to backup withholding.

The amount of any reportable payments, including interest, made to you (unless you are an exempt recipient) and the amount of tax withheld, if any, with respect to such payments will be reported to you and to the Internal Revenue Service for each calendar year. You should consult your tax advisor regarding your qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if applicable. The backup withholding tax is not an additional tax and will be credited against your U.S. federal income tax liability, provided that correct information is provided to the Internal Revenue Service.

Non-U.S. Holders

The following summary applies to you if you are a beneficial owner of a note and are not a U.S. holder, as defined above (a “non-U.S. holder”).

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Special rules may apply to certain non-U.S. holders such as “controlled foreign corporations,” “passive foreign investment companies” and “foreign personal holding companies.” Such entities are encouraged to consult their tax advisors to determine the United States federal, state, local and other tax consequences that may be relevant to them.

U.S. Federal Withholding Tax.  Subject to the discussion below, U.S. federal withholding tax will not apply to payments by us or our paying agent, in its capacity as such, of principal and interest on your notes under the “portfolio interest” exception of the Internal Revenue Code, provided that:

•  you do not, directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all classes of our stock entitled to vote;

•  you are not (1) a controlled foreign corporation for U.S. federal income tax purposes that is related, directly or indirectly, to us through sufficient stock ownership, as provided in the Internal Revenue Code, or (2) a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code;

•  such interest is not effectively connected with your conduct of a U.S. trade or business; and

•  you provide a signed written statement, under penalties of perjury, which can reliably be related to you, certifying that you are not a U.S. person within the meaning of the Internal Revenue Code and providing your name and address to:

•  us or our paying agent; or

•  a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds your notes on your behalf and that certifies to us or our paying agent under penalties of perjury that it, or the bank or financial institution between it and you, has received from you your signed, written statement and provides us or our paying agent with a copy of such statement.

Treasury regulations provide that:

•  if you are a foreign partnership, the certification requirement will generally apply to your partners, and you will be required to provide certain information;

•  if you are a foreign trust, the certification requirement will generally be applied to you or your beneficial owners depending on whether you are a “foreign complex trust, ““foreign simple trust, “or “foreign grantor trust” as defined in the Treasury regulations; and

•  look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.

If you are a foreign partnership or a foreign trust, you should consult your own tax advisor regarding your status under these Treasury regulations and the certification requirements applicable to you.

If you cannot satisfy the portfolio interest requirements described above, payments of interest will be subject to the 30% United States withholding tax, unless you provide us with a properly executed (1) Internal Revenue Service Form W-8BEN claiming an exemption from or reduction in withholding under the benefit of an applicable treaty or (2) Internal Revenue Service Form W-8ECI stating that interest paid on the note is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States. Alternative documentation may be applicable in certain circumstances.

If you are engaged in a trade or business in the United States and interest on a note is effectively connected with the conduct of that trade or business, you will be required to pay United States federal income tax on that interest on a net income basis (although you will be exempt from the 30% withholding tax provided the certification requirement described above is met) in the same manner as if you were a U.S. person, except as otherwise provided by an applicable tax treaty. If you are a foreign corporation, you may be required to pay a branch profits tax on the earnings and profits that are effectively connected to the conduct of your trade or business in the United States.

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Sale, Exchange or other Disposition of Notes.  You generally will not have to pay U.S. federal income tax on any gain or income realized from the sale, redemption, retirement at maturity or other disposition of your notes, unless:

•  in the case of gain, you are an individual who is present in the United States for 183 days or more during the taxable year of the sale or other disposition of your notes, and specific other conditions are met;

•  you are subject to tax provisions applicable to certain United States expatriates; or

•  the gain is effectively connected with your conduct of a U.S. trade or business.

If you are engaged in a trade or business in the United States and gain with respect to your notes is effectively connected with the conduct of that trade or business, you generally will be subject to U.S. income tax on a net basis on the gain. In addition, if you are a foreign corporation, you may be subject to a branch profits tax on your effectively connected earnings and profits for the taxable year, as adjusted for certain items.

U.S. Federal Estate Tax.  If you are an individual and are not a U.S. citizen or a resident of the United States, as specially defined for U.S. federal estate tax purposes, at the time of your death, your notes will generally not be subject to the U.S. federal estate tax, unless, at the time of your death (1) you owned actually or constructively 10% or more of the total combined voting power of all our classes of stock entitled to vote or (2) interest on the notes is effectively connected with your conduct of a U.S. trade or business.

Backup Withholding and Information Reporting.  Backup withholding will not apply to payments of principal or interest made by us or our paying agent, in its capacity as such, to you if you have provided the required certification that you are a non-U.S. holder as described in “— U.S. Federal Withholding Tax” above, and provided that neither we nor our paying agent have actual knowledge that you are a U.S. holder, as described in “— U.S. Holders” above. We or our paying agent may, however, report payments of interest on the notes.

The gross proceeds from the disposition of your notes may be subject to information reporting and backup withholding tax. If you sell your notes outside the United States through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. However, U.S. information reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your notes through a non-U.S. office of a broker that:

•  is a U.S. person, as defined in the Internal Revenue Code;

•  derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States;

•  is a “controlled foreign corporation” for U.S. federal income tax purposes; or

•  is a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons who in the aggregate hold more than 50% of the income or capital interests in the partnership, or the foreign partnership is engaged in a U.S. trade or business, unless the broker has documentary evidence in its files that you are a non-U.S. person and certain other conditions are met or you otherwise establish an exemption. If you receive payments of the proceeds of a sale of your notes to or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless you provide a Form W-8BEN certifying that you are a non-U.S. person or you otherwise establish an exemption.

You should consult your own tax advisor regarding application of backup withholding in your particular circumstance and the availability of and procedure for obtaining an exemption from backup withholding. Any amounts withheld under the backup withholding rules from a payment to you will be allowed as a refund or credit against your U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

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U.S. Federal Income and Estate Taxation of Holders of Our Warrants

Exercise of Warrants.  You will not generally recognize gain or loss upon the exercise of a warrant. Your basis in the debt securities, preferred stock, depositary shares or common stock, as the case may be, received upon the exercise of the warrant will be equal to the sum of your adjusted tax basis in the warrant and the exercise price paid. Your holding period in the debt securities, preferred stock, depositary shares or common stock, as the case may be, received upon the exercise of the warrant will not include the period during which the warrant was held by you.

Expiration of Warrants.  Upon the expiration of a warrant, you will recognize a capital loss in an amount equal to your adjusted tax basis in the warrant.

Sale or Exchange of Warrants.  Upon the sale or exchange of a warrant to a person other than us, you will recognize gain or loss in an amount equal to the difference between the amount realized on the sale or exchange and your adjusted tax basis in the warrant. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the warrant was held for more than one year. Upon the sale of the warrant to us, the Internal Revenue Service may argue that you should recognize ordinary income on the sale. You are advised to consult your own tax advisors as to the consequences of a sale of a warrant to us.

Potential Legislation or Other Actions Affecting Tax Consequences

Current and prospective securities holders should recognize that the present federal income tax treatment of an investment in us may be modified by legislative, judicial or administrative action at any time and that any such action may affect investments and commitments previously made. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the Treasury Department, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes. Revisions in federal tax laws and interpretations of these laws could adversely affect the tax consequences of an investment in us.

Internet Access to Our SEC Filings

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as our proxy statements and other materials that are filed with, or furnished to, the Securities and Exchange Commission are made available, free of charge, on our Web site at www.hcreit.com, as soon as reasonably practicable after they are filed with, or furnished to, the Securities and Exchange Commission.

Item 1A.  Risk Factors

Forward-Looking Statements and Risk Factors

This Annual Report on Form 10-K and the documents incorporated by reference contain statements that constitute “forward-looking statements” as that term is defined in the federal securities laws. These forward-looking statements include those regarding:

•  the possible expansion of our portfolio;

•  the sale of properties;

•  the performance of our operators and properties;

•  our ability to enter into agreements with new viable tenants for properties that we take back from financially troubled tenants, if any;

•  our ability to make distributions;

•  our policies and plans regarding investments, financings and other matters;

•  our tax status as a real estate investment trust;

•  our ability to appropriately balance the use of debt and equity;

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•  our ability to access capital markets or other sources of funds; and

•  our ability to meet our earnings guidance.

For example, when we use words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “estimate” or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including, but not limited to:

•  the status of the economy;

•  the status of capital markets, including prevailing interest rates;

•  serious issues facing the health care industry, including compliance with, and changes to, regulations and payment policies and operators’ difficulty in obtaining and maintaining adequate liability and other insurance;

•  changes in financing terms;

•  competition within the health care and senior housing industries;

•  negative developments in the operating results or financial condition of operators, including, but not limited to, their ability to pay rent and repay loans;

•  the Company’s ability to transition or sell facilities with profitable results;

•  the failure of closings to occur as and when anticipated;

•  acts of God affecting our properties;

•  our ability to reinvest sale proceeds at similar rates to assets sold;

•  operator bankruptcies or insolvencies;

•  government regulations affecting Medicare and Medicaid reimbursement rates;

•  liability claims and insurance costs for our operators;

•  unanticipated difficulties and/or expenditures relating to future acquisitions;

•  environmental laws affecting our properties;

•  delays in reinvestment of sale proceeds;

•  changes in rules or practices governing the Company’s financial reporting;

•  other factors, including REIT qualification, anti-takeover provisions and key management personnel; and

•  the risks described below:

Risk factors related to our operators’ revenues and expenses

Our facility operators’ revenues are primarily driven by occupancy, Medicare and Medicaid reimbursement, if applicable, and private pay rates. Expenses for these facilities are primarily driven by the costs of labor, food, utilities, taxes, insurance and rent or debt service. Revenues from government reimbursement have, and may continue, to come under pressure due to reimbursement cuts and state budget shortfalls. Liability insurance and staffing costs continue to increase for our operators. To the extent that any decrease in revenues and/or any increase in operating expenses result in a facility not generating enough cash to make payments to us, the credit of our operator and the value of other collateral would have to be relied upon.

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Risk factors related to operator bankruptcies

We are exposed to the risk that our operators may not be able to meet the rent, principal and interest or other payments due us, which may result in an operator bankruptcy or insolvency, or that an operator might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict an operator, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise 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 limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies.

We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of a facility, avoid the imposition of liens on a facility and/or transition a facility to a new operator. In some instances, we have terminated our lease with an operator and relet the facility to another operator. In some of those situations, we have provided working capital loans to and limited indemnification of the new operator. If we cannot transition a leased facility to a new operator, we may take possession of that facility, which may expose us to certain successor liabilities. Should such events occur, our revenue and operating cash flow may be adversely affected.

Risk factors related to government regulations

Our operators’ businesses are affected by government reimbursement and private payor rates. To the extent that a facility receives a significant portion of its revenues from governmental payors, primarily Medicare and Medicaid, such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries, government funding restrictions (at a program level or with respect to specific facilities) and interruption or delays in payments due to any ongoing governmental investigations and audits at such facility. In recent years, governmental payors have frozen or reduced payments to health care providers due to budgetary pressures. Health care reimbursement will likely continue to be of paramount importance to federal and state authorities. We cannot make any assessment as to the ultimate timing or effect any future legislative reforms may have on the financial condition of the skilled nursing industry, the specialty care industry or the health care industry in general. There can be no assurance that adequate reimbursement levels will continue to be available for services provided by any facility operator, whether the facility receives reimbursement from Medicare, Medicaid or private payors. Significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on an operator’s liquidity, financial condition and results of operations, which could adversely affect the ability of an operator to meet its obligations to us. In addition, 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 transfer of the facility or the replacement of the operator licensed to manage the facility. See “Item 1 — Business — Certain Government Regulations — Reimbursement” above.

Risk factors related to liability claims and insurance costs

Long-term care facility operators (skilled nursing facilities, assisted living facilities, and independent living/continuing care retirement communities) have experienced substantial increases in both the number and size of patient care liability claims in recent years, particularly in the states of Texas and Florida. As a result, general and professional liability costs have increased and may continue to increase. Long-term care liability insurance rates are increasing nationwide because of large jury awards in states like Texas and Florida. Over the past four years, both Texas and Florida have adopted skilled nursing facility liability laws that modify or limit tort damages. Despite some of these reforms, the long-term care industry overall continues to experience very high general and professional liability costs. Insurance companies have responded to this claims crisis by severely restricting their capacity to write long-term care general and professional liability policies. No assurances can be given that the climate for long-term care general and professional liability insurance will improve in any of the foregoing states or any other states where the facility operators conduct business. Insurance companies may continue to reduce or stop writing general and professional liability policies for long-term care facilities. Thus, general professional liability insurance coverage may be restricted or very costly, which may adversely affect the facility operators’ future

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operations, cash flows and financial condition, and may have a material adverse effect on the facility operators’ ability to meet their obligations to us.

Risk factors related to acquisitions

We are exposed to the risk that our future acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and newly acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. If we agree to provide construction funding to an operator and the project is not completed, we may need to take steps to ensure completion of the project or we could lose the property. Moreover, if we issue equity securities or incur additional debt, or both, to finance future acquisitions, it may reduce our per share financial results. These costs may negatively affect our results of operations.

Risk factors related to environmental laws

Under various federal and state laws, owners or operators of real estate may be required to respond to the release of hazardous substances on the property and may be held liable for property damage, personal injuries or penalties that result from environmental contamination. These laws also expose us to the possibility that we may become liable to reimburse the government for damages and costs it incurs in connection with the contamination. Generally, such liability attaches to a person based on the person’s relationship to the property. Our tenants or borrowers are primarily responsible for the condition of the property and since we are a passive landlord, we do not “participate in the management” of any property in which we have an interest. Moreover, we review environmental site assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are designed to meet the “all appropriate inquiry” standard, which qualifies us for the innocent purchaser defense if environmental liabilities arise. Based upon such assessments, we do not believe that any of our properties are subject to material environmental contamination. However, environmental liabilities may be present in our properties and we may incur costs to remediate contamination, which could have a material adverse effect on our business or financial condition.

Risk factors related to reinvestment of sale proceeds

From time to time, we will have cash available from (1) the proceeds of sales of our securities, (2) principal payments on our loans receivable and (3) the sale of properties, including non-elective dispositions, under the terms of master leases or similar financial support arrangements. We must re-invest these proceeds, on a timely basis, in properties or in qualified short-term investments. We compete for real estate investments with a broad variety of potential investors. This competition for attractive investments may negatively affect our ability to make timely investments on terms acceptable to us. Delays in acquiring properties may negatively impact revenues and perhaps our ability to make distributions to stockholders.

Other risk factors

We are also subject to a number of other risks. First, we might fail to qualify or remain qualified as a REIT. We intend to operate as a REIT under the Internal Revenue Code and believe we have and will continue to operate in such a manner. Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may fail to fulfill them, and if we do, our earnings will be reduced by the amount of federal taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. Also, if we were not a REIT, we would not be required to make distributions to stockholders since a non-REIT is not required to pay dividends to stockholders amounting to at least 90% of its annual taxable income (including 100% of capital gains). See “Item 1 — Business — Taxation” for a discussion of the provisions of the Internal Revenue Code that apply to us and the effects of non-qualification.

Second, our Second Restated Certificate of Incorporation and Amended and Restated By-Laws contain anti-takeover provisions (staggered board provisions, restrictions on share ownership and transfer and super majority stockholder approval requirements for business combinations) that could make it more difficult for or even prevent

28

a third party from acquiring us without the approval of our incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market value of our common stock.

Third, we are dependent on key personnel. Although we have entered into employment agreements with our executive officers, losing any one of them could, at least temporarily, have an adverse impact on our operations. We believe that losing more than one would have a material adverse impact on our business.

Item 1B.  Unresolved Staff Comments

None.

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Item 2.   Properties

Our headquarters are currently located at One SeaGate, Suite 1500, Toledo, Ohio 43604. The following table sets forth certain information regarding the facilities that comprise our investments as of December 31, 2005 (dollars in thousands):

	Number of		Number of		Total		Annualized
Facility Location	Facilities		Beds/Units		Investment(1)		Income(2)
Assisted Living Facilities:
Arizona		4		247	$	18,163	$	2,139
California		9		637		61,105		7,111
Colorado		1		46		4,266		522
Connecticut		6		591		54,340		5,798
Delaware		1		97		21,090		1,960
Florida		19		1,348		90,676		12,435
Georgia		2		107		4,427		543
Idaho		3		234		15,057		1,595
Indiana		2		78		5,055		637
Kansas		1		120		10,839		1,007
Kentucky		1		80		7,588		810
Louisiana		1		124		9,134		1,549
Maryland		2		164		9,361		1,063
Massachusetts		7		525		68,106		7,551
Mississippi		2		158		13,433		1,420
Montana		3		205		15,461		1,722
Nevada		3		262		25,069		2,946
New Jersey		3		176		17,927		1,848
New York		2		124		12,901		1,442
North Carolina		42		1,993		192,068		23,876
Ohio		9		627		46,758		4,768
Oklahoma		16		549		19,808		2,863
Oregon		4		168		15,971		2,079
Pennsylvania		3		227		17,281		1,381
South Carolina		7		366		30,872		3,989
Tennessee		6		334		16,906		2,186
Texas		22		1,267		72,431		6,963
Utah		2		138		13,746		1,497
Virginia		5		326		41,487		4,013
Washington		6		400		27,288		2,974
Wisconsin		1		28		4,006		494
Total Assisted Living Facilities		195		11,746		962,620		111,181

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	Number of		Number of		Total		Annualized
Facility Location	Facilities		Beds/Units		Investment(1)		Income(2)
Skilled Nursing Facilities:
Alabama		8		1,202	$	41,220	$	4,997
Arizona		3		505		21,004		1,991
California		1		116		3,868		602
Colorado		4		650		33,106		3,163
Connecticut		4		453		11,695		926
Florida		39		4,888		245,357		26,382
Georgia		3		499		16,716		1,748
Idaho		3		393		17,927		2,582
Illinois		4		406		28,180		2,498
Indiana		7		733		32,652		3,689
Kansas		1		163		9,480		806
Kentucky		10		1,343		67,658		7,139
Louisiana		6		708		29,719		3,090
Maryland		1		100		4,016		524
Massachusetts		26		3,633		228,748		26,864
Michigan		1		99		4,478		431
Mississippi		11		1,527		49,581		5,754
Missouri		3		407		24,955		1,966
Nevada		1		60		2,098		418
New Hampshire		1		68		4,638		447
New Jersey		1		176		4,766		441
Ohio		12		1,814		115,007		12,026
Oklahoma		3		668		21,727		2,262
Oregon		1		111		4,343		639
Pennsylvania		4		642		25,955		3,363
Tennessee		21		2,905		121,163		16,126
Texas		21		3,043		79,865		7,770
Utah		1		120		7,841		666
Virginia		2		316		8,433		1,194
Total Skilled Nursing Facilities		203		27,748		1,266,196		140,504
Independent Living / CCRC Facilities:
Arizona		2		376		25,965		1,145
California		6		970		126,825		9,512
Florida		3		542		69,757		6,120
Georgia		3		226		27,060		3,166
Idaho		1		254		14,034		1,791
Illinois		1		89		6,698		703
Indiana		1		74		5,999		696
Massachusetts		1				6,175		626
Montana		1		18		1,995		222
Nevada		1		103		11,554		1,309
New York		2		108		12,235		1,252

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	Number of		Number of		Total		Annualized
Facility Location	Facilities		Beds/Units		Investment(1)		Income(2)
North Carolina		2		335	$	23,446	$	1,964
South Carolina		4		703		69,213		6,065
Texas		2		532		19,767		2,447
Washington		1		70		5,122		530
Total Independent Living/CCRC Facilities		31		4,400		425,845		37,548
Specialty Care Facilities:
California		1		231		10,618		743
District of Columbia		1		148		17,175		1,202
Florida		1		100		3,961
Illinois		1		72		36,317		4,329
Massachusetts		3		550		57,162		7,906
Ohio		1		55		28,204		3,902
Oklahoma		1		31		3,943		380
Texas		4		125		46,388		4,465
Total Specialty Care Facilities		13		1,312		203,768		22,927
Total All Facilities:		442		45,206	$	2,858,429	$	312,160

(1)	Investments include real estate investments and credit enhancements which amounted to $2,855,979,000 and $2,450,000, respectively.
(2)	Reflects contract rate of interest for loans, annual straight-line rent for leases with fixed escalators or annual cash rent for leases with contingent escalators, excluding investments on non-accrual.

Item 3.   Legal Proceedings

From time to time, there are various legal proceedings pending to which we are a party or to which some of our 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 our consolidated financial position or results of operations.

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

None.

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PART II

Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

There were 5,823 stockholders of record as of February 28, 2006. The following table sets forth, for the periods indicated, the high and low prices of our common stock on the New York Stock Exchange, as reported on the Composite Tape, and common dividends paid per share:

	Sales Price				Dividends
	High		Low		Paid
2005
First Quarter	$	38.04	$	31.15	$	0.600
Second Quarter		37.99		31.69		0.620
Third Quarter		39.20		35.13		0.620
Fourth Quarter		37.37		33.35		0.620
2004
First Quarter	$	40.65	$	35.77	$	0.585
Second Quarter		40.88		27.70		0.600
Third Quarter		35.20		31.11		0.600
Fourth Quarter		38.15		34.41		0.600

Our Board of Directors approved a new quarterly dividend rate of $0.64 per share of common stock per quarter, commencing with the May 2006 dividend. Our dividend policy is reviewed annually by the Board of Directors. The declaration and payment of quarterly dividends remains subject to the review and approval of the Board of Directors.

On September 29, 2003, we issued 1,060,000 shares of 6% Series E Cumulative Convertible and Redeemable Preferred Stock as partial consideration for an acquisition of assets by us, with the shares valued at $26,500,000 for such purposes. The shares were issued to Southern Assisted Living, Inc. and certain of its shareholders without registration in reliance upon the federal statutory exemption of Section 4(2) of the Securities Act of 1933, as amended. The shares have a liquidation value of $25 per share. The preferred stock, which has no stated maturity, may be redeemed by us on or after August 15, 2008. The preferred shares are convertible into common stock at a conversion price of $32.66 per share at any time. During the three months ended December 31, 2005, certain holders of our Series E Cumulative Convertible and Redeemable Preferred Stock converted 4,559 shares into 3,487 shares of common stock, leaving 74,989 of such shares outstanding at December 31, 2005. These shares are not included in the following table:

ISSUER PURCHASES OF EQUITY SECURITIES

					Total Number	Maximum Number
					of Shares Purchased	of Shares that May
	Total Number				as Part of Publicly	Yet Be Purchased
	of Shares		Average Price		Announced Plans	Under the Plans
Period	Purchased(1)		Paid Per Share		or Programs(2)	or Programs
October 1, 2005 through October 31, 2005
November 1, 2005 through November 30, 2005
December 1, 2005 through December 31, 2005		8,378	$	33.96
Totals		8,378	$	33.96

(1)	During the three months ended December 31, 2005, the only securities purchased by the Company were shares of common stock held by employees who tendered owned shares to satisfy the tax withholding on the lapse of certain restrictions on restricted stock.
(2)	No shares were purchased as part of publicly announced plans or programs.

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Item 6.   Selected Financial Data

The following selected financial data for the five years ended December 31, 2005 are derived from our audited consolidated financial statements (in thousands, except per share data):

	Year Ended December 31
	2001		2002		2003		2004		2005
Operating Data
Revenues(1)	$	107,776	$	138,259	$	184,345	$	239,055	$	281,847
Expenses:
Interest expense(1)		24,826		34,637		45,949		68,567		80,050
Provision for depreciation(1)		21,031		29,571		46,551		66,897		80,000
Other operating expenses(2)		10,853		13,038		17,274		21,178		21,159
Impairment of assets				2,298		2,792		314
Loss on extinguishment of debt(3)		213		403						21,484
Loss on investment
Total expenses		56,923		79,947		112,566		156,956		202,693
Income from continuing operations		50,853		58,312		71,779		82,099		79,154
Income from discontinued operations, net(1)		9,696		9,347		10,961		3,272		5,132
Net income		60,549		67,659		82,740		85,371		84,286
Preferred stock dividends		13,505		12,468		9,218		12,737		21,594
Preferred stock redemption charge						2,790
Net income available to common stockholders	$	47,044	$	55,191	$	70,732	$	72,634	$	62,692
Other Data
Average number of common shares outstanding:
Basic		30,534		36,702		43,572		51,544		54,110
Diluted		31,027		37,301		44,201		52,082		54,499
Per Share Data
Basic:
Income from continuing operations available to common stockholders	$	1.22	$	1.25	$	1.37	$	1.35	$	1.07
Discontinued operations, net		0.32		0.25		0.25		0.06		0.09
Net income available to common stockholders	$	1.54	$	1.50	$	1.62	$	1.41	$	1.16
Diluted:
Income from continuing operations available to common stockholders	$	1.21	$	1.23	$	1.35	$	1.33	$	1.06
Discontinued operations, net		0.31		0.25		0.25		0.06		0.09
Net income available to common stockholders	$	1.52	$	1.48	$	1.60	$	1.39	$	1.15
Cash distributions per common share	$	2.34	$	2.34	$	2.34	$	2.385	$	2.46

	December 31
	2001		2002		2003		2004		2005
Balance Sheet Data
Net real estate investments	$	1,213,564	$	1,524,457	$	1,992,446	$	2,441,972	$	2,849,518
Total assets		1,267,543		1,591,482		2,184,088		2,552,171		2,972,164
Total debt		488,916		673,703		1,014,541		1,192,958		1,500,818
Total liabilities		509,673		694,250		1,034,409		1,216,892		1,541,408
Total stockholders’ equity		757,870		897,232		1,149,679		1,335,279		1,430,756

(1)	In accordance with FASB Statement No. 144, we have reclassified the income and expenses attributable to the properties sold subsequent to January 1, 2002 and attributable to the properties held for sale at December 31, 2005, to discontinued operations for all periods presented. See Note 15 to our audited consolidated financial statements.
(2)	Other operating expenses include loan expense, provision for loan losses and general and administrative expenses.
(3)	Effective January 1, 2003, in accordance with FASB Statement No. 145, we reclassified the losses on extinguishments of debt in 2001 and 2002 to income from continuing operations rather than as extraordinary items as previously required under FASB Statement No. 4.

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

The following discussion and analysis is based primarily on the consolidated financial statements of Health Care REIT, Inc. for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in “Item 1 — Business” and “Item 1A — Risk Factors” above.

Executive Overview

Business

Health Care REIT, Inc. is a self-administered, equity real estate investment trust that invests in health care and senior housing properties. Founded in 1970, we were the first REIT to invest exclusively in health care facilities. The following table summarizes our portfolio as of December 31, 2005:

	Investments(1)		Percentage of			Revenues(2)		Percentage of			Number of		Number of		Investment per		Number of		Number of
Type of Facility	(in thousands)		Investments			(in thousands)		Revenues			Facilities		Beds/Units		Beds/Units		Operators(4)		States(4)
Assisted Living Facilities	$	962,620		34	%	$	132,935		46	%		195		11,746	$	83,066		23		31
Skilled Nursing Facilities		1,266,196		44	%		121,986		42	%		203		27,748		45,828		23		29
Independent Living/CCRCs		425,845		15	%		17,725		6	%		31		4,400		100,872		13		15
Specialty Care Facilities		203,768		7	%		18,508		6	%		13		1,312		155,311		6		7
Totals	$	2,858,429		100	%	$	291,154		100	%		442		45,206

(1)	Investments include real estate investments and credit enhancements which amounted to $2,855,979,000 and $2,450,000, respectively.
(2)	Revenues include gross revenues and revenues from discontinued operations for the year ended December 31, 2005.
(3)	Investment per Bed/Unit was computed by using the total investment amount of $2,894,948,000 which includes real estate investments, credit enhancements and unfunded construction commitments for which initial funding has commenced which amounted to $2,855,979,000, $2,450,000 and $36,519,000, respectively.
(4)	We have investments in properties located in 36 states and managed by 54 different operators.

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 in properties managed by experienced operators and diversify our investment portfolio by operator 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 operators’ continued ability to make contractual rent and interest payments to us. To the extent that our operators 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 facility and operator. Our asset management process includes review of monthly financial statements for each facility, periodic review of operator credit, periodic facility 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 facility-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.

In addition to our asset management and research efforts, we also structure our investments to help mitigate payment risk. We typically limit our investments to no more than 90% of the appraised value of a property. 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

35

other loans, operating leases or agreements between us and the operator and its affiliates. As of December 31, 2005, 87% of our real property was subject to master leases.

For the year ended December 31, 2005, rental income and interest income represented 90% and 8%, respectively, of total gross revenues (including discontinued operations). Prior to June 2004, our standard lease structure contained fixed annual rental escalators, which were generally recognized on a straight-line basis over the initial lease period. Beginning in June 2004, our new standard lease structure contains annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. This lease structure initially generates lower revenues and earnings compared to leases with fixed escalators that require straight-lining, but enables us to generate additional organic growth and minimize non-cash straight-line rent over time. This change does not affect our cash flow or our ability to pay dividends. 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 making investments in additional facilities. New investments are generally funded from temporary borrowings under our unsecured lines of credit arrangements, 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 lines of credit arrangements, is expected to be provided through a combination of public and private offerings of debt and equity securities and the incurrence 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. We expect to complete gross new investments of $450,000,000 to $550,000,000 in 2006, including acquisitions of $300,000,000 and funded new development of $150,000,000 to $250,000,000. We anticipate the sale of real property and the repayment of loans receivable totaling approximately $100,000,000 to $150,000,000 during 2006. 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 lines of credit arrangements. At December 31, 2005, we had $36,237,000 of cash and cash equivalents and $345,000,000 of available borrowing capacity under our unsecured lines of credit arrangements.

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Key Transactions in 2005

We completed the following key transactions during the year ended December 31, 2005:

•  our Board of Directors increased our quarterly common dividend to $0.62 per share, which represents a two cent increase from the quarterly dividend of $0.60 paid for 2004. The dividend paid for the quarter ended December 31, 2005 represents the 139th consecutive dividend payment;

•  we completed $642,483,000 of gross investments and had $147,021,000 of investment payoffs;

•  we closed on a $500,000,000 unsecured revolving credit facility to replace our $310,000,000 facility which was scheduled to mature in May 2006. Among other things, the new facility provides us with additional financial flexibility and borrowing capacity, reduces our all-in borrowing costs by approximately 50 basis points, extends our agreement to June 2008 and permits us to increase the facility by $50,000,000 through an accordion feature during the first 24 months;

•  we issued $250,000,000 of 5.875% senior unsecured notes due May 2015 at an effective yield of 5.913% in April 2005. We used proceeds from this offering to fund: (a) a redemption of all of our outstanding $50,000,000 8.17% senior unsecured notes due March 2006; (b) a redemption of $122,500,000 of our outstanding $175,000,000 7.5% senior unsecured notes due August 2007; and (c) a public tender offer for $57,670,000 of our outstanding $100,000,000 7.625% senior unsecured notes due March 2008;

•  we completed a public offering of 3,000,000 shares of common stock with net proceeds to the company of $100,977,000 in November 2005; and

•  we issued $300,000,000 of 6.2% senior unsecured notes due June 2016 at an effective yield of 6.246% in December 2005.

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, credit strength and concentration risk. 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 available to common stockholders (“NICS”) is the most appropriate earnings measure. Other useful supplemental measures of our operating performance include funds from operations (“FFO”) and funds available for distribution (“FAD”); however, these supplemental measures are not defined by U.S. generally accepted accounting principals (“U.S. GAAP”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion of FFO and FAD and for reconciliations of FFO and FAD to NICS. These earning 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 (in thousands, except per share data):

	Year Ended
	December 31		December 31		December 31
	2003		2004		2005
Net income available to common stockholders	$	70,732	$	72,634	$	62,692
Funds from operations		119,463		146,742		144,293
Funds available for distribution		104,535		132,950		145,020
Per share data (fully diluted):
Net income available to common stockholders	$	1.60	$	1.39	$	1.15
Funds from operations		2.70		2.82		2.65
Funds available for distribution		2.36		2.55		2.66

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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. Our coverage ratios include interest coverage ratio and fixed charge coverage ratio. The coverage ratios indicate our ability to service interest and fixed charges (interest plus 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:

	Year Ended
	December 31			December 31			December 31
	2003			2004			2005
Debt to book capitalization ratio		47	%		47	%		51	%
Debt to market capitalization ratio		34	%		34	%		40	%
Interest coverage ratio		3.50	x		3.24	x		3.10	x
Fixed charge coverage ratio		3.01	x		2.77	x		2.47	x

Concentration Risk.  We evaluate our concentration risk in terms of asset mix, investment mix, operator 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 and related rights, is owned by us and leased to an operator pursuant to a long-term operating lease. Investment mix measures the portion of our investments that relate to our various facility types. Operator mix measures the portion of our investments that relate to our top five operators. The following table reflects our recent historical trends of concentration risk:

	December 31			December 31			December 31
	2003			2004			2005
Asset mix:
Real property		87	%		90	%		93	%
Loans receivable		13	%		10	%		7	%
Investment mix:
Assisted living facilities		60	%		54	%		34	%
Skilled nursing facilities		32	%		39	%		44	%
Independent/CCRC(1)								15	%
Specialty care facilities		8	%		7	%		7	%

(1) As a result of our significant independent living/continuing care retirement community acquisitions in the fourth quarter of 2005, we began to separately disclose this facility classification in our portfolio reporting. We adopted the National Investment Center definitions and reclassified certain of our existing facilities to this classification.

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	December 31			December 31			December 31
	2003			2004			2005
Operator mix:
Emeritus Corporation		12	%		15	%		13	%
Merrill Gardens L.L.C.								7	%
Southern Assisted Living, Inc.		11	%		8	%		7	%
Life Care Centers of America, Inc.		6	%					7	%
Commonwealth Communities Holdings LLC		10	%		8	%		7	%
Delta Health Group, Inc.					7	%
Home Quality Management, Inc.		7	%		7	%
Remaining operators		54	%		55	%		59	%
Geographic mix:
Florida		9	%		15	%		14	%
Massachusetts		13	%		14	%		13	%
Texas		6	%		6	%		8	%
North Carolina		10	%		8	%		8	%
California								7	%
Ohio		6	%		6	%
Remaining states		56	%		51	%		50	%

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. Management regularly monitors various 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 “Item 1A — Risk Factors” above for further discussion.

Portfolio Update

Payment coverages in our portfolio continue to improve. Our overall payment coverage is at 1.92 times and represents an increase of 14 basis points from 2004 and 39 basis points from 2003. The following table reflects our recent historical trends of portfolio coverages. Coverage data reflects the 12 months ended for the periods presented. CBMF represents the ratio of facilities’ earnings before interest, taxes, depreciation, amortization, rent and management fees to contractual rent or interest due us. CAMF represents the ratio of earnings before interest, taxes, depreciation, amortization, and rent (but after management fees) to contractual rent or interest due us.

September 30, 2003

September 30, 2004

September 30, 2005

CBMF

CAMF

CBMF

CAMF

CBMF

CAMF

Assisted Living Facilities

1.31

x

1.10

x

1.45

x

1.23

x

1.52

x

1.30

x

Skilled Nursing Facilities

1.75

x

1.34

x

2.11

x

1.62

x

2.18

x

1.61

x

Independent/CCRCs

1.43

x

1.21

x

Specialty Care Facilities

1.92

x

1.48

x

2.69

x

2.08

x

3.36

x

2.77

x

Weighted Averages

1.53

x

1.23

x

1.78

x

1.44

x

1.92

x

1.53

x

Corporate Governance

Maintaining investor confidence and trust has become increasingly important in today’s business environment. Health Care REIT, Inc.’s Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting

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all applicable legal requirements. In March 2004, the Board of Directors adopted its Corporate Governance Guidelines. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on our Web site at www.hcreit.com and from us upon written request sent to the Vice President — Administration and Corporate Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio, 43603-1475.

Liquidity and Capital Resources

Sources and Uses of Cash

Our primary sources of cash include rent and interest receipts, borrowings under unsecured lines of credit arrangements, public and private offerings of debt and equity securities, proceeds from the sales of real property and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property acquisitions, loan advances and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below.

The following is a summary of our sources and uses of cash flows (dollars in thousands):

	Year Ended						One Year Change						Year Ended			One Year Change						Two Year Change
	Dec. 31, 2003			Dec. 31, 2004			$			%			Dec. 31, 2005			$			%			$			%
Cash and cash equivalents at beginning of period	$	9,550		$	124,496		$	114,946			1,204	%	$	19,763		$	(104,733	)		−84	%	$	10,213			107	%
Cash provided from (used in) operating activities		129,521			144,025			14,504			11	%		173,755			29,730			21	%		44,234			34	%
Cash provided from (used in) investing activities		(388,746	)		(507,362	)		(118,616	)		31	%		(449,069	)		58,293			−11	%		(60,323	)		16	%
Cash provided from (used in) financing activities		374,171			258,604			(115,567	)		−31	%		291,788			33,184			13	%		(82,383	)		−22	%
Cash and cash equivalents at end of period	$	124,496		$	19,763		$	(104,733	)		−84	%	$	36,237		$	16,474			83	%	$	(88,259	)		−71	%

Operating Activities.  The increases in net cash provided from operating activities are primarily attributable to increases in net income, excluding the provision for depreciation and net straight-line rental income. Net income and the provision for depreciation increased primarily as a result of net new investments in properties owned by us. See the discussion of investing activities below for additional details. To the extent that we acquire or dispose of additional properties in the future, our net income and provision for depreciation will change accordingly. Net straight-line rental income decreased primarily due to a decrease in gross straight-line rental income and increases in cash payments outside normal monthly rental payments.

The following is a summary of our straight-line rent (dollars in thousands):

	Year Ended						One Year Change						Year Ended			One Year Change						Two Year Change
	Dec. 31, 2003			Dec. 31, 2004			$			%			Dec. 31, 2005			$			%			$			%
Gross straight-line rental income	$	21,199		$	21,936		$	737			3	%	$	13,142		$	(8,794	)		−40	%	$	(8,057	)		−38	%
Cash receipts due to real property sales		(2,427	)		(3,756	)		(1,329	)		55	%		(9,384	)		(5,628	)		150	%		(6,957	)		287	%
Prepaid rent receipts		(3,844	)		(4,388	)		(544	)		14	%		(4,485	)		(97	)		2	%		(641	)		17	%
Cash receipts in excess of (less than) rental income	$	14,928		$	13,792		$	(1,136	)		−8	%	$	(727	)	$	(14,519	)		−105	%	$	(15,655	)		−105	%

Gross straight-line rental income represents the non-cash difference between contractual cash rent due and the average rent recognized pursuant to Statement of Financial Accounting Standards No. 13 “Accounting for Leases.” This amount is positive in the first half of a lease term (but declining every year due to annual increases in cash rent due) and is negative in the second half of a lease term. The decrease in gross straight-line rental income is primarily due to annual increases in cash rent due on leases with fixed increases and our decision in 2004 to change our

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standard lease structure. Prior to June 2004 our standard lease structure contained fixed annual rental escalators, which were generally recognized on a straight-line basis over the initial lease period. Beginning in June 2004, our new standard lease structure contains annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded. Instead, rental income is recorded based on the contractual cash rental payment due for the period. The increase in non-recurring cash receipts are primarily attributable to cash received in connection with real property sales that resulted in the payoff of existing straight-line receivable balances.

Investing Activities.  The changes in net cash used in investing activities are primarily attributable to net changes in loans receivable and real property investments. The following is a summary of our investment and disposition activities (dollars in thousands):

	Year Ended
	December 31, 2003					December 31, 2004					December 31, 2005
	Facilities		Amount			Facilities		Amount			Facilities		Amount
Real property acquisitions:
Assisted living		71	$	350,062			22	$	179,940			4	$	47,660
Skilled nursing		25		120,823			52		338,951			45		262,084
Independent/CCRC												11		230,225
Specialty care												5		51,000
Total acquisitions		96		470,885			74		518,891			65		590,969
Less:
Assumed debt				(101,243	)				(14,555	)				(22,309	)
Preferred stock issuance				(26,500	)
Cash disbursed for acquisitions				343,142					504,336					568,660
Additions to CIP				31,771					11,883					8,790
Capital improvements to existing properties				35,500					26,328					21,841
Total cash invested in real property				410,413					542,547					599,291
Real property dispositions:
Assisted living		9		52,232			4		20,271			15		90,485
Skilled nursing		2		13,078			2		6,076
Specialty care							1		11,220
Land parcels				145										840
Proceeds from real property sales		11		65,455			7		37,567			15		91,325
Net cash investments in real property		85	$	344,958			67	$	504,980			50	$	507,966
Advances on loans receivable:
Investments in new loans			$	36,436				$	47,826				$	26,554
Draws on existing loans				69,219					14,062					13,833
Total investments in loans				105,655					61,888					40,387
Receipts on loans receivable:
Loan payoffs				30,631					38,450					82,379
Principal payments on loans				26,450					17,023					16,259
Total principal receipts on loans				57,081					55,473					98,638
Net cash advances/(receipts) on loans receivable			$	48,574				$	6,415				$	(58,251	)

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Financing Activities.  The changes in net cash provided from or used in financing activities are primarily attributable to changes related to our long-term debt, common stock issuances, preferred stock issuances and redemptions, and cash distributions to stockholders.

The following is a summary our senior unsecured note issuances (dollars in thousands):

Date Issued	Maturity Date	Interest Rate			Face Amount		Net Proceeds
March 2003	September 2012		8.000	%	$	100,000	$	103,167
October 2003	November 2013		6.000	%		250,000		247,303
2003 Totals					$	350,000	$	350,470
September 2004	November 2013		6.000	%	$	50,000	$	50,708
April 2005	May 2015		5.875	%	$	250,000	$	246,859
November 2005	June 2016		6.200	%		300,000		297,194
2005 Totals					$	550,000	$	544,053

We repaid $40,000,000 of 8.0% senior unsecured notes upon maturity in April 2004. In May 2005, we redeemed all of our outstanding $50,000,000 8.17% senior unsecured notes due March 2006, we completed a public tender offer for $57,670,000 of our outstanding $100,000,000 7.625% senior unsecured notes due March 2008, and we redeemed $122,500,000 of our outstanding $175,000,000 7.5% senior unsecured notes due August 2007. The increase in principal payments on secured debt during 2005 is primarily due to early extinguishments of outstanding mortgages. During the year ended December 31, 2005, we paid off mortgages with outstanding balances of $72,309,000 and average interest rates of 7.481%.

The change in common stock is primarily attributable to public and private issuances and common stock issuances related to our dividend reinvestment and stock purchase plan (“DRIP”). The remaining difference in common stock issuances is primarily due to issuances pursuant to stock incentive plans.

The following is a summary our common stock issuances (dollars in thousands, except per share amounts):

Date Issued	Shares Issued		Issue Price		Gross Proceeds		Net Proceeds
July 2003		1,583,100	$	30.32	$	48,000	$	47,933
September 2003		3,680,000	$	30.25		111,320		105,075
2003 DRIP		2,276,821	$	30.24		68,860		68,860
2003 Totals		7,539,921			$	228,180	$	221,868
2004 DRIP		1,532,819	$	33.65	$	51,575	$	51,575
November 2005		3,000,000	$	34.15	$	102,450	$	100,977
2005 DRIP		1,546,959	$	34.59		53,505		53,505
2005 Totals		4,546,959			$	155,955	$	154,482

In July 2003, we closed on a public offering of 4,000,000 shares of 7.875% Series D Cumulative Redeemable Preferred Stock, which generated net proceeds of approximately $96,850,000. A portion of the proceeds from this offering were used to redeem all 3,000,000 shares of our 8.875% Series B Cumulative Redeemable Preferred Stock on July 15, 2003, at a redemption price of $25 per share plus accrued and unpaid dividends. In September 2004, we closed on a public offering of 7,000,000 shares of 7.625% Series F Cumulative Redeemable Preferred Stock, which generated net proceeds of approximately $169,107,000. The proceeds were used to repay borrowings under our unsecured lines of credit arrangements and to invest in additional properties.

In order to qualify as a REIT for federal income tax purposes, we must distribute at least 90% of our taxable income (including 100% of capital gains) to our stockholders. The increases in dividends are primarily attributable to increases in outstanding common and preferred stock shares as discussed above and increases in our annual common stock dividend per share.

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The following is a summary of our dividend payments (in thousands, except per share amounts):

	Year Ended
	December 31, 2003				December 31, 2004				December 31, 2005
	Per Share		Amount		Per Share		Amount		Per Share		Amount
Common Stock	$	2.34	$	101,863	$	2.385	$	122,987	$	2.46	$	132,548
Series B Preferred Stock		2.22		3,605
Series C Preferred Stock		2.25		1,439
Series D Preferred Stock		1.97		3,784		1.97		7,875		1.97		7,875
Series E Preferred Stock		1.50		390		1.50		933		1.50		375
Series F Preferred Stock						1.50		3,929		1.91		13,344
Totals			$	111,081			$	135,724			$	154,142

Off-Balance Sheet Arrangements

We have an outstanding letter of credit issued for the benefit of certain insurance companies that provide workers’ compensation insurance to one of our tenants. Our obligation under the letter of credit matures in 2009. At December 31, 2005, our obligation under the letter of credit was $2,450,000.

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on the general trend in interest rates at the applicable dates, our perception of the future volatility of interest rates and our relative levels of variable rate debt and variable rate investments. As of December 31, 2005, we participated in two interest rate swap agreements related to our long-term debt. Our interest rate swaps are discussed below in “Contractual Obligations.”

Contractual Obligations

The following table summarizes our payment requirements under contractual obligations as of December 31, 2005 (in thousands):

	Payments Due by Period
Contractual Obligations	Total		2006		2007-2008		2009-2010		Thereafter
Unsecured lines of credit arrangements(1)	$	540,000	$	40,000	$	500,000	$	0	$	0
Senior unsecured notes		1,194,830				94,830				1,100,000
Secured debt		107,540		2,596		24,269		41,301		39,374
Contractual interest obligations		749,475		108,125		198,062		161,471		281,817
Capital lease obligations
Operating lease obligations		14,257		1,275		1,994		1,857		9,131
Purchase obligations		81,449		15,096		48,007		17,991		355
Other long-term liabilities
Total contractual obligations	$	2,687,551	$	167,092	$	867,162	$	222,620	$	1,430,677

(1) Unsecured lines of credit arrangements reflected at 100% capacity.

We have an unsecured credit arrangement with a consortium of ten banks providing for a revolving line of credit (“revolving credit”) in the amount of $500,000,000, which expires on June 22, 2008 (with the ability to extend for one year at our discretion if we are in compliance with all covenants). The agreement specifies that borrowings under the revolving credit are subject to interest payable in periods no longer than three months at either the agent bank’s prime rate of interest or the applicable margin over LIBOR interest rate, at our option (5.387% at December 31, 2005). The applicable margin is based on our ratings with Moody’s Investors Service and Standard & Poor’s Ratings Services and was 0.9% at December 31, 2005. In addition, we pay a facility fee annually to each bank based on the bank’s commitment under the revolving credit facility. The facility fee depends on our ratings

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with Moody’s Investors Service and Standard & Poor’s Ratings Services and was 0.225% at December 31, 2005. We also pay an annual agent’s fee of $50,000. Principal is due upon expiration of the agreement. We have another unsecured line of credit arrangement with a bank for a total of $40,000,000, which expires May 31, 2006. Borrowings under this line of credit are subject to interest at either the bank’s prime rate of interest (7.25% at December 31, 2005) or 1.3% over LIBOR interest rate, at our option. Principal is due upon expiration of the agreement. At December 31, 2005, we had $195,000,000 outstanding under the unsecured lines of credit arrangements and estimated total contractual interest obligations of $26,262,000. Contractual interest obligations are estimated based on the assumption that the balance of $195,000,000 at December 31, 2005 is constant until maturity at interest rates in effect at December 31, 2005.

We have $1,194,830,000 of senior unsecured notes principal outstanding with fixed annual interest rates ranging from 5.875% to 8.0%, payable semi-annually. Total contractual interest obligations on senior unsecured notes totaled $647,298,000 at December 31, 2005. Additionally, we have 31 mortgage loans totaling $107,540,000, collateralized by owned properties, with fixed annual interest rates ranging from 5.8% to 8.5%, payable monthly. The carrying values of the properties securing the mortgage loans totaled $167,230,000 at December 31, 2005. Total contractual interest obligations on mortgage loans totaled $32,715,000 at December 31, 2005.

On May 6, 2004, we entered into two interest rate swap agreements (the “Swaps”) for a total notional amount of $100,000,000 to hedge changes in fair value attributable to changes in the LIBOR swap rate of $100,000,000 of fixed rate debt with a maturity date of November 15, 2013. The Swaps are treated as fair-value hedges for accounting purposes and we utilize the short-cut method in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The Swaps are with highly rated counterparties in which we receive a fixed rate of 6% and pay a variable rate based on six-month LIBOR plus a spread. At December 31, 2005, total contractual interest obligations were estimated to be $43,200,000.

At December 31, 2005, we had operating lease obligations of $14,257,000 relating to our office space, five assisted living facilities and three skilled nursing facilities.

Purchase obligations are comprised of unfunded construction commitments and contingent purchase obligations. At December 31, 2005, we had outstanding construction financings of $3,906,000 for leased properties and were committed to providing additional financing of approximately $36,519,000 to complete construction. At December 31, 2005, we had contingent purchase obligations totaling $44,930,000. These contingent purchase obligations primarily relate to deferred acquisition fundings and capital improvements. Deferred acquisition fundings are contingent upon a tenant satisfying certain conditions in the lease. Upon funding, amounts due from the tenant are increased to reflect the additional investment in the property.

Capital Structure

As of December 31, 2005, we had stockholders’ equity of $1,430,756,000 and a total outstanding debt balance of $1,500,818,000, which represents a debt to total book capitalization ratio of 51%. Our ratio of debt to market capitalization was 40% at December 31, 2005. For the year ended December 31, 2005, our coverage ratio of EBITDA to interest was 3.10 to 1.00. For the year ended December 31, 2005, our coverage ratio of EBITDA to fixed charges was 2.47 to 1.00. Also, at December 31, 2005, we had $36,237,000 of cash and cash equivalents and $345,000,000 of available borrowing capacity under our unsecured lines of credit arrangements.

Our debt agreements contain various covenants, restrictions and events of default. Among other things, these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2005, we were in compliance with all of the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our unsecured lines of credit arrangements, the ratings on our senior unsecured notes are used to determine the fees and interest payable.

Our senior unsecured notes are rated Baa3 (stable), BBB- (positive) and BBB- (stable) by Moody’s Investors Service, Standard & Poor’s Ratings Services and Fitch Ratings, respectively. We plan to manage the Company to maintain investment grade status with a capital structure consistent with our current profile. Any downgrades in

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terms of ratings or outlook by any or all of the noted rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

As of February 28, 2006, we had an effective shelf registration statement on file with the Securities and Exchange Commission under which we may issue up to $429,344,619 of securities including debt securities, common and preferred stock, depositary shares, warrants and units. Also, as of February 28, 2006, we had an effective registration statement on file in connection with our enhanced DRIP program under which we may issue up to 6,314,213 shares of common stock. As of February 28, 2006, 2,718,433 shares of common stock remained available for issuance under this registration statement. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured lines of credit arrangements.

Results of Operations

	Year Ended				One Year Change					Year Ended		One Year Change						Two Year Change
	Dec. 31, 2003		Dec. 31, 2004		$		%			Dec. 31, 2005		$			%			$			%
Net income available to common stockholders	$	70,732	$	72,634	$	1,902		3	%	$	62,692	$	(9,942	)		−14	%	$	(8,040	)		−11	%
Funds from operations		119,463		146,742		27,279		23	%		144,293		(2,449	)		−2	%		24,830			21	%
Funds available for distribution		104,535		132,950		28,415		27	%		145,020		12,070			9	%		40,485			39	%
EBITDA		199,349		238,264		38,915		20	%		258,578		20,314			9	%		59,229			30	%

Net income available to common stockholders decreased 14% from 2004 and 11% from 2003 primarily due to the losses on extinguishment of debt totaling $21,484,000, or $0.39 per diluted share, and increases in interest expense, provision for depreciation and preferred stock dividends, offset by increases in rental income. Net income available to common stockholders increased 3% from 2003 to 2004 due to an increase in rental income offset by increases in interest expense and provision for depreciation. These changes are discussed in further detail below. Net income available to common stockholders decreased on a per share basis during 2005 due to the lower net income available to common stockholders discussed above and higher outstanding shares. Net income available to common stockholders decreased on a per share basis during 2004 primarily due to higher outstanding shares. On a fully diluted basis, average common shares outstanding for the year ended December 31, 2005 was 54,499,000, a 5% increase from 52,082,000 for the same period in 2004 and an 18% increase from 44,201,000 for the same period in 2003. The increase in fully diluted average common shares outstanding is primarily the result of public and private common stock offerings and common stock issuances pursuant to our DRIP.

The following table represents the changes in outstanding common stock for the period from January 1, 2003 to December 31, 2005 (in thousands):

	Year Ended
	Dec. 31, 2003		Dec. 31, 2004		Dec. 31, 2005		Totals
Beginning balance		40,086		50,361		52,925		40,086
Public/private offerings		5,263				3,000		8,263
DRIP issuances		2,277		1,533		1,547		5,357
Preferred stock conversions		2,224		369		210		2,803
Other issuances		511		662		443		1,616
Ending balance		50,361		52,925		58,125		58,125

The decrease in FFO for the year ended December 31, 2005 is primarily due to the losses on extinguishment of debt. The increase in FFO for the year ended December 31, 2004 is primarily due to the increase in net income available to common stockholders. The increases in FAD are primarily due to the changes in net straight-line rental income offset by the losses on extinguishment of debt. Please refer to the discussion of “Non-GAAP Financial Measures” below for further information regarding FFO and FAD and for reconciliations of FFO and FAD to NICS.

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The increases in EBITDA are primarily due to increases in net income, excluding interest expense and provision for depreciation. Our coverage ratio of EBITDA to total interest was 3.10 times for the year ended December 31, 2005 as compared with 3.24 times for the same period in 2004 and 3.50 times for the same period in 2003. Our coverage ratio of EBITDA to fixed charges was 2.47 times for the year ended December 31, 2005 as compared with 2.77 times for the same period in 2004 and 3.01 times for the same period in 2003. Our coverage ratios declined from the prior years primarily due to the losses on extinguishment of debt and increases in interest expense. Please refer to the discussion of “Non-GAAP Financial Measures” below for further information regarding EBITDA and a reconciliation of EBITDA and net income.

Revenues were comprised of the following (dollars in thousands):

	Year Ended				One Year Change						Year Ended		One Year Change						Two Year Change
	Dec. 31, 2003		Dec. 31, 2004		$			%			Dec. 31, 2005		$			%			$		%
Rental income	$	159,818	$	213,755	$	53,937			34	%	$	253,306	$	39,551			19	%	$	93,488		58	%
Interest income		20,768		22,818		2,050			10	%		23,993		1,175			5	%		3,225		16	%
Transaction fees and other income		3,759		2,432		(1,327	)		−35	%		4,548		2,116			87	%		789		21	%
Prepayment fees				50		50			n/a					(50	)		n/a					n/a
Totals	$	184,345	$	239,055	$	54,710			30	%	$	281,847	$	42,792			18	%	$	97,502		53	%

The increase in gross revenues is primarily attributable to increased rental income resulting from the acquisitions of new properties from which we receive rent. See the discussion of investing activities in “Liquidity and Capital Resources” above for further information. In addition, as discussed above, prior to June 2004, our standard lease structure contained fixed annual rental escalators, which were generally recognized on a straight-line basis over the minimum lease period. Beginning in June 2004, our new standard lease structure contains annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. While this change does not affect our cash flow or our ability to pay dividends, it is anticipated that we will generate additional organic growth and minimize non-cash straight-line rent over time. If gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our revenues may not continue to increase. Sales of real property would offset revenue increases and, to the extent that they exceed new acquisitions, could result in decreased revenues. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. As of December 31, 2005, we had no leases expiring prior to 2009 with the exception of our master lease with Commonwealth Communities Holdings LLC. In October 2005, Kindred Healthcare, Inc. (“Kindred”) announced its intent to acquire Commonwealth. As part of this transaction, which closed on February 28, 2006, we leased the Commonwealth facilities to Kindred under two master leases.

Interest income increased in 2005 primarily due to recognition of additional interest income of approximately $4,509,000 offset by loan payoffs. The additional interest income related to the payoffs of loans that were either on non-accrual or partial accrual and all contractual interest was received from the borrowers. Transaction fees and other income fluctuated primarily due to $822,000 of extinguishment recoveries, $750,000 in termination fees as well as additional fees from loan payoffs recognized during the year ended December 31, 2005. The decrease from 2003 to 2004 is primarily due to the $902,000 gain from the sale of our investment in Atlantic Healthcare Finance L.P. in October 2003.

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Expenses were comprised of the following (dollars in thousands):

	Year Ended				One Year Change						Year Ended		One Year Change						Two Year Change
	Dec. 31, 2003		Dec. 31, 2004		$			%			Dec. 31, 2005		$			%			$			%
Interest expense	$	45,949	$	68,567	$	22,618			49	%	$	80,050	$	11,483			17	%	$	34,101			74	%
Provision for depreciation		46,551		66,897		20,346			44	%		80,000		13,103			20	%		33,449			72	%
General and administrative		11,483		16,585		5,102			44	%		17,249		664			4	%		5,766			50	%
Loan expense		2,921		3,393		472			16	%		2,710		(683	)		−20	%		(211	)		−7	%
Impairment of assets		2,792		314		(2,478	)		−89	%				(314	)		−100	%		(2,792	)		−100	%
Loss on extinguishment of debt												21,484		21,484			n/a			21,484			n/a
Provision for loan losses		2,870		1,200		(1,670	)		−58	%		1,200		0			0	%		(1,670	)		−58	%
Totals	$	112,566	$	156,956	$	44,390			39	%	$	202,693	$	45,737			29	%	$	90,127			80	%

The increase in total expenses is primarily attributable to increases in interest expense, the provision for depreciation and the recognition of losses on extinguishment of debt. The increases in interest expense are primarily due to higher average borrowings and changes in the amount of capitalized interest offsetting interest expense. This was partially offset by lower average interest rates and savings generated from interest rate swap agreements. If we borrow under our unsecured lines of credit arrangements, issue additional senior unsecured notes or assume additional secured debt, our interest expense will increase.

The following is a summary of our interest expense (dollars in thousands):

	Year Ended						One Year Change						Year Ended			One Year Change					Two Year Change
	Dec. 31, 2003			Dec. 31, 2004			$			%			Dec. 31, 2005			$		%			$			%
Senior unsecured notes	$	48,527		$	61,216		$	12,689			26	%	$	63,080		$	1,864		3	%	$	14,553			30	%
Secured debt		5,514			11,069			5,555			101	%		11,769			700		6	%		6,255			113	%
Unsecured lines of credit		2,871			2,916			45			2	%		9,412			6,496		223	%		6,541			228	%
Capitalized interest		(1,535	)		(875	)		660			−43	%		(665	)		210		−24	%		870			−57	%
SWAP earnings					(1,770	)		(1,770	)		n/a			(972	)		798		−45	%		(972	)		n/a
Discontinued operations		(9,428	)		(3,989	)		5,439			−58	%		(2,574	)		1,415		−35	%		6,854			−73	%
Totals	$	45,949		$	68,567		$	22,618			49	%	$	80,050		$	11,483		17	%	$	34,101			74	%

The increase in interest expense on senior unsecured notes is due to the net effect and timing of issuances and extinguishments. See the discussion of financing activities in “Liquidity and Capital Resources” above for further information.

The following is a summary of our senior unsecured notes principal activity (dollars in thousands):

	Year Ended December 31, 2003					Year Ended December 31, 2004						Year Ended December 31, 2005
			Weighted Average						Weighted Average						Weighted Average
	Amount		Interest Rate			Amount			Interest Rate			Amount			Interest Rate
Beginning balance	$	515,000		7.781	%	$	865,000			7.291	%	$	875,000			7.181	%
Debt issued		350,000		6.571	%		50,000			6.000	%		550,000			6.052	%
Debt extinguished							(40,000	)		8.090	%		(230,170	)		7.677	%
Ending balance	$	865,000		7.291	%	$	875,000			7.181	%	$	1,194,830			6.566	%
Monthly averages	$	630,385		7.699	%	$	852,692			7.242	%	$	961,469			6.829	%

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The increase in interest expense on secured debt is due to the net effect and timing of assumptions, extinguishments and principal amortizations. The following is a summary of our secured debt activity (dollars in thousands):

	Year Ended December 31, 2003						Year Ended December 31, 2004						Year Ended December 31, 2005
				Weighted Average						Weighted Average						Weighted Average
	Amount			Interest Rate			Amount			Interest Rate			Amount			Interest Rate
Beginning balance	$	51,831			7.447	%	$	148,184			7.512	%	$	160,225			7.508	%
Debt assumed		101,243			7.403	%		14,555			7.500	%		22,309			6.561	%
Debt extinguished		(4,000	)		3.790	%								(72,309	)		7.481	%
Principal payments		(890	)		8.095	%		(2,514	)		7.709	%		(2,685	)		7.584	%
Ending balance	$	148,184			7.512	%	$	160,225			7.508	%	$	107,540			7.328	%
Monthly averages	$	82,644			7.594	%	$	148,141			7.510	%	$	156,027			7.452	%

The increase in interest expense on unsecured lines of credit arrangements is due primarily to higher average outstanding borrowings. The following is a summary of our unsecured lines of credit arrangements (dollars in thousands):

	Year Ended December 31
	2003			2004			2005
Balance outstanding at December 31	$	0		$	151,000		$	195,000
Maximum amount outstanding at any month end	$	156,900		$	159,000		$	318,000
Average amount outstanding (total of daily principal balances divided by days in year)	$	61,677		$	54,770		$	181,232
Weighted average interest rate (actual interest expense divided by average borrowings outstanding)		4.65	%		5.32	%		5.19	%

We capitalize certain interest costs associated with funds used to finance the construction of properties owned directly by us. The amount capitalized is based upon the borrowings outstanding during the construction period using the rate of interest that approximates our cost of financing. Our interest expense is reduced by the amount capitalized. Capitalized interest for the years ended December 31, 2003, 2004 and 2005 totaled $1,535,000, $875,000 and $665,000, respectively.

On May 6, 2004, we entered into two interest rate swap agreements (the “Swaps”) for a total notional amount of $100,000,000 to hedge changes in fair value attributable to changes in the LIBOR swap rate of $100,000,000 of fixed rate debt with a maturity date of November 15, 2013. We receive a fixed rate of 6.0% and pay a variable rate based on six-month LIBOR plus a spread. For the years ended December 31, 2005, and 2004, we generated $972,000 and $1,770,000, respectively, of savings related to our Swaps that was recorded as a reduction of interest expense. We had no interest rate swap agreements outstanding during 2003.

The provision for depreciation increased primarily as a result of additional investments in properties owned directly by us. See the discussion of investing activities in “Liquidity and Capital Resources” above for further information. To the extent that we acquire or dispose of additional properties in the future, our provision for depreciation will change accordingly.

General and administrative expenses as a percentage of revenues (including revenues from discontinued operations) for the year ended December 31, 2005, were 5.89% as compared with 6.54% and 5.55% for the same periods in 2004 and 2003, respectively. The change from 2004 to 2005 is due to increased costs to attract and retain appropriate personnel to achieve our business objectives offset by a decrease in professional service fees and other operating costs as a result of focused expense control. Approximately one-half of the increases from 2003 to 2004 were related to costs associated with our initiatives to attract and retain appropriate personnel to achieve our business objectives. The remainder was comprised of increases relating to professional services fees (including costs associated with SOX compliance), taxes and transition costs associated with the removal of an underperforming operator in December 2004.

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The change in loan expense was primarily due to increased costs in 2003 and 2004 related to amending our primary unsecured line of credit arrangement, costs related to obtaining consents to modify the covenants under our senior unsecured notes and costs related to the issuance of senior unsecured notes.

During the year ended December 31, 2004, it was determined that the projected undiscounted cash flows from a property did not exceed its related net book value and an impairment charge of $314,000 was recorded to reduce the property to its estimated fair market value. The estimated fair market value of the property was determined by an independent appraisal. During the year ended December 31, 2003, it was determined that the projected undiscounted cash flows from a property did not exceed its related net book value and an impairment charge of $2,792,000 was recorded to reduce the property to its estimated fair market value. The estimated fair market value of the property was determined by an independent appraisal.

The provision for loan losses is related to our critical accounting estimate for the allowance for loan losses and is discussed below in “Critical Accounting Policies.”

Other items were comprised of the following (dollars in thousands):

	Year Ended						One Year Change						Year Ended			One Year Change						Two Year Change
	Dec. 31, 2003			Dec. 31, 2004			$			%			Dec. 31, 2005			$			%			$			%
Gain (loss) on sales of properties	$	4,139		$	(143	)	$	(4,282	)		n/a		$	3,227		$	3,370			n/a		$	(912	)		−22	%
Discontinued operations, net		6,822			3,415			(3,407	)		−50	%		1,905			(1,510	)		−44	%		(4,917	)		−72	%
Preferred dividends		(9,218	)		(12,737	)		(3,519	)		38	%		(21,594	)		(8,857	)		70	%		(12,376	)		134	%
Preferred stock redemption charge		(2,790	)					2,790			100	%					0			0	%		2,790			100	%
Totals	$	(1,047	)	$	(9,465	)	$	(8,418	)		804	%	$	(16,462	)	$	(6,997	)		74	%	$	(15,415	)		1,472	%

One assisted living facility was held for sale at December 31, 2005. We did not recognize an impairment loss on this asset as the fair market value less estimated costs to sell exceeded our carrying value. Also during the years ended December 31, 2003, 2004 and 2005, we sold properties with carrying values of $61,316,000, $37,710,000 and $88,098,000 for net gains of $4,139,000, net losses of $143,000 and net gains of $3,227,000, respectively. In accordance with Statement of Financial Accounting Standards No. 144, we have reclassified the income and expenses attributable to the properties held for sale or sold subsequent to January 1, 2002 to discontinued operations. These properties generated $6,822,000, $3,415,000 and $1,905,000 of income after deducting depreciation and interest expense from rental revenue for the years ended December 31, 2003, 2004 and 2005, respectively. Please refer to Note 15 of our audited consolidated financial statements for further discussion.

The increase in preferred dividends is primarily due to the increase in average outstanding preferred shares. The following is a summary of our preferred stock activity:

	Year Ended December 31, 2003						Year Ended December 31, 2004						Year Ended December 31, 2005
				Weighted Average						Weighted Average						Weighted Average
	Shares			Dividend Rate			Shares			Dividend Rate			Shares			Dividend Rate
Beginning balance		5,100,000			8.926	%		4,830,444			7.553	%		11,350,045			7.663	%
Shares issued		5,060,000			7.482	%		7,000,000			7.625	%
Shares redeemed		(3,000,000	)		8.875	%
Shares converted		(2,329,556	)		8.704	%		(480,399	)		6.000	%		(275,056	)		6.000	%
Ending balance		4,830,444			7.553	%		11,350,045			7.663	%		11,074,989			7.704	%
Monthly averages		4,983,803			8.357	%		6,786,481			7.621	%		11,245,073			7.679	%

In July 2003, we closed a public offering of 4,000,000 shares of 7.875% Series D Cumulative Redeemable Preferred Stock. A portion of the proceeds from this offering were used to redeem all 3,000,000 shares of our 8.875% Series B Cumulative Redeemable Preferred Stock on July 15, 2003. In accordance with Emerging Issues Task Force (“EITF”) Topic D-42, the costs to issue these securities were recorded as a non-cash, non-recurring

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charge of $2,790,000, or $0.06 per diluted share, in the third quarter of 2003 to reduce net income available to common stockholders. No such transactions or charges occurred in 2004 or 2005.

Non-GAAP Financial Measures

We believe that net income, as defined by U.S. GAAP, is the most appropriate earnings measurement. However, we consider FFO and FAD to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means net income, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FAD represents FFO excluding the non-cash straight-line rental adjustments. Additionally, our historical results include an adjustment for a preferred stock redemption charge for the year ended December 31, 2003 but exclude adjustments for impairment charges.

In April 2002, the Financial Accounting Standards Board issued Statement No. 145 that requires gains and losses on extinguishment of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under Statement No. 4. We adopted the standard effective January 1, 2003 and have properly reflected the $21,484,000, or $0.39 per diluted share, of losses on extinguishment of debt for the year ended December 31, 2005. These charges have not been added back for the calculations of FFO, FAD or EBITDA.

In August 2003, we adopted the SEC clarification of EITF Topic D-42. To implement the clarified accounting pronouncement, our 2003 results reflect a reduction in net income available to common stockholders resulting from a non-cash, non-recurring charge of $2,790,000, or $0.06 per diluted share, due to the redemption of our 8.875% Series B Cumulative Redeemable Preferred Stock in July 2003. NAREIT has issued its recommendation that preferred stock redemption charges should not be added back to net income in the calculation of FFO and FAD. Although we have adopted this recommendation, we have also disclosed FFO and FAD adjusted for the preferred stock redemption charge for enhanced clarity. Additionally, we believe that the nature of the charge is non-recurring because there was not a similar charge during the two preceding years and we do not anticipate a similar charge in the succeeding two years.

In October 2003, NAREIT informed its member companies that the SEC had changed its position on certain aspects of the NAREIT FFO definition, including impairment charges. Previously, the SEC accepted NAREIT’s view that impairment charges were effectively an early recognition of an expected loss on an impending sale of property and thus should be added back to net income in the calculation of FFO and FAD similar to other gains and losses on sales. However, the SEC’s clarified interpretation is that recurring impairments taken on real property may not be added back to net income in the calculation of FFO and FAD. We have adopted this interpretation and have not added back impairment charges of $2,792,000, or $0.06 per diluted share, recorded for the year ended December 31, 2003 and $314,000, or $0.01 per diluted share, recorded for the year ended December 31, 2004.

EBITDA stands for earnings before interest, taxes, depreciation and amortization. Additionally, we exclude the non-cash provision for loan losses in calculating EBITDA. We believe that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of our operations. Additionally, restrictive covenants in our long-term debt arrangements contain financial ratios based on EBITDA. We primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed charges. Fixed charges include total interest and preferred dividends.

FFO, FAD and EBITDA are financial measures that are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results, in

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making operating decisions and for budget planning purposes. Additionally, FFO and FAD are internal evaluation metrics utilized by the Board of Directors to evaluate management. FFO, FAD and EBITDA do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, FFO, FAD and EBITDA, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies.

The table below reflects the reconciliation of FFO to net income available to common stockholders, the most directly comparable U.S. GAAP measure, for the periods presented. The provision for depreciation includes provision for depreciation from discontinued operations. Amounts are in thousands except for per share data.

	Year Ended
	December 31			December 31			December 31
	2003			2004			2005
FFO Reconciliation:
Net income available to common stockholders	$	70,732		$	72,634		$	62,692
Provision for depreciation		52,870			74,015			84,828
Loss (gain) on sales of properties		(4,139	)		143			(3,227	)
Prepayment fees					(50	)
Funds from operations		119,463			146,742			144,293
Preferred stock redemption charge		2,790
Funds from operations — adjusted	$	122,253		$	146,742		$	144,293
Average common shares outstanding:
Basic		43,572			51,544			54,110
Diluted		44,201			52,082			54,499
Per share data:
Net income available to common stockholders
Basic	$	1.62		$	1.41		$	1.16
Diluted		1.60			1.39			1.15
Funds from operations
Basic	$	2.74		$	2.85		$	2.67
Diluted		2.70			2.82			2.65
Funds from operations — adjusted
Basic	$	2.81		$	2.85		$	2.67
Diluted		2.77			2.82			2.65

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The table below reflects the reconciliation of FAD to net income available to common stockholders, the most directly comparable U.S. GAAP measure, for the periods presented. The provision for depreciation includes provision for depreciation from discontinued operations. Amounts are in thousands except for per share data.

	Year Ended
	December 31			December 31			December 31
	2003			2004			2005
FAD Reconciliation:
Net income available to common stockholders	$	70,732		$	72,634		$	62,692
Provision for depreciation		52,870			74,015			84,828
Loss (gain) on sales of properties		(4,139	)		143			(3,227	)
Prepayment fees					(50	)
Rental income in excess of cash received		(14,928	)		(13,792	)		727
Funds available for distribution		104,535			132,950			145,020
Preferred stock redemption charge		2,790
Funds available for distribution — adjusted	$	107,325		$	132,950		$	145,020
Average common shares outstanding:
Basic		43,572			51,544			54,110
Diluted		44,201			52,082			54,499
Per share data:
Net income available to common stockholders
Basic	$	1.62		$	1.41		$	1.16
Diluted		1.60			1.39			1.15
Funds available for distribution
Basic	$	2.40		$	2.58		$	2.68
Diluted		2.36			2.55			2.66
Funds available for distribution — adjusted
Basic	$	2.46		$	2.58		$	2.68
Diluted		2.43			2.55			2.66

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The table below reflects the reconciliation of EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. The provision for depreciation and interest expense includes provision for depreciation and interest expense from discontinued operations. Amortization includes amortization of deferred loan expenses, restricted stock and stock options. Dollars are in thousands.

	Year Ended
	December 31			December 31			December 31
	2003			2004			2005
EBITDA Reconciliation:
Net income	$	82,740		$	85,371		$	84,286
Interest expense		55,377			72,556			82,624
Capitalized interest		1,535			875			665
Provision for depreciation		52,870			74,015			84,828
Amortization		3,957			4,247			4,975
Provision for loan losses		2,870			1,200			1,200
EBITDA	$	199,349		$	238,264		$	258,578
Interest Coverage Ratio:
Interest expense	$	55,377		$	72,556		$	82,624
Capitalized interest		1,535			875			665
Total interest		56,912			73,431			83,289
EBITDA	$	199,349		$	238,264		$	258,578
Interest coverage ratio		3.50	x		3.24	x		3.10	x
Fixed Charge Coverage Ratio:
Total interest	$	56,912		$	73,431		$	83,289
Preferred dividends		9,218			12,737			21,594
Total fixed charges		66,130			86,168			104,883
EBITDA	$	199,349		$	238,264		$	258,578
Fixed charge coverage ratio		3.01	x		2.77	x		2.47	x

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions. Management considers an accounting estimate or assumption critical if:

•  the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

•  the impact of the estimates and assumptions on financial condition or operating performance is material.

Management has discussed the development and selection of its critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to them. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 1 of our audited consolidated financial statements for further information on significant accounting policies that impact us. There were no material changes to these policies in 2005.

We adopted the fair value-based method of accounting for share-based payments effective January 1, 2003 using the prospective method described in FASB Statement No. 148, Accounting for Stock-Based Compensation — 

53

Transition and Disclosure. Because Statement 123(R) must be applied not only to new awards but to previously granted awards that are not fully vested on the effective date of Statement 123(R), and because we adopted Statement 123 using the prospective transition method (which applied only to awards granted, modified or settled after the adoption date of Statement 123), compensation cost for some previously granted awards that were not recognized under Statement 123 will be recognized under Statement 123(R). Additionally, we amortize compensation cost for share based payments to the date that the awards become fully vested or to the expected retirement date, if sooner. Effective with the adoption of Statement 123(R) on January 1, 2006, we will begin recognizing compensation cost to the date the awards become fully vested or to the retirement eligible date, if sooner. Had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income and earnings per share in Note 9 to our audited consolidated financial statements. We expect that the adoption of Statement 123(R) will increase compensation cost by approximately $1,287,000 for 2006 as a result of amortizing share based awards to the retirement eligible date.

The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:

Nature of Critical	Assumptions/
Accounting Estimate	Approach Used
Allowance for Loan Losses
We maintain an allowance for loan losses in accordance with Statement of Financial Accounting Standards No.  114, Accounting by Creditors for Impairment of a Loan, as amended, and SEC Staff Accounting Bulletin No.  102, Selected Loan Loss Allowance Methodology and Documentation Issues. The allowance for loan losses is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of all outstanding loans. If this evaluation indicates that there is a greater risk of loan charge-offs, additional allowances or placement on non- accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the original loan agreement. Consistent with this definition, all loans on non-accrual are deemed impaired. To the extent circumstances improve and the risk of collectibility is diminished, we will return these loans to full accrual status.	The determination of the allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectibility of loan payments and principal. We evaluate the collectibility of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors and value of the underlying property. For the year ended December  31, 2005 we recorded $1,200,000 as provision for loan losses, resulting in an allowance for loan losses of $6,461,000 relating to loans with outstanding balances of $31,416,000 at December  31, 2005. At December  31, 2005, we had loans with outstanding balances of $16,770,000 on non-accrual status.
Depreciation and Useful Lives
Substantially all of the properties owned by us are leased under operating leases and are recorded at cost. The cost of our real property is allocated to land, buildings, improvements and intangibles in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. The allocation of the acquisition costs of properties is based on appraisals commissioned from independent real estate appraisal firms.	We compute depreciation on our properties using the straight-line method based on their estimated useful lives which range from 15 to 40  years for buildings and five to 15  years for improvements. For the year ended December  31, 2005, we recorded $68,061,000 and $16,767,000 as provision for depreciation relating to buildings and improvements, respectively, including amounts reclassified as discontinued operations. The average useful life of our buildings and improvements was 31.7  years and 9.8  years, respectively, at December  31, 2005.
Impairment of Long-Lived Assets
We review our long-lived assets for potential impairment in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment and Disposal of Long- Lived Assets. An impairment charge must be recognized when the carrying value of a long-lived asset is not recoverable. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that a permanent impairment of a long-lived asset has occurred, the carrying value of the asset is reduced to its fair value and an impairment charge is recognized for the difference between the carrying value and the fair value.	The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if there are indicators of impairment. These indicators may include anticipated operating losses at the property level, the tenant’s inability to make rent payments, a decision to dispose of an asset before the end of its estimated useful life and changes in the market that may permanently reduce the value of the property. If indicators of impairment exist, then the undiscounted future cash flows from the most likely use of the property are compared to the current net book value. This analysis requires us to determine if indicators of impairment exist and to estimate the most likely stream of cash flows to be generated from the property during the period the property is expected to be held. We did not record any impairment charges for the year ended December  31, 2005.

54

Nature of Critical	Assumptions/
Accounting Estimate	Approach Used
Fair Value of Derivative Instruments
The valuation of derivative instruments is accounted for in accordance with Statement of Financial Accounting Standards No.  133, Accounting for Derivative Instruments and Hedging Activities (‘‘SFAS133”), as amended by Statement of Financial Accounting Standards No.  138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. SFAS133, as amended, requires companies to record derivatives at fair market value on the balance sheet as assets or liabilities.	The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values for our derivatives are estimated by a third party consultant, which utilizes pricing models that consider forward yield curves and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates which may change in the future. At December  31, 2005, we participated in two interest rate swap agreements related to our long-term debt. At December  31, 2005, the swaps were reported at their fair value as a $2,211,000 other asset. For the year ended December  31, 2005, we generated $972,000 of savings related to our swaps that was recorded as a reduction in interest expense.
Revenue Recognition
Revenue is recorded in accordance with Statement of Financial Accounting Standards No.  13, Accounting for Leases, and SEC Staff Accounting Bulletin No.  101, Revenue Recognition in Financial Statements, as amended (‘‘SAB101”). SAB101 requires that revenue be recognized after four basic criteria are met. These four criteria include persuasive evidence of an arrangement, the rendering of service, fixed and determinable income and reasonably assured collectibility. If the collectibility of revenue is determined incorrectly, the amount and timing of our reported revenue could be significantly affected. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectibility risk. Prior to June 2004, our standard lease structure contained fixed annual rental escalators, which were generally recognized on a straight-line basis over the initial lease period. Beginning in June 2004, our new standard lease structure contains annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the property. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period.	We evaluate the collectibility of our revenues and related receivables on an on-going basis. We evaluate collectibility based on assumptions and other considerations including, but not limited to, the certainty of payment, payment history, the financial strength of the investment’s underlying operations as measured by cash flows and payment coverages, the value of the underlying collateral and guaranties and current economic conditions. If our evaluation indicates that collectibility is not reasonably assured, we may place an investment on non-accrual or reserve against all or a portion of current income as an offset to revenue. For the year ended December  31, 2005 we recognized $23,993,000 of interest income and $262,613,000 of rental income, including discontinued operations. Cash receipts on leases with deferred revenue provisions were $13,869,000 as compared to gross straight-line rental income recognized of $13,142,000. At December  31, 2005, our straight-line receivable balance was $63,725,000. Also at December  31, 2005, we had loans with outstanding balances of $16,770,000 on non-accrual status.

Impact of Inflation

During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, our earnings are primarily long-term investments with fixed rates of return. These investments are mainly financed with a combination of equity, senior unsecured notes and borrowings under our unsecured lines of credit arrangements. During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate remains moderate and long-term interest rates do not increase significantly, we believe that inflation will not impact the availability of equity and debt financing for us.

55

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. The following section is presented to provide a discussion of the risks associated with potential fluctuations in interest rates.

We historically borrow on our unsecured lines of credit arrangements to acquire, construct or make loans relating to health care and senior housing properties. Then, as market conditions dictate, we will issue equity or long-term fixed rate debt to repay the borrowings under the unsecured lines of credit arrangements.

A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate changes, however, will affect the fair value of our fixed rate debt. A 1% increase in interest rates would result in a decrease in fair value of our senior unsecured notes by approximately $36,770,000 at December 31, 2005 ($28,025,000 at December 31, 2004). Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt, or equity or repaid by the sale of assets.

On May 6, 2004, we entered into two interest rate swap agreements (the “Swaps”) for a total notional amount of $100,000,000 to hedge changes in fair value attributable to changes in the LIBOR swap rate of $100,000,000 of fixed rate debt with a maturity date of November 15, 2013. The Swaps are treated as fair-value hedges for accounting purposes and we utilize the short-cut method in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The Swaps are with highly rated counterparties in which we receive a fixed rate of 6.0% and pay a variable rate based on six-month LIBOR plus a spread. At December 31, 2005 and 2004, the Swaps were reported at their fair values as a $2,211,000 and $4,206,000 other asset, respectively. A 1% increase in interest rates would result in a decrease in fair value of our Swaps by approximately $6,435,000 and $7,382,000 at December 31, 2005 and 2004. We had no interest rate swap agreements outstanding at December 31, 2003.

Our variable rate debt, including our unsecured lines of credit arrangements, is reflected at fair value. At December 31, 2005, we had $195,000,000 outstanding related to our variable rate debt and assuming no changes in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of $1,950,000. At December 31, 2004, we had $151,000,000 outstanding related to our variable rate debt and assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $1,510,000.

We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited.

56

Item 8.   Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and Directors

Health Care REIT, Inc.

We have audited the accompanying consolidated balance sheets of Health Care REIT, Inc. as of December 31, 2005 and 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 consolidated financial position of Health Care REIT, Inc. at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Health Care REIT, Inc.’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2006 expressed an unqualified opinion thereon.

/s/  Ernst & Young LLP

Toledo, Ohio

February 22, 2006

57

HEALTH CARE REIT, INC.

CONSOLIDATED BALANCE SHEETS

	December 31
	2005			2004
	(In thousands)
ASSETS
Real estate investments:
Real property owned
Land	$	261,236		$	208,173
Buildings & improvements		2,659,746			2,176,327
Real property held for sale, net of accumulated depreciation		11,912
Construction in progress		3,906			25,463
		2,936,800			2,409,963
Less accumulated depreciation		(274,875	)		(219,536	)
Total real property owned		2,661,925			2,190,427
Loans receivable		194,054			256,806
Less allowance for losses on loans receivable		(6,461	)		(5,261	)
		187,593			251,545
Net real estate investments		2,849,518			2,441,972
Other assets:
Equity investments		2,970			3,298
Deferred loan expenses		12,228			9,486
Cash and cash equivalents		36,237			19,763
Receivables and other assets		71,211			77,652
		122,646			110,199
Total assets	$	2,972,164		$	2,552,171
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Borrowings under unsecured lines of credit arrangements	$	195,000		$	151,000
Senior unsecured notes		1,198,278			881,733
Secured debt		107,540			160,225
Accrued expenses and other liabilities		40,590			23,934
Total liabilities		1,541,408			1,216,892
Stockholders’ equity:
Preferred stock, $1.00 par value:		276,875			283,751
Authorized — 25,000,000 shares
Issued and outstanding — 11,074,989 in 2005 and 11,350,045 shares in 2004 at liquidation preference
Common stock, $1.00 par value:		58,050			52,860
Authorized — 125,000,000 shares
Issued — 55,960,317 shares in 2005 and 52,960,317 shares in 2004
Outstanding — 58,124,657 shares in 2005 and 52,924,601 shares in 2004
Capital in excess of par value		1,306,471			1,139,723
Treasury stock		(2,054	)		(1,286	)
Cumulative net income		830,103			745,817
Cumulative dividends		(1,039,032	)		(884,890	)
Accumulated other comprehensive income					1
Other equity		343			(697	)
Total stockholders’ equity		1,430,756			1,335,279
Total liabilities and stockholders’ equity	$	2,972,164		$	2,552,171

See accompanying notes

58

HEALTH CARE REIT, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended December 31
	2005		2004			2003
	(In thousands, except per share data)
Revenues:
Rental income	$	253,306	$	213,755		$	159,818
Interest income		23,993		22,818			20,768
Transaction fees and other income		4,548		2,432			3,759
Prepayment fees				50
		281,847		239,055			184,345
Expenses:
Interest expense		80,050		68,567			45,949
Provision for depreciation		80,000		66,897			46,551
General and administrative		17,249		16,585			11,483
Loan expense		2,710		3,393			2,921
Impairment of assets				314			2,792
Loss on extinguishment of debt		21,484
Provision for loan losses		1,200		1,200			2,870
		202,693		156,956			112,566
Income from continuing operations		79,154		82,099			71,779
Discontinued operations:
Net gain (loss) on sales of properties		3,227		(143	)		4,139
Income from discontinued operations, net		1,905		3,415			6,822
		5,132		3,272			10,961
Net income		84,286		85,371			82,740
Preferred stock dividends		21,594		12,737			9,218
Preferred stock redemption charge							2,790
Net income available to common stockholders	$	62,692	$	72,634		$	70,732
Average number of common shares outstanding:
Basic		54,110		51,544			43,572
Diluted		54,499		52,082			44,201
Earnings per share:
Basic:
Income from continuing operations available to common stockholders	$	1.07	$	1.35		$	1.37
Discontinued operations, net		0.09		0.06			0.25
Net income available to common stockholders	$	1.16	$	1.41		$	1.62
Diluted:
Income from continuing operations and after preferred stock dividends	$	1.06	$	1.33		$	1.35
Discontinued operations, net		0.09		0.06			0.25
Net income available to common stockholders	$	1.15	$	1.39		$	1.60

See accompanying notes

59

HEALTH CARE REIT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

																		Accumulated
						Capital in												Other
	Preferred			Common		Excess of			Treasury			Cumulative			Cumulative			Comprehensive			Other
	Stock			Stock		Par Value			Stock			Net Income			Dividends			Income			Equity			Total
	(In thousands, except per share data)
Balances at January 1, 2003	$	127,500		$	40,086	$	790,838		$	0		$	580,496		$	(638,085	)	$	(170	)	$	(3,433	)	$	897,232
Comprehensive income:
Net income													82,740												82,740
Other comprehensive income:
Unrealized loss on equity investments																			(11	)					(11	)
Foreign currency translation adjustment																			182						182
Total comprehensive income																									82,911
Proceeds from issuance of common stock from dividend reinvestment and stock incentive plans, net of forfeitures					2,725		75,649			(523	)											53			77,904
Restricted stock amortization																						1,182			1,182
Option compensation expense																						173			173
Proceeds from issuance of preferred stock		126,500					(3,150	)																	123,350
Redemption of preferred stock		(75,000	)				2,790						(2,790	)											(75,000	)
Proceeds from sale of common stock					5,263		147,745																		153,008
Conversion of preferred stock		(58,239	)		2,224		56,015																		0
Cash dividends:
Common stock-$2.34 per share																(101,863	)								(101,863	)
Preferred stock, Series B-$2.22 per share																(3,605	)								(3,605	)
Preferred stock, Series C-$2.25 per share																(1,439	)								(1,439	)
Preferred stock, Series D-$1.97 per share																(3,784	)								(3,784	)
Preferred stock, Series E-$1.50 per share																(390	)								(390	)
Balances at December 31, 2003		120,761			50,298		1,069,887			(523	)		660,446			(749,166	)		1			(2,025	)		1,149,679
Comprehensive income:
Net income													85,371												85,371
Other comprehensive income:
Unrealized loss on equity investments																									0
Total comprehensive income																									85,371
Proceeds from issuance of common stock from dividend reinvestment and stock incentive plans, net of forfeitures					2,194		64,087			(763	)														65,518
Restricted stock amortization																						949			949
Option compensation expense																						379			379
Proceeds from issuance of preferred stock		175,000					(5,893	)																	169,107
Redemption of preferred stock		(12,010	)		368		11,642																		0
Cash dividends:
Common stock-$2.385 per share																(122,987	)								(122,987	)
Preferred stock, Series D-$1.97 per share																(7,875	)								(7,875	)
Preferred stock, Series E-$1.50 per share																(933	)								(933	)
Preferred stock, Series F-$1.50 per share																(3,929	)								(3,929	)
Balances at December 31, 2004		283,751			52,860		1,139,723			(1,286	)		745,817			(884,890	)		1			(697	)		1,335,279
Comprehensive income:
Net income													84,286												84,286
Other comprehensive income:
Unrealized loss on equity investments																			(1	)					(1	)
Total comprehensive income																									84,285
Proceeds from issuance of common stock from dividend reinvestment and stock incentive plans, net of forfeitures					1,980		62,105			(768	)														63,317
Restricted stock amortization																						728			728
Option compensation expense																						312			312
Net proceeds from sale of common stock					3,000		97,977																		100,977
Conversion of preferred stock		(6,876	)		210		6,666																		0
Cash dividends:
Common stock-$2.46 per share																(132,548	)								(132,548	)
Preferred stock, Series D-$1.97 per share																(7,875	)								(7,875	)
Preferred stock, Series E-$1.50 per share																(375	)								(375	)
Preferred stock, Series F-$1.91 per share																(13,344	)								(13,344	)
Balances at December 31, 2005	$	276,875		$	58,050	$	1,306,471		$	(2,054	)	$	830,103		$	(1,039,032	)	$	0		$	343		$	1,430,756

See accompanying notes

60

HEALTH CARE REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31
	2005			2004			2003
	(In thousands)
Operating activities
Net income	$	84,286		$	85,371		$	82,740
Adjustments to reconcile net income to net cash provided from operating activities:
Provision for depreciation		84,828			74,015			52,870
Amortization		4,975			4,247			3,957
Provision for loan losses		1,200			1,200			2,870
Impairment of assets					314			2,792
Rental income less than (in excess of) cash received		727			(13,792	)		(14,928	)
Equity in losses (earnings) of affiliated companies								(270	)
Loss (gain) on sales of properties		(3,227	)		143			(4,139	)
Increase (decrease) in accrued expenses and other liabilities		(1,467	)		4,063			(679	)
Decrease (increase) in receivables and other assets		2,433			(11,536	)		4,308
Net cash provided from (used in) operating activities		173,755			144,025			129,521
Investing activities
Investment in real property		(599,291	)		(542,547	)		(410,413	)
Investment in loans receivable		(40,387	)		(61,888	)		(105,655	)
Other investments, net of payments		328						4,637
Principal collected on loans receivable		98,638			55,473			57,081
Proceeds from sales of properties		91,325			37,567			65,455
Other		318			4,033			149
Net cash provided from (used in) investing activities		(449,069	)		(507,362	)		(388,746	)
Financing activities
Net increase (decrease) under unsecured lines of credit arrangements		44,000			151,000			(109,500	)
Proceeds from issuance of senior unsecured notes		544,053			50,708			350,470
Principal payments on senior unsecured notes		(230,170	)		(40,000	)
Principal payments on secured debt		(74,994	)		(2,514	)		(4,891	)
Net proceeds from the issuance of common stock		165,062			66,281			231,435
Net proceeds from the issuance of preferred stock					169,107			96,850
Redemption of preferred stock								(75,000	)
Decrease (increase) in deferred loan expense		(2,021	)		(254	)		(4,112	)
Cash distributions to stockholders		(154,142	)		(135,724	)		(111,081	)
Net cash provided from (used in) financing activities		291,788			258,604			374,171
Increase (decrease) in cash and cash equivalents		16,474			(104,733	)		114,946
Cash and cash equivalents at beginning of year		19,763			124,496			9,550
Cash and cash equivalents at end of year	$	36,237		$	19,763		$	124,496
Supplemental cash flow information-interest paid	$	85,123		$	73,308		$	50,698

See accompanying notes

61

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Accounting Policies and Related Matters

Industry

We are a self-administered, equity real estate investment trust that invests in health care and senior housing properties, which primarily include skilled nursing facilities, independent living/continuing care retirement communities, assisted living facilities and specialty care facilities.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries after the elimination of all significant intercompany accounts and transactions.

Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months or less.

Loans Receivable

Loans receivable consist of mortgage loans, construction loans and working capital loans. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectibility risks. The mortgage loans and construction loans are primarily collateralized by a first or second mortgage lien or leasehold mortgage on, or an assignment of the partnership interest in, the related facilities. Working capital loans are generally either unsecured or secured by the operator’s leasehold rights, corporate guaranties and/or personal guaranties.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectibility of loan payments. We evaluate the collectibility of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors and value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the original loan agreement. Consistent with this definition, all loans on non-accrual are deemed impaired. At December 31, 2005, we had loans with outstanding balances of $16,770,000 on non-accrual status ($35,918,000 at December 31, 2004). To the extent circumstances improve and the risk of collectibility is diminished, we will return these loans to full accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding balance.

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Real Property Owned

The cost of our real property is allocated to land, buildings, improvements and intangibles in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. The allocation of the acquisition costs of properties is based on appraisals commissioned from independent real estate appraisal firms. Substantially all of the properties owned by us are leased under operating leases and are recorded at cost. These properties are depreciated on a straight-line basis over their estimated useful lives which range from 15 to 40 years for buildings and five to 15 years for improvements. The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be changed. We consider external factors relating to each asset. If these external factors and the projected undiscounted cash flows of the asset over the remaining depreciation period indicate that the asset will not be recoverable, the carrying value may be reduced to the estimated fair market value. The leases generally extend for a minimum seven-year period and provide for payment of all taxes, insurance and maintenance by the tenants. Prior to June 2004, our standard lease structure contained fixed annual rental escalators, which are generally recognized on a straight-line basis over the minimum lease period subject to an evaluation of collectibility risks. This income is greater than the amount of cash received during the first half of the lease term. Beginning in June 2004, our new standard lease structure contains annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenants’ properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. We recognized $4,274,000 and $922,500 of contingent rental income for the years ended December 31, 2005 and 2004, respectively. We did not recognize any contingent rental income for the year ended December 31, 2003.

Capitalization of Construction Period Interest

We capitalize interest costs associated with funds used to finance the construction of properties owned directly by us. The amount capitalized is based upon the balance outstanding during the construction period using the rate of interest which approximates our cost of financing. We capitalized interest costs of $665,000, $875,000, and $1,535,000, during 2005, 2004 and 2003, respectively, related to construction of real property owned by us. Our interest expense reflected in the consolidated statements of income has been reduced by the amounts capitalized.

Deferred Loan Expenses

Deferred loan expenses are costs incurred by us in connection with the issuance and amendments of short-term and long-term debt. We amortize these costs over the term of the debt using the straight-line method, which approximates the interest yield method.

Equity Investments

We had an investment in Atlantic Healthcare Finance L.P., a property group that specializes in the financing, through sale and leaseback transactions, of nursing and care homes located in the United Kingdom. This investment was accounted for using the equity method of accounting because we had the ability to exercise significant influence, but not control, over the investee due to our 31% ownership interest. In October 2003, we sold our investment in Atlantic Healthcare Finance L.P. generating a net gain of $902,000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other equity investments, which consist of investments in private and public companies for which we do not have the ability to exercise influence, are accounted for under the cost method. Under the cost method of accounting, investments in private companies are carried at cost and are adjusted only for other-than-temporary declines in fair value, distributions of earnings and additional investments. For investments in public companies that have readily determinable fair market values, we classify our equity investments as available-for-sale and, accordingly, record these investments at their fair market values with unrealized gains and losses included in accumulated other comprehensive income, a separate component of stockholders’ equity. These investments represent a minimal ownership interest in these companies.

Foreign Currency Translation

For fiscal year 2003, the functional currency of our investment in Atlantic Healthcare Finance L.P. was the local currency. The income and expenses of the entity were translated into U.S. dollars using the average exchange rates for the reporting period to derive our equity earnings. Translation adjustments were recorded in accumulated other comprehensive income, a separate component of stockholders’ equity. As noted above, we sold this investment in October 2003.

Transaction Fees

Transaction fees are earned by us for our agreement to provide direct and standby financing to, and credit enhancement for, owners and operators of health care and senior housing properties. We amortize transaction fees over the initial fixed term of the lease, the loan or the construction period related to such investments.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income includes unrealized gains or losses on our equity investments and foreign currency translation adjustments. Accumulated unrealized gains and losses totaled $0, $1,000 and $1,000 at December 31, 2005, 2004 and 2003, respectively, and is included as a component of stockholders’ equity.

Fair Value of Derivative Instruments

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates.

In June 2000, the FASB issued Statement No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, which amends Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. Statement No. 133, as amended, requires companies to record derivatives at fair market value on the balance sheet as assets or liabilities.

On May 6, 2004, we entered into two interest rate swap agreements (the “Swaps”) for a total notional amount of $100,000,000 to hedge changes in fair value attributable to changes in the LIBOR swap rate of $100,000,000 of fixed rate debt with a maturity date of November 15, 2013. The Swaps are treated as fair-value hedges for accounting purposes and we utilize the short-cut method in accordance with Statement No. 133, as amended. The Swaps are with highly rated counterparties in which we receive a fixed rate of 6.0% and pay a variable rate based on six-month LIBOR plus a spread. The hedging arrangement is considered highly effective and, as such, changes in the Swaps’ fair values exactly offset the corresponding changes in the fair value of senior unsecured notes and, as a result, the changes in fair value do not result in an impact on net income. At December 31, 2005 and 2004, the Swaps were reported at their fair value of $2,211,000 and $4,206,000, respectively, in other assets with an offsetting adjustment to the underlying senior unsecured notes. For the years ended December 31, 2005 and 2004, we generated $972,000 and $1,770,000, respectively, of savings related to the Swaps that was recorded as a reduction in interest expense. We had no interest rate swap agreements outstanding at December 31, 2003.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values for our derivatives are estimated by a third party consultant, which utilizes pricing models that consider forward yield curves and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future.

Net Income Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding for the period adjusted for non-vested shares of restricted stock. The computation of diluted earnings per share is similar to basic earnings per share, except that the number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

Federal Income Tax

No provision has been made for federal income taxes since we have elected to be treated as a real estate investment trust under the applicable provisions of the Internal Revenue Code, and we believe that we have met the requirements for qualification as such for each taxable year. See Note 11.

New Accounting Standards

We adopted the fair value-based method of accounting for share-based payments effective January 1, 2003 using the prospective method described in FASB Statement No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Currently, we use the Black-Scholes-Merton option pricing model to estimate the value of stock option grants and expect to continue to use this acceptable option valuation model upon the required adoption of Statement of 123(R) on January 1, 2006. Because Statement 123(R) must be applied not only to new awards but to previously granted awards that are not fully vested on the effective date of Statement 123(R), and because we adopted Statement 123 using the prospective transition method (which applied only to awards granted, modified or settled after the adoption date of Statement 123), compensation cost for some previously granted awards that were not recognized under Statement 123 will be recognized under Statement 123(R). Additionally, we amortize compensation cost for share based payments to the date that the awards become fully vested or to the expected retirement date, if sooner. Effective with the adoption of Statement 123(R), we will begin recognizing compensation cost to the date the awards become fully vested or to the retirement eligible date, if sooner. Had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income and earnings per share in Note 9. We expect that the adoption of Statement 123(R) will increase compensation cost by approximately $1,287,000 for 2006 as a result of amortizing share based awards to the retirement eligible date.

Reclassifications

Certain amounts in prior years have been reclassified to conform with the current year presentation.

2.  Loans Receivable

The following is a summary of loans receivable (in thousands):

	December 31
	2005		2004
Mortgage loans	$	141,467	$	155,266
Construction loans				720
Working capital loans		52,587		100,820
Totals	$	194,054	$	256,806

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Loans to related parties (an entity whose ownership included one Company director) that existed in prior years were at rates comparable to loans to other third-party borrowers and were equal to or greater than our net interest cost on borrowings to support such loans. There were no such loans outstanding during 2005. The amount of interest income and commitment fees from related parties amounted to $0, $682,000 and $36,000 for 2005, 2004 and 2003, respectively.

The following is a summary of mortgage loans at December 31, 2005:

Final		Number			Principal
Payment		of			Amount at		Carrying
Due		Loans		Payment Terms	Inception		Amount
					(In thousands)
	2006		9	Monthly payments from $415 to $160,377, including interest from 1.98% to 17.15%	$	31,859	$	30,122
	2007		2	Monthly payments from $1,479 to $7,934, including interest from 7.52% to 19.26%		1,175		1,441
	2008		4	Monthly payments from $4,312 to $109,395, including interest from 8.66% to 15.61%		41,975		33,221
	2009		4	Monthly payments from $2,535 to $147,455, including interest from 7.12% to 19.26%		12,100		25,875
	2010		2	Monthly payments from $29,575 to $122,383, including interest from 10.14% to 13.18%		12,980		14,643
	2011		1	Monthly payments of $1,112, including interest of 12.17%		38		110
	2012		2	Monthly payments from $73,954 to $126,969, including interest from 7.00% to 11.275%		25,891		17,741
	2015		1	Monthly payments of $20,991, including interest of 11.13%		2,016		1,995
	2016		1	Monthly payments of $7,355, including interest of 10.50%		40		841
	2018		1	Monthly payments of $52,708, including interest of 5.75%		11,000		11,000
	2020		1	Monthly payments of $39,730, including interest of 9.632%		4,500		4,478
				Totals	$	143,574	$	141,467

3.  Allowance for Loan Losses

The following is a summary of the allowance for loan losses (in thousands):

	Year Ended December 31
	2005		2004			2003
Balance at beginning of year	$	5,261	$	7,825		$	4,955
Provision for loan losses		1,200		1,200			2,870
Charge-offs				(3,764	)
Balance at end of year	$	6,461	$	5,261		$	7,825

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of our loan impairments (in thousands):

	December 31
	2005		2004		2003
Balance of impaired loans at year end	$	16,770	$	35,918	$	30,523
Allowance for loan losses		6,461		5,261		7,825
Balance of impaired loans not reserved	$	10,309	$	30,657	$	22,698
Average impaired loans for the year	$	26,344	$	33,221	$	22,917

Interest income recognized on non-accrual loans was $2,391,000 for the year ended December 31, 2005. We did not recognize any interest on non-accrual loans for the years ended December 31, 2004 and 2003.

4.   Real Property Owned

The following table summarizes certain information about our real property owned as of December 31, 2005 (dollars in thousands):

	Number of				Building &		Total		Accumulated
	Facilities		Land		Improvements		Investment		Depreciation
Assisted Living Facilities:
Arizona		4	$	2,100	$	17,563	$	19,663	$	1,917
California		9		8,950		56,323		65,273		6,338
Colorado		1		940		3,721		4,661		395
Connecticut		6		8,690		46,660		55,350		7,064
Delaware		1		560		21,220		21,780		690
Florida		19		9,387		95,168		104,555		15,899
Georgia		2		1,080		3,688		4,768		341
Idaho		3		1,125		14,875		16,000		943
Indiana		2		220		5,520		5,740		685
Kansas		1		600		10,590		11,190		351
Kentucky		1		490		7,610		8,100		512
Louisiana		1		1,100		10,161		11,261		3,045
Maryland		2		870		9,155		10,025		664
Massachusetts		7		8,160		62,490		70,650		3,200
Mississippi		2		1,080		13,470		14,550		1,117
Montana		3		1,460		14,772		16,232		1,256
Nevada		3		1,820		25,126		26,946		2,711
New Jersey		3		2,040		16,855		18,895		3,566
New York		2		880		12,992		13,872		971
North Carolina		41		15,862		181,932		197,794		17,637
Ohio		9		4,504		40,601		45,105		6,988
Oklahoma		16		1,928		24,346		26,274		6,466
Oregon		4		1,767		16,249		18,016		2,344
Pennsylvania		3		2,434		14,835		17,269		1,198
South Carolina		7		2,452		31,741		34,193		3,832
Tennessee		6		2,376		17,376		19,752		3,214
Texas		20		5,366		72,749		78,115		9,810
Utah		2		1,420		12,842		14,262		1,071
Virginia		5		2,674		40,486		43,160		1,672
Washington		6		5,150		24,286		29,436		2,149
Wisconsin		1		420		4,006		4,426		420
Construction in progress		2						1,793
Assets held for sale		1						11,912
		195		97,905		929,408		1,041,018		108,466

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	Number of				Building &		Total		Accumulated
	Facilities		Land		Improvements		Investment		Depreciation
Skilled Nursing Facilities:
Alabama		8	$	3,000	$	41,419	$	44,419	$	3,198
Arizona		3		2,050		19,966		22,016		1,011
California		1		1,460		3,942		5,402		1,534
Colorado		4		3,460		31,246		34,706		1,600
Connecticut		4		2,170		9,801		11,971		276
Florida		38		18,722		236,592		255,314		22,869
Georgia		3		2,650		14,932		17,582		867
Idaho		3		2,010		20,662		22,672		4,745
Illinois		4		1,110		24,700		25,810		5,795
Indiana		6		1,824		30,459		32,283		4,043
Kansas		1		1,120		8,360		9,480
Kentucky		10		3,015		65,432		68,447		2,447
Louisiana		6		543		29,257		29,800		81
Maryland		1		390		4,010		4,400		384
Massachusetts		25		21,588		213,632		235,220		24,100
Mississippi		11		1,625		52,651		54,276		4,694
Missouri		3		1,247		23,827		25,074		3,954
Nevada		1		182		2,503		2,685		587
New Hampshire		1		340		4,360		4,700		62
New Jersey		1		1,850		3,050		4,900		134
Ohio		12		7,086		117,295		124,381		9,374
Oklahoma		2		954		11,190		12,144		1,621
Oregon		1		300		5,316		5,616		1,273
Pennsylvania		3		2,979		19,839		22,818		4,309
Tennessee		21		8,250		117,584		125,834		12,428
Texas		15		8,347		69,545		77,892		3,204
Utah		1		991		6,850		7,841
Virginia		2		1,891		7,312		9,203		770
Construction in progress		1						911
		192		101,154		1,195,732		1,297,797		115,360

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Number of				Building &		Total		Accumulated
	Facilities		Land		Improvements		Investment		Depreciation
Independent Living/CCRC Facilities:
Arizona		2	$	3,533	$	24,823	$	28,356	$	4,510
California		6		17,200		109,625		126,825
Florida		3		6,842		66,832		73,674		7,301
Georgia		3		3,256		24,759		28,015		7,412
Idaho		1		550		14,740		15,290		1,256
Illinois		1		670		6,780		7,450		752
Indiana		1		175		7,305		7,480		1,480
Nevada		1		1,144		10,831		11,975		3,612
New York		1		1,510		9,490		11,000		963
North Carolina		2		3,120		19,980		23,100
South Carolina		4		7,190		61,675		68,865		809
Texas		2		5,670		16,620		22,290		2,522
Washington		1		620		4,780		5,400		278
Construction in progress								1,202
		28		51,480		378,240		430,922		30,895
Specialty Care Facilities:
Illinois		1		3,650		16,582		20,232		2,147
Massachusetts		3		3,425		61,941		65,366		15,077
Ohio		1		3,020		27,445		30,465		2,261
Oklahoma		1		146		3,854		4,000		57
Texas		4		456		46,544		47,000		612
		10		10,697		156,366		167,063		20,154
Total Real Property Owned		425	$	261,236	$	2,659,746	$	2,936,800	$	274,875

At December 31, 2005, future minimum lease payments receivable under operating leases are as follows (in thousands):

2006	$	286,047
2007		289,764
2008		293,387
2009		296,410
2010		298,296
Thereafter		2,276,510
Totals	$	3,740,414

We purchased $3,908,000, $8,500,000 and $12,433,000 of real property that had previously been financed by the Company with loans in 2005, 2004 and 2003, respectively. We converted $29,238,000 of completed construction projects into operating lease properties in 2005. We acquired properties which included the assumption of mortgages totaling $22,309,000, $14,555,000 and $101,243,000 in 2005, 2004 and 2003, respectively. We issued $26,050,000 of preferred stock relating to acquisitions in 2003. Certain of our 2005 acquisitions included deferred

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acquisition payments totaling $18,125,000. These non-cash activities are appropriately not reflected in the accompanying statements of cash flows.

During the year ended December 31, 2004, it was determined that the projected undiscounted cash flows from a property did not exceed its related net book value and an impairment charge of $314,000 was recorded to reduce the property to its estimated fair market value. The estimated fair market value was determined by an offer to purchase received from a third party. During the year ended December 31, 2003, it was determined that the projected undiscounted cash flows from a property did not exceed its related net book value and an impairment charge of $2,792,000 was recorded to reduce the property to its estimated fair market value. The estimated fair market value of the property was determined by an independent appraisal. We did not record any impairment charges during the year ended December 31, 2005.

At December 31, 2005, we had $11,912,000 related to assets held for sale. See Note 15 for further discussion of discontinued operations.

5.   Concentration of Risk

As of December 31, 2005, long-term care facilities, which include skilled nursing, independent living/continuing care retirement communities and assisted living facilities, comprised 93% (93% at December 31, 2004) of our real estate investments and were located in 36 states. The following table summarizes certain information about our operator concentration as of December 31, 2005 (dollars in thousands):

	Number of		Total		Percent of
	Facilities		Investments(1)		Investment(2)
Concentration by investment:
Emeritus Corporation		50	$	362,832		13	%
Merrill Gardens L.L.C.		13		204,907		7	%
Southern Assisted Living, Inc.		43		195,794		7	%
Life Care Centers of America, Inc.		23		195,129		7	%
Commonwealth Communities Holdings LLC		13		190,558		7	%
Remaining operators (49)		300		1,709,209		59	%
Totals		442	$	2,858,429		100	%

	Number of		Total		Percent of
	Facilities		Revenues(3)		Revenue(4)
Concentration by revenue:
Emeritus Corporation		50	$	35,425		12	%
Commonwealth Communities Holdings LLC		13		26,734		9	%
Southern Assisted Living, Inc.		43		24,611		8	%
Home Quality Management, Inc.		30		22,679		8	%
Delta Health Group, Inc.		25		17,096		6	%
Remaining operators (49)		281		164,609		57	%
Totals		442	$	291,154		100	%

(1)	Investments include real estate investments and credit enhancements which amounted to $2,855,979,000 and $2,450,000, respectively.
(2)	Investments with top five operators comprised 45% of total investments at December 31, 2004.
(3)	Revenues include gross revenues and revenues from discontinued operations for the year ended December 31, 2005.
(4)	Revenues from top five operators were 46% and 41% for the years ended December 31, 2004 and 2003, respectively.

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6.  Borrowings Under Lines of Credit Arrangements and Related Items

We have an unsecured credit arrangement with a consortium of ten banks providing for a revolving line of credit (“revolving credit”) in the amount of $500,000,000, which expires on June 22, 2008 (with the ability to extend for one year at our discretion if we are in compliance with all covenants). The agreement specifies that borrowings under the revolving credit are subject to interest payable in periods no longer than three months at either the agent bank’s prime rate of interest or the applicable margin over LIBOR interest rate, at our option (5.387% at December 31, 2005). The applicable margin is based on our ratings with Moody’s Investors Service and Standard & Poor’s Ratings Services and was 0.9% at December 31, 2005. In addition, we pay a facility fee annually to each bank based on the bank’s commitment under the revolving credit facility. The facility fee depends on our ratings with Moody’s Investors Service and Standard & Poor’s Ratings Services and was 0.225% at December 31, 2005. We also pay an annual agent’s fee of $50,000. Principal is due upon expiration of the agreement. We have another unsecured line of credit arrangement with a bank for a total of $40,000,000, which expires May 31, 2006. Borrowings under this line of credit are subject to interest at either the bank’s prime rate of interest (7.25% at December 31, 2005) or 1.3% over LIBOR interest rate, at our option. Principal is due upon expiration of the agreement.

The following information relates to aggregate borrowings under the unsecured lines of credit arrangements (dollars in thousands):

	Year Ended December 31
	2005			2004			2003
Balance outstanding at December 31	$	195,000		$	151,000		$	0
Maximum amount outstanding at any month end	$	318,000		$	159,000		$	156,900
Average amount outstanding (total of daily principal balances divided by days in year)	$	181,232		$	54,770		$	61,677
Weighted average interest rate (actual interest expense divided by average borrowings outstanding)		5.19	%		5.32	%		4.65	%

7.  Senior Unsecured Notes and Secured Debt

We have $1,198,278,000 of senior unsecured notes with annual interest rates ranging from 5.88% to 8.00%. The carrying amounts of the senior unsecured notes represent the par value of $1,194,830,000 adjusted for any unamortized premiums or discounts and other basis adjustments related to hedging the debt with derivative instruments. See Note 1 for further discussion regarding derivative instruments.

We have 31 mortgage loans totaling $107,540,000, collateralized by owned properties with annual interest rates ranging from 5.80% to 8.50%. The carrying values of the properties securing the mortgage loans totaled $167,230,000 at December 31, 2005.

Our debt agreements contain various covenants, restrictions and events of default. Among other things, these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions.

71

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2005, the annual principal payments on these long-term obligations are as follows (in thousands):

	Senior		Mortgage
	Unsecured Notes		Loans		Totals
2006	$	0	$	2,596	$	2,596
2007		52,500		14,544		67,044
2008		42,330		9,725		52,055
2009				33,207		33,207
2010				8,094		8,094
2011				19,791		19,791
2012		250,000		14,126		264,126
Thereafter		850,000		5,457		855,457
Totals	$	1,194,830	$	107,540	$	1,302,370

8.  Stock Incentive Plans

Our 2005 Long-Term Incentive Plan authorizes up to 2,200,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. The 2005 Plan replaced the 1995 Stock Incentive Plan and the Stock Plan for Non-Employee Directors. The options granted to officers and key employees under the 1995 Plan continue to vest through 2015 and expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2005 Plan. The 2005 Plan allows for the issuance of, among other things, stock options, restricted stock, deferred stock units and dividend equivalent rights. There were no dividend equivalent rights outstanding under the 1995 Plan for 2003.

The following summarizes the activity in the plans (shares in thousands):

	Year Ended December 31
	2005					2004					2003
	Number			Average		Number			Average		Number			Average
	of			Exercise		of			Exercise		of			Exercise
Stock Options	Shares			Price		Shares			Price		Shares			Price
Options at beginning of year		1,015		$	24.86		1,503		$	23.15		1,606		$	21.99
Options granted		60			34.88		112			36.92		340			25.82
Options exercised		(380	)		22.84		(600	)		22.83		(420	)		20.95
Options terminated		(10	)		25.24							(23	)		22.35
Options at end of year		685		$	26.87		1,015		$	24.86		1,503		$	23.15
Options exercisable at end of year		257		$	23.16		639		$	23.54		817		$	22.69
Weighted average fair value of options granted during the year				$	12.48				$	12.09				$	1.74

Vesting periods for options and restricted shares range from three years for directors to five years for officers and key employees. Options expire ten years from the date of grant. We granted 85,000, 112,000 and 110,000 restricted shares during 2005, 2004 and 2003, respectively, including 16,000, 10,000 and 12,000 shares to non-employee directors in 2005, 2004 and 2003, respectively. Expense, which is recognized as the shares vest based on the market value at the date of the award, totaled $2,948,000, $2,887,000 and $2,157,000, in 2005, 2004 and 2003, respectively.

72

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes information about stock options outstanding at December 31, 2005 (options in thousands):

	Options Outstanding						Options Exercisable
					Weighted
Range of Per			Weighted		Average				Weighted
Share Exercise	Number		Average		Remaining		Number		Average
Prices	Outstanding		Exercise Price		Contract Life		Exercisable		Exercise Price
$16–$20		92	$	16.81		4.0		92	$	16.81
$20–$25		191		24.42		5.0		98		24.42
$25–$30		229		25.90		6.6		43		26.27
$30–$40		173		36.21		8.4		24		36.88
Totals		685	$	26.87		6.3		257	$	23.16

9.   Other Equity

Other equity consists of the following (in thousands):

	December 31
	2005			2004			2003
Accumulated compensation expense related to stock options	$	864		$	552		$	173
Unamortized restricted stock		(521	)		(1,249	)		(2,198	)
Totals	$	343		$	(697	)	$	(2,025	)

Unamortized restricted stock represents the unamortized value of restricted stock granted to employees and non-employee directors prior to January 1, 2003. Expense related to these grants, which is recognized as the shares vest based on the market value at the date of the award, totaled $728,000, $949,000 and $1,182,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

In December 2002, the Financial Accounting Standards Board issued Statement No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, which we are required to adopt for fiscal years beginning after December 15, 2002, with transition provisions for certain matters. Statement 148 amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation. In addition, Statement 148 amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Effective January 1, 2003, we commenced recognizing compensation expense in accordance with Statement 123 on a prospective basis. Accumulated compensation expense related to stock options represents the amount of amortized compensation costs related to stock options awarded to employees and directors subsequent to January 1, 2003.

73

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table illustrates the effect on net income available to common stockholders if we had applied the fair value recognition provisions of Statement 123 to stock-based compensation for options granted since 1995 but prior to adoption at January 1, 2003 (in thousands, except per share data):

	Year Ended December 31
	2005		2004		2003
Numerator:
Net income available to common stockholders — as reported	$	62,692	$	72,634	$	70,732
Deduct: Additional stock-based employee compensation expense determined under fair value based method for all awards		181		274		405
Net income available to common stockholders — pro forma	$	62,511	$	72,360	$	70,327
Denominator:
Basic weighted average shares — as reported and pro forma		54,110		51,544		43,572
Effect of dilutive securities:
Employee stock options — pro forma				365		388
Non-vested restricted shares		208		161		202
Dilutive potential common shares		208		526		590
Diluted weighted average shares — pro forma		54,318		52,070		44,162
Net income available to common stockholders per share — as reported
Basic	$	1.16	$	1.41	$	1.62
Diluted	$	1.15	$	1.39	$	1.60
Net income available to common stockholders per share — pro forma
Basic	$	1.16	$	1.40	$	1.61
Diluted	$	1.15	$	1.39	$	1.59

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

	2005			2004			2003
Dividend yield(1)		0.0	%		0.6	%		9.1	%
Expected volatility		22.8	%		22.4	%		25.2	%
Risk-free interest rate		4.25	%		4.11	%		3.73	%
Expected life (in years)		7			7			7
Weighted-average fair value(1)	$	12.48		$	12.09		$	1.74

(1) Options granted to employees in 2005 and 2004 include dividend equivalent rights. These options are assumed to have a dividend yield of 0% for purposes of the Black-Scholes-Merton option pricing model and result in higher fair values than options without dividend equivalent rights.

74

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10.   Preferred Stock

In July 2003, we closed a public offering of 4,000,000 shares of 7.875% Series D Cumulative Redeemable Preferred Stock. These shares have a liquidation value of $25.00 per share. Dividends are payable quarterly in arrears. The preferred stock, which has no stated maturity, may be redeemed by us at a redemption price of $25.00 per share, plus accrued and unpaid dividends on such shares to the redemption date, on or after July 9, 2008. A portion of the proceeds from this offering were used to redeem all 3,000,000 shares of our 8.875% Series B Cumulative Redeemable Preferred Stock on July 15, 2003, at a redemption price of $25.00 per share plus accrued and unpaid dividends. In accordance with Emerging Issues Task Force Topic D-42, the costs to issue the Series B Preferred Stock were recorded as a non-cash, non-recurring charge of $2,790,000, or $0.06 per diluted share, in the third quarter of 2003 to reduce net income available to common stockholders.

In September 2003, we issued 1,060,000 shares of 6% Series E Cumulative Convertible and Redeemable Preferred Stock as partial consideration for an acquisition of assets by the Company, with the shares valued at $26,500,000 for such purposes. The shares were issued to Southern Assisted Living, Inc. and certain of its stockholders without registration in reliance upon the federal statutory exemption of Section 4(2) of the Securities Act of 1933, as amended. The shares have a liquidation value of $25.00 per share. Dividends are payable quarterly in arrears. The preferred stock, which has no stated maturity, may be redeemed by us at a redemption price of $25.00 per share, plus accrued and unpaid dividends on such shares to the redemption date, on or after August 15, 2008. The preferred shares are convertible into common stock at a conversion price of $32.66 per share at any time. During the year ended December 31, 2005, certain holders of our Series E Preferred Stock converted 275,056 shares into 210,541 shares of our common stock, leaving 74,989 of such shares outstanding at December 31, 2005.

In September 2004, we closed a public offering of 7,000,000 shares of 7.625% Series F Cumulative Redeemable Preferred Stock. These shares have a liquidation value of $25.00 per share. Dividends are payable quarterly in arrears. The preferred stock, which has no stated maturity, may be redeemed by us at a redemption price of $25.00 per share, plus accrued and unpaid dividends on such shares to the redemption date, on or after September 14, 2009.

11.   Income Taxes and Distributions

To qualify as a real estate investment trust for federal income tax purposes, 90% of taxable income (including 100% of capital gains) must be distributed to stockholders. Real estate investment trusts that do not distribute a certain amount of current year taxable income in the current year are also subject to a 4% federal excise tax. The principal differences between undistributed net income for federal income tax purposes and financial statement purposes are the recognition of straight-line rent for reporting purposes, differing useful lives and depreciation methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes.

Cash distributions paid to common stockholders, for federal income tax purposes, are as follows:

	Year Ended December 31
	2005		2004		2003
Per Share:
Ordinary income	$	1.266	$	1.189	$	1.365
Return of capital		1.194		1.196		0.896
Capital gains						0.079
Totals	$	2.460	$	2.385	$	2.340

75

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12.   Commitments and Contingencies

We have an outstanding letter of credit issued for the benefit of certain insurance companies that provide workers’ compensation insurance to one of our tenants. Our obligation under the letter of credit matures in 2009. At December 31, 2005, our obligation under the letter of credit was $2,450,000.

At December 31, 2005, we had outstanding construction financings of $3,906,000 for leased properties and were committed to providing additional financing of approximately $36,519,000 to complete construction. At December 31, 2005, we had contingent purchase obligations totaling $44,930,000. These contingent purchase obligations primarily relate to deferred acquisition fundings and capital improvements. Deferred acquisition fundings are contingent upon an operator satisfying certain conditions such as payment coverage and value tests. Amounts due from the tenant are increased to reflect the additional investment in the property.

At December 31, 2005, we had operating lease obligations of $14,257,000 relating to Company office space, six assisted living facilities and three skilled nursing facilities. We incurred rental expense relating to our Company office space of $283,000, $292,000 and $348,000 for the years ended December 31, 2005, 2004 and 2003, respectively. Regarding the facility leases, we have sublease agreements with certain of our operators that require the operators to reimburse us for our monthly operating lease obligations. At December 31, 2005, aggregate future minimum rentals to be received under these noncancelable subleases totaled $14,185,000.

At December 31, 2005, future minimum lease payments due under operating leases are as follows (in thousands):

2006	$	1,275
2007		1,066
2008		928
2009		928
2010		929
Thereafter		9,131
Totals	$	14,257

13.   Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	Year Ended December 31
	2005		2004		2003
Numerator for basic and diluted earnings per share — net income available to common stockholders	$	62,692	$	72,634	$	70,732
Denominator for basic earnings per share — weighted average shares		54,110		51,544		43,572
Effect of dilutive securities:
Employee stock options		181		377		427
Non-vested restricted shares		208		161		202
Dilutive potential common shares		389		538		629
Denominator for diluted earnings per share — adjusted weighted average shares		54,499		52,082		44,201
Basic earnings per share	$	1.16	$	1.41	$	1.62
Diluted earnings per share	$	1.15	$	1.39	$	1.60

76

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The diluted earnings per share calculation excludes the dilutive effect of 112,000, 112,000 and 0 options for 2005, 2004 and 2003, respectively, because the exercise price was greater than the average market price. The Series C Cumulative Convertible Preferred Stock was not included in the calculations for 2003 as the effect of the conversions was anti-dilutive. The Series E Cumulative Convertible and Redeemable Preferred Stock was not included in the calculations for 2005, 2004 and 2003 as the effect of the conversions was anti-dilutive.

14.   Disclosure about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.

Mortgage Loans Receivable — The fair value of all mortgage loans receivable is estimated by discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Working Capital Loans and Construction Loans — The carrying amount is a reasonable estimate of fair value based on the interest rates received, which approximates current market rates.

Cash and Cash Equivalents — The carrying amount approximates fair value.

Equity Investments — Equity investments are recorded at their fair market value.

Borrowings Under Lines of Credit Arrangements — The carrying amount of the lines of credit arrangements approximates fair value because the borrowings are interest rate adjustable.

Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated by discounting the estimated future cash flows using the current borrowing rate available to the Company for similar debt.

Mortgage Loans Payable — Mortgage loans payable is a reasonable estimate of fair value based on the interest rates paid, which approximates current market rates.

Interest Rate Swap Agreements — Our interest rate swap agreements are recorded as assets or liabilities on the balance sheet at fair market value. Fair market value is estimated by a third party consultant, which utilizes pricing models that consider forward yield curves and discount rates.

77

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The carrying amounts and estimated fair values of our financial instruments are as follows (in thousands):

	December 31, 2005				December 31, 2004
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Mortgage loans receivable	$	141,467	$	150,105	$	155,266	$	165,551
Working capital loans		52,587		52,587		100,820		100,820
Construction loans						720		720
Cash and cash equivalents		36,237		36,237		19,763		19,763
Interest rate swap agreements		2,211		2,211		4,206		4,206
Equity investments						1		1
Financial Liabilities:
Borrowings under lines of credit arrangements	$	195,000	$	195,000	$	151,000	$	151,000
Senior unsecured notes		1,198,278		1,271,370		881,733		1,068,132
Mortgage loans payable		107,540		107,540		160,225		160,225

15.   Discontinued Operations

In August 2001, the Financial Accounting Standards Board issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which is effective for fiscal years beginning after December 15, 2001. We adopted the standard effective January 1, 2002.

One assisted living facility was held for sale as of December 31, 2005 and was sold during February 2006. During the years ended December 31, 2003, 2004 and 2005, we sold properties with carrying values of $61,316,000, $37,710,000 and $88,098,000 for net gains of $4,139,000, net losses of $143,000, and net gains of $3,227,000, respectively. In accordance with Statement No. 144, we have reclassified the income and expenses attributable to these properties to discontinued operations. Expenses include an allocation of interest expense based on property carrying values and our weighted average cost of debt. The following illustrates the reclassification impact of Statement No. 144 as a result of classifying the properties as discontinued operations (in thousands):

	Year Ended December 31
	2005		2004		2003
Revenues:
Operating lease rents	$	9,307	$	14,522	$	22,569
Expenses:
Interest expense		2,574		3,989		9,428
Provision for depreciation		4,828		7,118		6,319
Income from discontinued operations, net	$	1,905	$	3,415	$	6,822

16.   Retirement Arrangements

We have a Retirement Plan and Trust (the “401(k) Plan”) covering all eligible employees. Under the 401(k) Plan, eligible employees may make contributions, and we may make matching contributions and a profit sharing contribution. Our contributions to this 401(k) Plan totaled $337,000, $289,000 and $206,000 in 2005, 2004 and 2003, respectively.

78

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We have a Supplemental Executive Retirement Plan (“SERP”), a non-qualified defined benefit pension plan, which provides certain executive officers with supplemental deferred retirement benefits. The SERP provides an opportunity for participants to receive retirement benefits that cannot be paid under our tax-qualified plans because of the restrictions imposed by ERISA and the Internal Revenue Code of 1986, as amended. Benefits are based on compensation and length of service and the SERP is unfunded. No contributions by the Company are anticipated for the 2005 fiscal year. No benefit payments are expected to occur during the next five fiscal years and total $778,000 during the succeeding five fiscal years. We use a December 31 measurement date for the SERP. The accrued liability on our balance sheet for the SERP was $1,032,000 at December 31, 2005 ($703,000 at December 31, 2004).

The following tables provide a reconciliation of the changes in the SERP’s benefit obligations and a statement of the funded status for the periods indicated (in thousands):

	Year Ended December 31
	2005		2004
Reconciliation of benefit obligation:
Obligation at January 1	$	729	$	454
Service cost		286		262
Interest cost		44		28
Actuarial (gain)/loss		196		(15	)
Obligation at December 31	$	1,255	$	729

	December 31
	2005			2004
Funded status:
Funded status at December 31	$	(1,255	)	$	(729	)
Unrecognized (gain)/loss		223			26
Prepaid/(accrued) benefit cost	$	(1,032	)	$	(703	)

The following table shows the components of net periodic benefit costs for the periods indicated (in thousands):

	Year Ended December 31
	2005		2004
Service cost	$	286	$	262
Interest cost		44		28
Net periodic benefit cost	$	330	$	290

The following table provides information for the SERP, which has an accumulated benefit in excess of plan assets (in thousands):

	December 31
	2005		2004
Projected benefit obligation	$	1,255	$	729
Accumulated benefit obligation		831		529
Fair value of assets		n/a		n/a

79

HEALTH CARE REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table reflects the weighted-average assumptions used to determine the benefit obligations and net periodic benefit cost for the SERP:

	Benefit Obligations						Net Periodic Benefit Cost
	December 31						Year Ended December 31
	2005			2004			2005			2004
Discount rate		5.75	%		6.00	%		6.00	%		6.25	%
Rate of compensation increase		4.00	%		4.25	%		4.25	%		4.50	%
Expected long-term return on plan assets		n/a			n/a			n/a			n/a

17.   Quarterly Results of Operations (Unaudited)

The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2005 and 2004 (in thousands, except per share data):

	Year Ended December 31, 2005
	1st			2nd			3rd			4th
	Quarter			Quarter(2)			Quarter			Quarter
Revenues — as reported	$	68,379		$	68,607		$	73,065		$	77,967
Discontinued operations		(2,541	)		(2,555	)		(1,075	)
Revenues — as adjusted(1)	$	65,838		$	66,052		$	71,990		$	77,967
Net income (loss) available to common stockholders	$	17,803		$	(1,606	)	$	19,908		$	26,587
Net income (loss) available to common stockholders per share:
Basic	$	0.34		$	(0.03	)	$	0.37		$	0.47
Diluted		0.33			(0.03	)		0.37			0.47

	Year Ended December 31, 2004
	1st			2nd			3rd			4th
	Quarter			Quarter			Quarter			Quarter(3)
Revenues — as reported	$	60,961		$	59,334		$	63,629		$	68,794
Discontinued operations		(4,354	)		(3,500	)		(2,984	)		(2,825	)
Revenues — as adjusted (1)	$	56,607		$	55,834		$	60,645		$	65,969
Net income available to common stockholders	$	18,655		$	19,207		$	19,004		$	15,767
Net income available to common stockholders per share:
Basic	$	0.37		$	0.37		$	0.37		$	0.30
Diluted		0.36			0.37			0.37			0.30

(1)	In accordance with FASB Statement No. 144, we have reclassified the income attributable to the properties sold subsequent to January 1, 2002 to discontinued operations. See Note 15.
(2)	The net loss and amounts per share are primarily attributable to the loss on extinguishment of debt recorded in second quarter 2005.
(3)	The decrease in net income and amounts per share is primarily attributable to losses on sale in fourth quarter 2004 and increased preferred stock dividends in fourth quarter 2004 resulting from the September 2004 issuance of the Series F Preferred Stock.

80

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

Not applicable.

Item 9A.   Controls and Procedures

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005 based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in a report entitled Internal Control — Integrated Framework. Based on that assessment, management believes that the Company’s internal control over financial reporting is effective as of December 31, 2005.

The registered independent public accounting firm of Ernst & Young LLP, as auditors of the Company’s consolidated financial statements, has issued an attestation report on management’s assessment of the Company’s internal control over financial reporting.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended) occurred during the fourth quarter of the one-year period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

81

Report of Independent Registered Public Accounting Firm

Stockholders and Directors

Health Care REIT, Inc.

We have audited management’s assessment, included in Management’s Report on Internal Control over Financial Reporting, that Health Care REIT, Inc. maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Health Care REIT Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Health Care REIT, Inc. maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Health Care REIT, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Health Care REIT, Inc. as of December 31, 2005 and 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005 of Health Care REIT, Inc. and our report dated February 22, 2006 expressed an unqualified opinion thereon.

/s/  Ernst & Young LLP

Toledo, Ohio

February 22, 2006

82

Item 9B.   Other Information

None.

PART III

Item 10.   Directors and Executive Officers of the Registrant

The information required by this Item is incorporated herein by reference to the information under the headings “Election of Three Directors,” “Board and Committees,” “Executive Officers” and “Security Ownership of Directors and Management and Certain Beneficial Owners — Section 16(a) Compliance” in our definitive proxy statement, which will be filed with the Securities and Exchange Commission (“Commission”) prior to April 30, 2006.

We have adopted a Code of Business Conduct & Ethics that applies to our directors, officers and employees. The code is posted on our Web site at www.hcreit.com and is available from the Company upon written request to the Vice President — Administration and Corporate Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603-1475. Any amendment to, or waivers from, the code that relate to any officer or director of the Company will be promptly disclosed on our Internet Web site at www.hcreit.com.

In addition, the Board has adopted charters for the Audit, Compensation and Nominating/Corporate Governance Committees. These charters are posted on our Web site at www.hcreit.com and are available from the Company upon written request to the Vice President — Administration and Corporate Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603-1475.

Item 11.   Executive Compensation

The information required by this Item is incorporated herein by reference to the information under the heading “Remuneration” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2006.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference to the information under the headings “Security Ownership of Directors and Management and Certain Beneficial Owners” and “Remuneration — Equity Compensation Plan Information” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2006.

Item 13.   Certain Relationships and Related Transactions

The information required by this Item is incorporated herein by reference to the information under the heading “Certain Relationships and Related Transactions” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2006.

Item 14.   Principal Accountant Fees and Services

The information required by this Item is incorporated herein by reference to the information under the heading “Ratification of the Appointment of the Independent Registered Public Accounting Firm” and “Pre-Approval Policies and Procedures” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2006.

83

PART IV

Item 15.   Exhibits and Financial Statement Schedules

(a)1. Our Consolidated Financial Statements are included in Part II, Item 8:

Report of Independent Registered Public Accounting Firm	57
Consolidated Balance Sheets — December 31, 2005 and 2004	58
Consolidated Statements of Income — Years ended December 31, 2005, 2004 and 2003	59
Consolidated Statements of Stockholders’ Equity — Years ended December 31, 2005, 2004 and 2003	60
Consolidated Statements of Cash Flows — Years ended December 31, 2005, 2004 and 2003	61
Notes to Consolidated Financial Statements	62

 2. The following Financial Statement Schedules are included in Item 15(c):

III —  Real Estate and Accumulated Depreciation

IV —  Mortgage Loans on Real Estate

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

3. Exhibit Index:

3	.1	Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.2	Certificate of Designation, Preferences and Rights of Junior Participating Preferred Stock, Series A, of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.3	Certificate of Designations, Preferences and Rights of Series C Cumulative Convertible Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.4	Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.5	Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003, and incorporated herein by reference thereto).
3	.6	Certificate of Designation of 77/8% Series D Cumulative Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 2.5 to the Company’s Form 8-A/A filed July  8, 2003, and incorporated herein by reference thereto).
3	.7	Certificate of Designation of 6% Series E Cumulative Convertible and Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed October 1, 2003, and incorporated herein by reference thereto).
3	.8	Certificate of Designation of 75/8% Series F Cumulative Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 2.5 to the Company’s Form 8-A filed September 10, 2004, and incorporated herein by reference thereto).
3	.9	Amended and Restated By-Laws of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed September 8, 2004, and incorporated herein by reference thereto).

84

4	.1	The Company, by signing this Report, agrees to furnish the Securities and Exchange Commission upon its request a copy of any instrument that defines the rights of holders of long-term debt of the Company and authorizes a total amount of securities not in excess of 10% of the total assets of the Company.
4	.2	Indenture dated as of April 17, 1997 between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed April 21, 1997, and incorporated herein by reference thereto).
4	.3	First Supplemental Indenture, dated as of April 17, 1997, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 21, 1997, and incorporated herein by reference thereto).
4	.4	Second Supplemental Indenture, dated as of March 13, 1998, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 11, 1998, and incorporated herein by reference thereto).
4	.5	Third Supplemental Indenture, dated as of March 18, 1999, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 17, 1999, and incorporated herein by reference thereto).
4	.6	Fourth Supplemental Indenture, dated as of August 10, 2001, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed August 9, 2001, and incorporated herein by reference thereto).
4	.7	Supplemental Indenture No. 5, dated September 10, 2003, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).
4	.8	Amendment No. 1, dated September 16, 2003, to Supplemental Indenture No. 5, dated September 10, 2003, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).
4	.9	Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 9, 2002, and incorporated herein by reference thereto).
4	.10	Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 9, 2002, and incorporated herein by reference thereto).
4	.11	Amendment No. 1, dated March 12, 2003, to Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 14, 2003, and incorporated herein by reference thereto).
4	.12	Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).
4	.13	Amendment No. 1, dated September 16, 2003, to Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.4 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).
4	.14	Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed October 30, 2003, and incorporated herein by reference thereto).

85

4	.15	Amendment No. 1, dated September 13, 2004, to Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A., as successor to Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 13, 2004, and incorporated herein by reference thereto).
4	.16	Supplemental Indenture No. 4, dated as of April 27, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed April 28, 2005, and incorporated herein by reference thereto).
4	.17	Supplemental Indenture No. 5, dated as of November 30, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed November 30, 2005, and incorporated herein by reference thereto).
4	.18	Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit 4.9 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).
4	.19	Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit 4.10 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).
10	.1	Second Amended and Restated Loan Agreement, dated June  22, 2005, by and among Health Care REIT, Inc. and certain of its subsidiaries, the banks signatory thereto, KeyBank National Association, as administrative agent, Deutsche Bank Securities Inc., as syndication agent, and UBS Securities LLC, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as documentation agents (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed June 28, 2005, and incorporated herein by reference thereto).
10	.2	Credit Agreement, dated as of May 31, 2005, by and among Health Care REIT, Inc. and certain of its subsidiaries and Fifth Third Bank (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed June 6, 2005, and incorporated herein by reference thereto).
10	.3	ISDA Master Agreement and Schedule dated as of May 6, 2004 by and between Bank of America, N.A. and Health Care REIT, Inc. (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed July 23, 2004, and incorporated herein by reference thereto).
10	.4	Interest Rate Swap Confirmation dated May 10, 2004 between Health Care REIT, Inc. and Bank of America, N.A. (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed July 23, 2004, and incorporated herein by reference thereto).
10	.5	Interest Rate Swap Confirmation dated May 6, 2004 between Health Care REIT, Inc. and Deutsche Bank AG (filed with the Commission as Exhibit 10.5 to the Company’s Form 10-Q filed July  23, 2004, and incorporated herein by reference thereto).
10	.6	Health Care REIT, Inc. Interest Rate & Currency Risk Management Policy adopted on May 6, 2004 (filed with the Commission as Exhibit 10.6 to the Company’s Form 10-Q filed July  23, 2004, and incorporated herein by reference thereto).
10	.7	The 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Appendix II to the Company’s Proxy Statement for the 1995 Annual Meeting of Stockholders, filed September 29, 1995, and incorporated herein by reference thereto).*
10	.8	First Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 4.2 to the Company’s Form S-8 (File No. 333-40771) filed November 21, 1997, and incorporated herein by reference thereto).*
10	.9	Second Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 4.3 to the Company’s Form S-8 (File No. 333-73916) filed November 21, 2001, and incorporated herein by reference thereto).*
10	.10	Third Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 10.15 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*

86

10	.11	Stock Plan for Non-Employee Directors of Health Care REIT, Inc. (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed May 10, 2004, and incorporated herein by reference thereto).*
10	.12	First Amendment to the Stock Plan for Non-Employee Directors of Health Care REIT, Inc. effective April 21, 1998 (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed May 10, 2004, and incorporated herein by reference thereto).*
10	.13	Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with the Commission as Appendix A to the Company’s Proxy Statement for the 2005 Annual Meeting of Stockholders, filed March  28, 2005, and incorporated herein by reference thereto).*
10	.14	Form of Stock Option Agreement for Executive Officers under the 1995 Stock Incentive Plan (filed with the Commission as Exhibit 10.17 to the Company’s Form 10-K filed March 16, 2005, and incorporated herein by reference thereto).*
10	.15	Form of Restricted Stock Agreement for Executive Officers under the 1995 Stock Incentive Plan (filed with the Commission as Exhibit 10.18 to the Company’s Form 10-K filed March  16, 2005, and incorporated herein by reference thereto).*
10	.16	Form of Stock Option Agreement under the Stock Plan for Non-Employee Directors (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q/A filed October 27, 2004, and incorporated herein by reference thereto).*
10	.17	Form of Restricted Stock Agreement under the Stock Plan for Non-Employee Directors (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 16, 2005, and incorporated herein by reference thereto).*
10	.18	Form of Stock Option Agreement (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan.*
10	.19	Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan.*
10	.20	Form of Stock Option Agreement (without Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan.*
10	.21	Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan.*
10	.22	Form of Restricted Stock Agreement for the Chief Executive Officer under the 2005 Long-Term Incentive Plan.*
10	.23	Form of Restricted Stock Agreement for Executive Officers under the 2005 Long-Term Incentive Plan.*
10	.24	Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2005 Long-Term Incentive Plan.*
10	.25	Second Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and George L. Chapman (filed with the Commission as Exhibit 10.17 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.26	Second Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and Raymond W. Braun (filed with the Commission as Exhibit 10.18 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.27	Second Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and Erin C. Ibele (filed with the Commission as Exhibit 10.19 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.28	Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and Charles J. Herman, Jr. (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.29	Employment Agreement, effective April 28, 2003, by and between Health Care REIT, Inc. and Scott A. Estes (filed with the Commission as Exhibit 10.21 to the Company’s Form 10-K filed March  12, 2004, and incorporated herein by reference thereto).*

87

10	.30	Employment Agreement, effective July 1, 2004, by and between Health Care REIT, Inc. and Jeffrey H. Miller (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed July 23, 2004, and incorporated herein by reference thereto).*
10	.31	Health Care REIT, Inc. Supplemental Executive Retirement Plan, effective as of January 1, 2001 (filed with the Commission as Exhibit 10.19 to the Company’s Form 10-K filed March 10, 2003, and incorporated herein by reference thereto).*
10	.32	Health Care REIT, Inc. Executive Loan Program, effective as of August 1999 (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 10, 2003, and incorporated herein by reference thereto).*
10	.33	Form of Indemnification Agreement between the Company and each director, executive officer and officer of the Company (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 18, 2005, and incorporated herein by reference thereto).*
10	.34	Summary of Executive Compensation Program.*
10	.35	Summary of Director Compensation.*
12		Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
14		Code of Business Conduct and Ethics (filed with the Commission as Exhibit 14 to the Company’s Form 10-K filed March  12, 2004, and incorporated herein by reference thereto).
21		Subsidiaries of the Company.
23		Consent of Ernst & Young LLP, independent registered public accounting firm.
24		Powers of Attorney.
31	.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31	.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32	.1	Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer.
32	.2	Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer.

* Management Contract or Compensatory Plan or Arrangement.

(b) Exhibits:

The exhibits listed in Item 15(a)(3) above are either filed with this Form 10-K or incorporated by reference in accordance with Rule 12b-32 of the Securities Exchange Act of 1934.

(c) Financial Statement Schedules:

Financial statement schedules are included on pages 90 through 99.

88

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

HEALTH CARE REIT, INC.

By:  /s/  George L. Chapman

Chairman, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 10, 2006, by the following person on behalf of the Company and in the capacities indicated.

/s/  William C. Ballard, Jr.*	/s/  R. Scott Trumbull*
William C. Ballard, Jr., Director	R. Scott Trumbull, Director
/s/  Pier C. Borra*	/s/  George L. Chapman
Pier C. Borra, Director	George L. Chapman, Chairman, Chief Executive Officer and Director (Principal Executive Officer)
/s/  Thomas J. Derosa*	/s/  Raymond W. Braun*
Thomas J. DeRosa, Director	Raymond W. Braun, President and Chief Financial Officer (Principal Financial Officer)
/s/  Jeffrey H. Donahue*	/s/  Paul D. Nungester, Jr.*
Jeffrey H. Donahue, Director	Paul D. Nungester, Jr., Controller (Principal Accounting Officer)
/s/  Peter J. Grua*	*By: /s/  George L. Chapman
Peter J. Grua, Director	George L. Chapman, Attorney-in-Fact
/s/  Sharon M. Oster* Sharon M. Oster, Director

89

HEALTH CARE REIT, INC.

SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2005

									Gross Amount at Which
			Initial Cost to Company				Cost Capitalized		Carried at Close of Period
(Dollars in thousands)					Buildings &		Subsequent to				Buildings &		Accumulated		Year		Year
Description	Encumbrances		Land		Improvements		Acquisition		Land		Improvements		Depreciation		Acquired		Built
Assisted Living Facilities:
Alhambra, CA	$	0	$	420	$	2,534	$	0	$	420	$	2,534	$	338		1999		1999
Amarillo, TX				390		5,100				390		5,100		168		2004		1996
Asheboro, NC(3)		3,617		290		5,032		21		290		5,053		321		2003		1998
Asheville, NC				204		3,489				204		3,489		692		1999		1999
Asheville, NC				280		1,955		351		280		2,306		162		2003		1992
Auburn, MA(1)		4,633		1,050		7,950				1,050		7,950		533		2003		1997
Azusa, CA				570		3,141				570		3,141		439		1998		1988
Baltimore, MD				510		4,515				510		4,515		356		2003		1999
Bartlesville, OK				100		1,380				100		1,380		393		1996		1995
Beaumont, TX				520		6,050				520		6,050		210		2004		1997
Bellingham, WA				300		3,200				300		3,200		197		2003		1994
Bluffton, SC				700		5,598		3,085		700		8,683		991		1999		2000
Bradenton, FL				252		3,298				252		3,298		955		1996		1995
Bradenton, FL				100		1,700		801		100		2,501		689		1999		1996
Brandon, FL				860		7,140				860		7,140		421		2003		1990
Brick, NJ				1,300		9,394		14		1,300		9,408		2,771		1999		2000
Burlington, NC				280		4,297		707		280		5,004		307		2003		2000
Burlington, NC(3)		2,835		460		5,501		5		460		5,506		348		2003		1997
Butte, MT				550		3,957		43		550		4,000		556		1998		1999
Canton, OH				300		2,098				300		2,098		424		1998		1998
Cape Coral, FL				530		3,281				530		3,281		345		2002		2000
Cary, NC				1,500		4,350		986		1,500		5,336		955		1998		1996
Cedar Hill, TX				171		1,490				171		1,490		392		1997		1996
Chapel Hill, NC				354		2,646		783		354		3,429		296		2002		1997
Chelmsford, MA(2)		9,256		1,040		10,960				1,040		10,960		654		2003		1997
Chickasha, OK				85		1,395				85		1,395		390		1996		1996
Chubbuck, ID				125		5,375				125		5,375		338		2003		1996
Claremore, OK				155		1,428				155		1,428		374		1996		1996
Clarksville, TN				330		2,292				330		2,292		458		1998		1998
Clermont, FL				350		5,232		449		350		5,681		1,538		1996		1997
Coeur D’ Alene, ID				530		7,570				530		7,570		472		2003		1987
Columbia, TN				341		2,295				341		2,295		452		1999		1999
Concord, NC(3)		4,801		550		3,921		78		550		3,999		279		2003		1997
Corpus Christi, TX				155		2,935		15		155		2,950		1,024		1997		1996
Corpus Christi, TX				420		4,796		139		420		4,935		2,189		1996		1997
Danville, VA				410		3,954		722		410		4,676		299		2003		1998
Dayton, OH				690		2,970		1,365		690		4,335		482		2003		1994
Desoto, TX				205		1,383				205		1,383		354		1996		1996
Duncan, OK				103		1,347				103		1,347		369		1995		1996
Durham, NC				1,476		10,659		2,196		1,476		12,855		3,843		1997		1999
Easley, SC				250		3,266				250		3,266		258		2003		1999
Eden, NC(3)		3,117		390		5,039		89		390		5,128		320		2003		1998
Edmond, OK				175		1,564				175		1,564		420		1995		1996
Elizabeth City, NC				200		2,760		2,011		200		4,771		677		1998		1999
Encinitas, CA				1,460		7,721				1,460		7,721		1,189		2000		2000
Enid, OK				90		1,390				90		1,390		395		1995		1995
Eugene, OR				600		5,150				600		5,150		544		2002		2000
Everett, WA				1,400		5,476				1,400		5,476		1,007		1999		1999
Fairfield, CA				1,460		14,040				1,460		14,040		1,504		2002		1998
Fairhaven, MA				770		6,230				770		6,230		290		2004		1999
Fayetteville, NY				410		3,962		500		410		4,462		459		2001		1997
Federal Way, WA				540		3,960				540		3,960		244		2003		1978
Findlay, OH				200		1,800				200		1,800		438		1997		1997
Flagstaff, AZ				540		4,460				540		4,460		281		2003		1999
Florence, NJ				300		2,978				300		2,978		311		2002		1999
Forest City, NC(3)		3,190		320		4,576		51		320		4,627		297		2003		1999
Fort Myers, FL				440		2,560				440		2,560		166		2003		1980
Fort Worth, TX				65		3,790		91		65		3,881		1,387		1996		1984
Fredricksburg, VA(4)		7,678		1,000		20,000				1,000		20,000		393		2005		1999
Gaffney, SC				200		1,892				200		1,892		167		2003		1999
Gastonia, NC(3)		4,244		470		6,129		9		470		6,138		387		2003		1998
Gastonia, NC(3)		1,977		310		3,096		38		310		3,134		211		2003		1994

90

									Gross Amount at Which
			Initial Cost to Company				Cost Capitalized		Carried at Close of Period
(Dollars in thousands)					Buildings &		Subsequent to				Buildings &		Accumulated		Year		Year
Description	Encumbrances		Land		Improvements		Acquisition		Land		Improvements		Depreciation		Acquired		Built
Gastonia, NC(3)	$	3,951	$	400	$	5,029	$	0	$	400	$	5,029	$	324		2003		1996
Georgetown, TX				200		2,100				200		2,100		499		1997		1997
Grand Terrace, CA				530		2,770				530		2,770		109		2004		1982
Greensboro, NC				330		2,970		554		330		3,524		231		2003		1996
Greensboro, NC				560		5,507		1,013		560		6,520		424		2003		1997
Greenville, NC(3)		3,710		290		4,393		20		290		4,413		281		2003		1998
Greenville, SC				310		4,750				310		4,750		175		2004		1997
Hagerstown, MD				360		4,640				360		4,640		308		2003		1999
Haines City, FL				80		1,937		174		80		2,111		658		1999		1999
Hamden, CT				1,470		4,530				1,470		4,530		543		2002		1998
Hamilton, NJ				440		4,469				440		4,469		484		2001		1998
Harlingen, TX				92		2,057		127		92		2,184		721		1997		1989
Hattiesburg, MS				560		5,790				560		5,790		650		2002		1998
Henderson, NV				380		9,220		65		380		9,285		1,722		1998		1998
Henderson, NV				380		4,360		41		380		4,401		602		1999		2000
Hickory, NC				290		987		232		290		1,219		107		2003		1994
High Point, NC				560		4,443		793		560		5,236		337		2003		2000
High Point, NC				370		2,185		410		370		2,595		179		2003		1999
High Point, NC(3)		2,714		330		3,395		34		330		3,429		223		2003		1994
High Point, NC(3)		3,062		430		4,147		3		430		4,150		268		2003		1998
Highlands Ranch, CO				940		3,721				940		3,721		395		2002		1999
Hilton Head Island, SC				510		6,037		2,380		510		8,417		1,207		1998		1999
Hopedale, MA				130		8,170				130		8,170		199		2005		1999
Houston, TX				360		2,640				360		2,640		241		2002		1999
Houston, TX				360		2,640				360		2,640		238		2002		1999
Hutchinson, KS				600		10,590				600		10,590		351		2004		1997
Jackson, TN				540		1,633		177		540		1,810		145		2003		1998
Jonesboro, GA				460		1,304				460		1,304		94		2003		1992
Kalispell, MT				360		3,282				360		3,282		649		1998		1998
Kenner, LA				1,100		10,036		125		1,100		10,161		3,045		1998		2000
Kikland, WA(2)		5,066		1,880		4,320				1,880		4,320		274		2003		1996
Knoxville, TN				314		2,756				314		2,756		242		2002		1998
Lake Havasu City, AZ				450		4,223				450		4,223		757		1998		1999
Lake Havasu City, AZ				110		2,244		136		110		2,380		464		1998		1994
Lake Wales, FL				80		1,939		172		80		2,111		660		1999		1999
Lakeland, FL				520		4,580				520		4,580		284		2003		1991
Lakewood, NY				470		8,530				470		8,530		513		2003		1999
Lawton, OK				144		1,456				144		1,456		395		1995		1996
Lecanto, FL				200		6,900				200		6,900		243		2004		1986
Lenoir, NC				190		3,748		641		190		4,389		281		2003		1998
Lexington, NC				200		3,900		1,015		200		4,915		415		2002		1997
Litchfield, CT				660		9,652		208		660		9,860		3,750		1997		1998
Longview, TX				320		4,440				320		4,440		156		2004		1997
Louisville, KY(1)		3,444		490		7,610				490		7,610		512		2003		1997
Lubbock, TX				280		6,220		1,255		280		7,475		385		2003		1996
Manassas, VA(2)		3,855		750		7,450				750		7,450		452		2003		1996
Margate, FL				500		7,303		2,459		500		9,762		3,656		1998		1972
Martinsville, NC				349						349						2003
Marysville, CA				450		4,172		44		450		4,216		588		1998		1999
Matthews, NC(3)		3,897		560		4,869		182		560		5,051		323		2003		1998
Middleburg Heights, OH				960		7,780				960		7,780		263		2004		1998
Middleton, WI				420		4,006				420		4,006		420		2001		1991
Middletown, OH				800		3,700				800		3,700		159		2004		2000
Midland, TX				400		4,930				400		4,930		168		2004		1997
Midwest City, OK				95		1,385				95		1,385		394		1996		1995
Missoula, MT(5)		6,660		550		7,490				550		7,490		52		2005		1998
Monroe, NC				470		3,681		648		470		4,329		285		2003		2001
Monroe, NC				310		4,799		857		310		5,656		349		2003		2000
Monroe, NC(3)		3,387		450		4,021		12		450		4,033		269		2003		1997
Morehead City, NC				200		3,104		1,648		200		4,752		663		1999		1999
Morristown, TN				400		3,808		155		400		3,963		932		1998		1999
Moses Lake, WA				260		5,940				260		5,940		371		2003		1986
Newark, DE				560		21,220				560		21,220		690		2004		1998
Newark, OH				410		5,711		312		410		6,023		1,770		1998		1987
Newburyport, MA				960		8,290				960		8,290		795		2002		1999
Norman, OK				55		1,484				55		1,484		482		1995		1995
North Augusta, SC				332		2,558				332		2,558		496		1999		1998
North Miami Beach, FL				300		5,709		2,006		300		7,715		2,685		1998		1987
North Oklahoma City, OK				87		1,508				87		1,508		389		1996		1996
Oak Ridge, TN				450		4,066		196		450		4,262		985		1998		1999

91

									Gross Amount at Which
			Initial Cost to Company				Cost Capitalized		Carried at Close of Period
(Dollars in thousands)					Buildings &		Subsequent to				Buildings &		Accumulated		Year		Year
Description	Encumbrances		Land		Improvements		Acquisition		Land		Improvements		Depreciation		Acquired		Built
Ocean Shores, WA	$	0	$	770	$	1,390	$	0	$	770	$	1,390	$	56		2004		1996
Ogden, UT				360		6,700				360		6,700		229		2004		1998
Oklahoma City, OK				130		1,350				130		1,350		374		1995		1996
Oklahoma City, OK				220		2,943				220		2,943		502		1999		1999
Ontario, OR				90		2,110				90		2,110		130		2003		1985
Orange City, FL				80		2,239		273		80		2,512		822		1999		1998
Orlando, FL				1,390		4,630				1,390		4,630		191		2004		1973
Owasso, OK				215		1,380				215		1,380		360		1996		1996
Palestine, TX				173		1,410				173		1,410		370		1996		1996
Paso Robles, CA				1,770		8,630				1,770		8,630		918		2002		1998
Phoenix, AZ				1,000		6,500				1,000		6,500		414		2003		1999
Pinehurst, NC				290		2,690		484		290		3,174		216		2003		1998
Piqua, OH				204		1,885				204		1,885		408		1997		1997
Pittsburgh, PA				1,750		8,572				1,750		8,572		182		2005		1998
Pocatello, ID				470		1,930				470		1,930		133		2003		1991
Ponca City, OK				114		1,536				113		1,537		437		1995		1995
Portland, OR				628		3,585		232		628		3,817		680		1998		1999
Quincy, MA				2,690		15,410				2,690		15,410		406		2004		1999
Reidsville, NC				170		3,830		857		170		4,687		403		2002		1998
Reno, NV				1,060		11,440				1,060		11,440		386		2004		1998
Rheems, PA				200		1,575				200		1,575		112		2003		1996
Ridgeland, MS(2)		4,897		520		7,680				520		7,680		467		2003		1997
Rocky Hill, CT				1,460		7,040				1,460		7,040		765		2002		1998
Rocky Hill, CT(1)		4,752		1,090		6,710				1,090		6,710		455		2003		1996
Roswell, GA				620		2,200		184		620		2,384		247		2002		1997
Salem, OR				449		5,172				449		5,172		989		1999		1998
Salisbury, NC(3)		3,669		370		5,697		57		370		5,754		365		2003		1997
Salt Lake City, UT				1,060		6,142				1,060		6,142		842		1999		1986
San Angelo, TX				260		8,800				260		8,800		291		2004		1997
San Juan Capistrano, CA				1,390		6,942				1,390		6,942		817		2000		2001
Sarasota, FL				475		3,175				475		3,175		919		1996		1995
Sarasota, FL				1,190		4,810				1,190		4,810		315		2003		1988
Seven Fields, PA				484		4,663		25		484		4,688		904		1999		1999
Shawnee, OK				80		1,400				80		1,400		395		1996		1995
Smithfield, NC(3)		3,632		290		5,777		53		290		5,830		366		2003		1998
Statesville, NC				150		1,447		266		150		1,713		116		2003		1990
Statesville, NC(3)		2,945		310		6,183		32		310		6,215		381		2003		1996
Statesville, NC(3)		2,551		140		3,798		34		140		3,832		236		2003		1999
Staunton, VA				140		8,360				140		8,360		528		2003		1999
Stillwater, OK				80		1,400				80		1,400		397		1995		1995
Sunrise, FL				1,480		15,950				1,480		15,950		560		2004		1988
Tewksbury, MA				1,520		5,480				1,520		5,480		324		2003		1989
Texarkana, TX				192		1,403				192		1,403		365		1996		1996
Troy, OH				200		2,000				200		2,000		477		1997		1997
Vacaville, CA				900		6,329				900		6,329		436		2002		2003
Valparaiso, IN				112		2,558				112		2,558		321		2001		1998
Valparaiso, IN				108		2,962				108		2,962		364		2001		1999
Vero Beach, FL				263		3,187				263		3,187		389		2001		1999
Vero Beach, FL				297		3,263				297		3,263		402		2001		1996
W. Hartford, CT				2,650		5,980				2,650		5,980		297		2004		1905
Waco, TX				180		4,500				180		4,500		164		2004		1997
Wake Forest, NC				200		3,003		1,742		200		4,745		738		1998		1999
Walterboro, SC				150		1,838		337		150		2,175		539		1999		1992
Waterford, CT				1,360		12,540				1,360		12,540		1,253		2002		2000
Waxahachie, TX				154		1,429				154		1,429		375		1996		1996
Westerville, OH				740		8,287		2,693		740		10,980		2,567		1998		2001
Wichita Falls, TX				470		3,010				470		3,010		114		2004		1997
Williamsburg, VA				374						374						2003
Wilmington, NC				210		2,991				210		2,991		567		1999		1999
Winston-Salem, NC				360		2,514		459		360		2,973		195		2003		1996
Total Assisted Living Facilities:		107,540		97,906		889,036		40,371		97,905		929,408		108,466
Skilled Nursing Facilities:
Agawam, MA				880		16,112		2,136		880		18,248		1,553		2002		1993
Akron, OH				290		8,219				290		8,219				2005		1961
Amarillo, TX				540		7,260				540		7,260		106		2005		1986
Atlanta, GA				460		5,540				460		5,540		88		2005		1972
Auburndale, FL				750		5,950				750		5,950		90		2005		1983
Baytown, TX				450		6,150				450		6,150		597		2002		2000
Beachwood, OH				1,260		23,478				1,260		23,478		2,612		2001		1990

92

									Gross Amount at Which
			Initial Cost to Company				Cost Capitalized		Carried at Close of Period
(Dollars in thousands)					Buildings &		Subsequent to				Buildings &		Accumulated		Year		Year
Description	Encumbrances		Land		Improvements		Acquisition		Land		Improvements		Depreciation		Acquired		Built
Beattyville, KY	$	0	$	100	$	6,900	$	0	$	100	$	6,900	$	34		2005		1972
Bernice, LA				16		1,017				16		1,017		5		2005		1969
Birmingham, AL				390		4,902				390		4,902		387		2003		1977
Birmingham, AL				340		5,734				340		5,734		410		2003		1974
Boise, ID				810		5,401				810		5,401		1,362		1998		1966
Boise, ID				600		7,383				600		7,383		1,645		1998		1997
Boonville, IN				190		5,510				190		5,510		569		2002		2000
Bountiful, UT				991		6,850				991		6,850				2005		1987
Boynton Beach, FL				980		8,112				980		8,112		347		2004		1999
Braintree, MA				170		7,157		1,290		170		8,447		3,390		1997		1968
Brandon, MS				115		9,549				115		9,549		714		2003		1963
Bridgewater, NJ				1,850		3,050				1,850		3,050		134		2004		1970
Brighton, MA				240		3,859				240		3,859		74		2005		1982
Broadview Heights, OH				920		12,400				920		12,400		1,383		2001		1984
Bunnell, FL				260		7,118				260		7,118		322		2004		1985
Butler, AL				90		3,510				90		3,510		166		2004		1960
Byrdstown, TN						2,414						2,414		282		2004		1982
Canton, MA				820		8,201		263		820		8,464		853		2002		1993
Carrollton, TX				730		2,770				730		2,770		51		2005		1976
Centerville, MA				1,490		9,650				1,490		9,650		286		2004		1982
Cheswick, PA				384		6,041		1,293		384		7,334		1,594		1998		1933
Clearwater, FL				160		7,218				160		7,218		296		2004		1961
Clearwater, FL				1,260		2,740				1,260		2,740		54		2005		1983
Cleveland, MS						1,850						1,850		463		2003		1977
Cleveland, TN				350		5,000		123		350		5,123		616		2001		1987
Coeur d’Alene, ID				600		7,878				600		7,878		1,738		1998		1996
Colorado Springs, CO				310		6,290				310		6,290		98		2005		1985
Columbia, TN				590		3,787				590		3,787		308		2003		1974
Columbus, IN				530		5,170		1,540		530		6,710		566		2002		2001
Columbus, OH				1,070		11,726				1,070		11,726				2005		1968
Corpus Christi, TX				307		443				307		443		18		2005		1985
Corpus Christi, TX				400		1,916				400		1,916				2005		1985
Dade City, FL				250		7,150				250		7,150		290		2004		1975
Daytona Beach, FL				470		5,930				470		5,930		262		2004		1986
Daytona Beach, FL				490		5,710				490		5,710		262		2004		1961
Daytona Beach, FL				1,850		2,650				1,850		2,650		54		2005		1964
DeBary, FL				440		7,460				440		7,460		301		2004		1965
Dedham, MA				1,790		12,936				1,790		12,936		1,386		2002		1996
DeLand, FL				220		7,080				220		7,080		289		2004		1967
Denton, MD				390		4,010				390		4,010		384		2003		1982
Denver, CO				2,530		9,514				2,530		9,514				2005		1987
Douglasville, GA				1,350		7,471				1,350		7,471		593		2003		1975
Easton, PA				285		6,315				285		6,315		2,606		1993		1959
Eight Mile, AL				410		6,110				410		6,110		505		2003		1973
El Paso, TX				539		8,961				539		8,961		132		2005		1970
El Paso, TX				642		3,958				642		3,958		70		2005		1969
Elizabethton, TN				310		4,604		336		310		4,940		650		2001		1980
Erin, TN				440		8,060		134		440		8,194		946		2001		1981
Eugene, OR				300		5,316				300		5,316		1,273		1998		1972
Fairfield, AL				530		9,134				530		9,134		687		2003		1965
Fall River, MA				620		5,829		4,847		620		10,676		2,038		1996		1973
Falmouth, MA				670		3,145		97		670		3,242		939		1999		1966
Farmerville, LA				147		4,087				147		4,087		12		2005		1984
Florence, AL				320		3,975				320		3,975		353		2003		1972
Fort Myers, FL				636		6,026				636		6,026		1,889		1998		1984
Fort Pierce, FL				440		3,560				440		3,560		28		2005		1973
Gardnerville, NV				182		1,718		785		182		2,503		587		2004		2000
Grand Prairie, TX				574		3,426				574		3,426		61		2005		1982
Granite City, IL				610		7,143		842		610		7,985		2,206		1998		1973
Granite City, IL				400		4,303		707		400		5,010		1,320		1999		1964
Greeneville, TN				400		8,290				400		8,290		422		2004		1979
Hanover, IN				210		4,430				210		4,430		196		2004		2000
Hardin, IL				50		5,350		135		50		5,485		1,087		2002		1996
Harriman, TN				590		8,060		158		590		8,218		1,010		2001		1972
Herculaneum, MO				127		10,373		393		127		10,766		2,055		2002		1984
Hilliard, FL				150		6,990				150		6,990		1,447		1999		1990
Houston, TX				600		2,700				600		2,700		50		2005		1974
Houston, TX				630		5,970		750		630		6,720		615		2002		1995
Huron, OH				160		6,088				160		6,088				2005		1983
Indianapolis, IN				75		925				75		925		55		2004		1942

93

									Gross Amount at Which
			Initial Cost to Company				Cost Capitalized		Carried at Close of Period
(Dollars in thousands)					Buildings &		Subsequent to				Buildings &		Accumulated		Year		Year
Description	Encumbrances		Land		Improvements		Acquisition		Land		Improvements		Depreciation		Acquired		Built
Jackson, MS	$	0	$	410	$	1,814	$	0	$	410	$	1,814	$	167		2003		1968
Jackson, MS						4,400						4,400		1,100		2003		1980
Jackson, MS						2,150						2,150		538		2003		1970
Jamestown, TN						6,707						6,707		782		2004		1966
Jefferson City, MO				370		6,730		301		370		7,031		1,333		2002		1982
Jonesboro, GA				840		1,921				840		1,921		186		2003		1992
Kent, OH				215		3,367				215		3,367		1,255		1989		1983
Kissimmee, FL				230		3,854				230		3,854		164		2004		1972
LaBelle, FL				60		4,946				60		4,946		228		2004		1986
Lake Placid, FL				150		12,850				150		12,850		533		2004		1984
Lakeland, FL				696		4,843				696		4,843		1,535		1998		1984
Lee, MA				290		18,135		926		290		19,061		1,916		2002		1998
Littleton, MA				1,240		2,910				1,240		2,910		340		1996		1975
Longview, TX				293		1,707				293		1,707		35		2005		1971
Longwood, FL				480		7,520				480		7,520		311		2004		1980
Louisville, KY				490		10,010				490		10,010		177		2005		1978
Louisville, KY				430		7,135		163		430		7,298		859		2002		1974
Louisville, KY				350		4,675		109		350		4,784		575		2002		1975
Lowell, MA				370		7,450				370		7,450		215		2004		1977
Lufkin, TX				416		1,184				416		1,184		35		2005		1919
Manchester, NH				340		4,360				340		4,360		62		2005		1984
McComb, MS				120		5,786				120		5,786		423		2003		1973
Memphis, TN				970		4,246				970		4,246		361		2003		1981
Memphis, TN				480		5,656				480		5,656		445		2003		1982
Memphis, TN				940		5,963				940		5,963		347		2004		1951
Merrillville, IN				643		7,084		2,276		643		9,360		2,517		1997		1999
Mesa, AZ				940		2,579				940		2,579				2005		1984
Midwest City, OK				470		5,673				470		5,673		1,535		1998		1958
Midwest City, OK				484		5,516				484		5,516		85		2005		1987
Millbury, MA				930		4,570				930		4,570		258		2004		1972
Mobile, AL				440		3,625				440		3,625		312		2003		1982
Monteagle, TN				310		3,318				310		3,318		251		2003		1980
Monterey, TN						4,195						4,195		489		2004		1977
Monticello, FL				140		4,471				140		4,471		212		2004		1986
Morgantown, KY				380		3,705				380		3,705		265		2003		1965
Moss Point, MS				120		7,280				120		7,280		307		2004		1933
Mountain City, TN				220		5,896		660		220		6,556		1,210		2001		1976
Naples, FL				550		5,450				550		5,450		182		2004		1968
Natchitoches, LA				190		4,096				190		4,096		12		2005		1965
Needham, MA				1,610		13,715		366		1,610		14,081		1,534		2002		1994
New Haven, IN				176		3,524				176		3,524		140		2004		1981
New Port Richey, FL				624		7,307				624		7,307		2,272		1998		1984
North Easton, MA				1,600		1,900				1,600		1,900		56		2004		1970
North Miami, FL				430		3,918				430		3,918		227		2004		1968
North Miami, FL				440		4,830				440		4,830		229		2004		1963
Norwalk, CT				410		2,118		1,411		410		3,529		96		2004		1971
Ormond Beach, FL						2,739		73				2,812		510		2002		1983
Overland Park, KS				1,120		8,360				1,120		8,360				2005		1970
Owensboro, KY				240		6,760				240		6,760		148		2005		1966
Owensboro, KY				225		13,275				225		13,275		194		2005		1964
Owenton, KY				100		2,400				100		2,400		43		2005		1979
Panama City, FL				300		9,200				300		9,200		383		2004		1992
Payson, AZ				180		3,988				180		3,988		1,011		1998		1985
Pigeon Forge, TN				320		4,180		117		320		4,297		552		2001		1986
Plano, TX				1,305		9,095				1,305		9,095		137		2005		1977
Pleasant Grove, AL				480		4,429				480		4,429		378		2003		1964
Plymouth, MA				440		6,220				440		6,220		188		2004		1968
Port St. Joe, FL				370		2,055				370		2,055		173		2004		1982
Prospect, CT				820		1,441		809		820		2,250		62		2004		1970
Pueblo, CO				370		6,051				370		6,051		1,502		1998		1989
Pueblo, CO				250		9,391				250		9,391				2005		1986
Quincy, FL				200		5,333				200		5,333		255		2004		1983
Quitman, MS				60		10,340				60		10,340		411		2004		1976
Rochdale, MA				675		11,847		1,899		675		13,746		1,157		2002		1995
Richmond, VA				1,211		2,889				1,211		2,889		318		2003		1995
Ridgely, TN				300		5,700		97		300		5,797		686		2001		1990
Ringgold, LA				30		4,174				30		4,174		12		2005		1984
Rockledge, FL				360		4,117				360		4,117		671		2001		1970
Rockwood, TN				500		7,116		741		500		7,857		985		2001		1979
Rogersville, TN				350		3,278				350		3,278		249		2003		1980

94

									Gross Amount at Which
			Initial Cost to Company				Cost Capitalized		Carried at Close of Period
(Dollars in thousands)					Buildings &		Subsequent to				Buildings &		Accumulated		Year		Year
Description	Encumbrances		Land		Improvements		Acquisition		Land		Improvements		Depreciation		Acquired		Built
Royal Palm Beach, FL	$	0	$	980	$	8,320	$	0	$	980	$	8,320	$	354		2004		1984
Ruleville, MS						50						50		13		2003		1978
Ruston, LA				130		9,403				130		9,403		23		2005		1988
San Antonio, TX				560		7,315				560		7,315		716		2002		2000
Sandwich, MA				1,140		11,190				1,140		11,190		329		2004		1987
Santa Rosa, CA				1,460		3,880		62		1,460		3,942		1,534		1998		1968
Sarasota, FL				560		8,474				560		8,474		1,431		1999		2000
Sarasota, FL				600		3,400				600		3,400		127		2004		1982
Scituate, MA				1,740		10,640				1,740		10,640				2005		1976
Seville, OH				230		1,770				230		1,770		35		2005		1981
Shelby, MS				60		5,340				60		5,340		219		2004		1979
Shelbyville, KY				630		3,870				630		3,870		57		2005		1965
South Boston, MA				385		2,002		5,218		385		7,220		1,452		1995		1961
South Pittsburg, TN				430		5,628				430		5,628		309		2004		1979
Southbridge, MA				890		8,110				890		8,110		431		2004		1976
Spring City, TN				420		6,085		2,579		420		8,664		995		2001		1987
St. Louis, MO				750		6,030				750		6,030		566		1995		1994
Starke, FL				120		10,180				120		10,180		420		2004		1990
Stuart, FL				390		8,110				390		8,110		332		2004		1985
Swanton, OH				330		6,370				330		6,370		202		2004		1950
Tampa, FL				830		6,370				830		6,370		325		2004		1968
Torrington, CT				360		1,261		602		360		1,863		54		2004		1966
Troy, OH				470		16,730				470		16,730		510		2004		1971
Tucson, AZ				930		13,399				930		13,399				2005		1985
Tupelo, MS				740		4,092				740		4,092		341		2003		1980
Venice, FL				500		6,000				500		6,000		197		2004		1987
Vero Beach, FL				660		9,040		1,461		660		10,501		3,099		1998		1984
Wareham, MA				875		10,311		1,699		875		12,010		1,083		2002		1989
Warren, OH				240		3,810				240		3,810		60		2005		1973
Webster, MA				234		3,580		712		500		4,026		1,381		1995		1986
Webster, MA				70		5,917				70		5,917		1,866		1995		1982
Webster, TX				360		5,940				360		5,940		579		2002		2000
West Haven, CT				580		1,620		540		580		2,160		64		2004		1971
West Palm Beach, FL				696		8,037				696		8,037		2,768		1998		1984
Westlake, OH				1,320		17,936				1,330		17,926		2,026		2001		1985
Westlake, OH				571		5,411				571		5,411		1,293		1998		1957
Westmoreland, TN				330		1,822		2,634		330		4,456		532		2001		1994
White Hall, IL				50		5,550		670		50		6,220		1,181		2002		1971
Whitemarsh, PA				2,310		6,190				2,310		6,190		109		2005		1967
Williamstown, KY				70		6,430				70		6,430		95		2005		1987
Winnfield, LA				31		6,480				31		6,480		17		2005		1964
Woodbridge, VA				680		4,422				680		4,422		452		2002		1977
Worcester, MA				1,053		2,265		268		1,053		2,533		1,074		1997		1961
Worcester, MA				1,100		5,400		1,127		1,100		6,527		302		2004		1962
Total Skilled Nursing Facilities:		0		100,878		1,152,659		43,349		101,154		1,195,732		115,360
Independent Living / CCRC Facilities:
Amelia Island, FL				3,290		24,310				3,290		24,310				2005		1998
Anderson, SC				710		6,290				710		6,290		408		2003		1986
Atlanta, GA				2,059		14,914				2,059		14,914		4,119		1997		1999
Austin, TX				880		9,520				880		9,520		1,876		1999		1998
Columbia, SC				2,120		4,860		2,185		2,120		7,045		401		2003		2000
Douglasville, GA				90		217				90		217		18		2003		1985
Fremont, CA				3,400		25,300				3,400		25,300				2005		1988
Gardnerville, NV				1,143		10,831				1,143		10,831		3,612		1998		1999
Houston, TX				4,790		7,100				4,790		7,100		647		2003		1974
Lauderhill, FL				1,836		25,216				1,836		25,216		339		2005		1976
Manteca, CA				1,300		12,125				1,300		12,125				2005		1988
Marysville, WA				620		4,780				620		4,780		278		2003		1998
Mesa, AZ				950		9,087				950		9,087		1,323		1999		2000
Mount Airy, NC				270		6,430				270		6,430				2005		1998
Naples, FL				1,716		17,306				1,716		17,306		6,962		1997		1999
Ossining, NY				1,510		9,490				1,510		9,490		963		2002		1967
Pawleys Island, SC				1,010		32,590				1,010		32,590				2005		1998
Rohnert Park, CA				6,500		18,700				6,500		18,700				2005		1988
Roswell, GA				1,107		9,627				1,107		9,627		3,275		1997		1999
Sonoma, CA				1,100		18,400				1,100		18,400				2005		1988
Spartanburg, SC				3,350		15,750				3,350		15,750				2005		1998
Terre Haute, IN				175		3,499		3,806		175		7,305		1,480		1999		1999

95

									Gross Amount at Which
			Initial Cost to Company				Cost Capitalized		Carried at Close of Period
(Dollars in thousands)					Buildings &		Subsequent to				Buildings &		Accumulated		Year		Year
Description	Encumbrances		Land		Improvements		Acquisition		Land		Improvements		Depreciation		Acquired		Built
Tucson, AZ	$	0	$	0	$	1,373	$	16,948	$	2,584	$	15,737	$	3,187		2002		2000
Twin Falls, ID				550		14,740				550		14,740		1,255		2002		1991
Urbana, IL				670		6,780				670		6,780		752		2002		1998
Vacaville, CA				900		17,100				900		17,100				2005		1988
Vallejo, CA				4,000		18,000				4,000		18,000				2005		1988
Winston-Salem, NC				2,850		13,550				2,850		13,550				2005		1997
Total Independent Living / CCRC Facilities:		0		48,896		357,885		22,939		51,480		378,240		30,895
Specialty Care Facilities:
Amarillo, TX				72		11,928				72		11,928		156		2005		1986
Braintree, MA				350		13,781				350		13,781		3,328		2005		1918
Chicago, IL				3,650		7,505		9,077		3,650		16,582		2,147		2002		1979
Corpus Christi, TX				77		3,923				77		3,923		60		2005		1968
El Paso, TX				112		15,887				112		15,887		205		2005		1994
Midwest City, OK				146		3,854				146		3,854		56		2005		1996
New Albany, OH				3,020		27,445				3,020		27,445		2,262		2002		2003
Plano, TX				195		14,805				195		14,805		191		2005		1995
Springfield, MA				2,100		22,914				2,100		22,914		5,516		2005		1952
Stoughton, MA				975		25,247				975		25,247		6,233		2005		1958
Total Specialty Care Facilities:		0		10,697		147,289		9,077		10,697		156,366		20,154
Construction in Progress:						3,906						3,906
Assets Held for Sale: Hendersonville, NC				2,270		11,771		279		2,270		12,050		2,408		1998		1998
Total Investment in Real Property Owned:	$	107,540	$	260,647	$	2,562,546	$	116,015	$	263,506	$	2,675,702	$	277,283

(1)	In June 2003, three wholly-owned subsidiaries of the Company completed the acquisitions of three assisted living facilities from Emeritus Corporation. The properties were subject to existing mortgage debt of $13,981,000. The three wholly-owned subsidiaries are included in the Company’s consolidated financial statements. Notwithstanding consolidation for financial statement purposes, it is the Company’s intention that the subsidiaries be separate legal entities wherein the assets and liabilities are not available to pay other debts or obligations of the consolidated Company.
(2)	In September 2003, four wholly-owned subsidiaries of the Company completed the acquisitions of four assisted living facilities from Emeritus Corporation. The properties were subject to existing mortgage debt of $24,291,000. The four wholly-owned subsidiaries are included in the Company’s consolidated financial statements. Notwithstanding consolidation for financial statement purposes, it is the Company’s intention that the subsidiaries be separate legal entities wherein the assets and liabilities are not available to pay other debts or obligations of the consolidated Company.
(3)	In September 2003, 17 wholly-owned subsidiaries of the Company completed the acquisitions of 17 assisted living facilities from Southern Assisted Living, Inc. The properties were subject to existing mortgage debt of $59,471,000. The 17 wholly-owned subsidiaries are included in the Company’s consolidated financial statements. Notwithstanding consolidation for financial statement purposes, it is the Company’s intention that the subsidiaries be separate legal entities wherein the assets and liabilities are not available to pay other debts or obligations of the consolidated Company.
(4)	In January 2005, one wholly-owned subsidiary of the Company completed the acquisition of one assisted living facility from Emeritus Corporation. The property was subject to existing mortgage debt of $7,875,000. The wholly-owned subsidiary is included in the Company’s consolidated financial statements. Notwithstanding consolidation for financial statement purposes, it is the Company’s intention that the subsidiary be a separate legal entity wherein the assets and liabilities are not available to pay other debts or obligations of the consolidated Company.
(5)	In September 2005, one wholly-owned subsidiary of the Company completed the acquisition of one assisted living facility from Emeritus Corporation. The property was subject to existing mortgage debt of $6,705,000. The wholly-owned subsidiary is included in the Company’s consolidated financial statements. Notwithstanding consolidation for financial statement purposes, it is the Company’s intention that the subsidiary be a separate legal entity wherein the assets and liabilities are not available to pay other debts or obligations of the consolidated Company.

96

HEALTH CARE REIT, INC.

	Year Ended December 31
	2005			2004			2003
				(In thousands)
Investment in real estate:
Balance at beginning of year	$	2,409,963		$	1,893,977		$	1,420,397
Additions:
Acquisitions		568,660			504,336			346,643
Improvements		31,422			33,538			64,878
Conversions from loans receivable		3,908			8,500			12,433
Issuance of preferred stock								26,500
Deferred acquisition payments		18,125
Assumed debt		22,309			14,555			101,243
Total additions		644,424			560,929			551,697
Deductions:
Cost of real estate sold		(115,179	)		(44,629	)		(75,325	)
Reclassification of accumulated depreciation for assets held for sale		(2,408	)
Impairment of assets					(314	)		(2,792	)
Total deductions		(117,587	)		(44,943	)		(78,117	)
Balance at end of year(1)	$	2,936,800		$	2,409,963		$	1,893,977
Accumulated depreciation:
Balance at beginning of year	$	219,536		$	152,440		$	113,579
Additions:
Depreciation expense		84,828			74,015			52,870
Deductions:
Sale of properties		(27,081	)		(6,919	)		(14,009	)
Reclassification of accumulated depreciation for assets held for sale		(2,408	)
Balance at end of year	$	274,875		$	219,536		$	152,440

(1) The aggregate cost for tax purposes for real property equals $2,389,766,000, $2,411,323,000 and $1,896,472,000 at December 31, 2005, 2004 and 2003, respectively.

97

HEALTH CARE REIT, INC.

SCHEDULE IV — MORTGAGE LOANS ON REAL ESTATE

December 31, 2005

					(In thousands)
									Principal Amount
									of Loans Subject
		Final					Carrying		to Delinquent
	Interest	Maturity	Periodic Payment	Prior	Face Amount		Amount of		Principal or
Description	Rate	Date	Terms	Liens	of Mortgages		Mortgages		Interest
Washington DC	9.63%	05/01/09	Monthly Payments		$	17,800	$	17,175		None
(Specialty care facility)			$147,455
Five assisted living facilities in Ohio,	8.66%	08/01/08	Monthly Payments			17,020		15,159		None
Pennsylvania, Connecticut and New Jersey			$109,395
Lauderhill, FL	11.275%	09/01/12	Monthly Payments			12,700		12,564		None
(Skilled nursing facility)			$126,969
Oklahoma City, OK	10.68%	07/01/06	Monthly Payments			12,204		11,204		None
(Skilled nursing facility)			$99,716
26 skilled nursing facilities and three assisted living facilities in Florida, Pennsylvania, South Carolina, Tennessee and Kentucky	13.18%	03/31/10	Monthly Payments $122,383			11,143		11,143		None
Six skilled nursing facilities in Illinois and Missouri	5.75%	06/30/18	Monthly Payments $52,708			11,000		11,000		None
Chicago, IL	17.15%	12/31/06	Monthly Payments			12,400		10,968		None
(Specialty care facility)			$160,377
Sun Valley, CA	9.63%	05/01/08	Monthly Payments			11,000		10,618		None
(Specialty care facility)			$92,817
Bala, PA	15.61%	07/01/08	Monthly Payments			7,400		7,145		None
(Skilled nursing facility)			$68,470
Plymouth, MA	19.26%	09/09/09	Monthly Payments			6,175		6,175		None
(Independent living facility)			$52,179
Six skilled nursing facilities	7.00%	08/31/12	Monthly Payments			12,198		5,177		None
in Texas			$73,954
Adrian, MI	9.632%	07/01/20	Monthly Payments			4,500		4,478		None
(Skilled nursing facility)			$39,730
12 mortgage loans relating to	From	From	Monthly Payments			26,798		18,661		None
15 skilled nursing facilities, 11	1.98% to	01/31/06 to	from $415
assisted living facilities, 2	14.00%	04/01/16	to $34,655
independent living facilities and 4 specialty care facilities
Totals					$	162,338	$	141,467	$	0

98

HEALTH CARE REIT, INC.

	Year Ended December 31
	2005		2004		2003
			(In thousands)
Reconciliation of mortgage loans:
Balance at beginning of year	$	155,266	$	164,139	$	179,761
Additions:
New mortgage loans		36,055		30,057		48,117
		191,321		194,196		227,878
Deductions:
Collections of principal(1)		45,946		20,197		47,971
Conversions to real property		3,908		8,500		10,133
Other(2)				10,233		5,635
		49,854		38,930		63,739
Balance at end of year	$	141,467	$	155,266	$	164,139

(1)	Includes collection of negative principal amortization.
(2)	Includes mortgage loans that were reclassified to working capital loans during the periods indicated.

99

EXHIBIT INDEX

3	.1	Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.2	Certificate of Designation, Preferences and Rights of Junior Participating Preferred Stock, Series A, of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.3	Certificate of Designations, Preferences and Rights of Series C Cumulative Convertible Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.4	Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000, and incorporated herein by reference thereto).
3	.5	Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003, and incorporated herein by reference thereto).
3	.6	Certificate of Designation of 77/8% Series D Cumulative Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 2.5 to the Company’s Form 8-A/A filed July 8, 2003, and incorporated herein by reference thereto).
3	.7	Certificate of Designation of 6% Series E Cumulative Convertible and Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed October 1, 2003, and incorporated herein by reference thereto).
3	.8	Certificate of Designation of 75/8% Series F Cumulative Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 2.5 to the Company’s Form 8-A filed September 10, 2004, and incorporated herein by reference thereto).
3	.9	Amended and Restated By-Laws of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed September 8, 2004, and incorporated herein by reference thereto).
4	.1	The Company, by signing this Report, agrees to furnish the Securities and Exchange Commission upon its request a copy of any instrument that defines the rights of holders of long-term debt of the Company and authorizes a total amount of securities not in excess of 10% of the total assets of the Company.
4	.2	Indenture dated as of April 17, 1997 between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed April 21, 1997, and incorporated herein by reference thereto).
4	.3	First Supplemental Indenture, dated as of April 17, 1997, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 21, 1997, and incorporated herein by reference thereto).
4	.4	Second Supplemental Indenture, dated as of March 13, 1998, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 11, 1998, and incorporated herein by reference thereto).
4	.5	Third Supplemental Indenture, dated as of March 18, 1999, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 17, 1999, and incorporated herein by reference thereto).
4	.6	Fourth Supplemental Indenture, dated as of August 10, 2001, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed August 9, 2001, and incorporated herein by reference thereto).
4	.7	Supplemental Indenture No. 5, dated September 10, 2003, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).
4	.8	Amendment No. 1, dated September 16, 2003, to Supplemental Indenture No. 5, dated September 10, 2003, to Indenture dated as of April 17, 1997, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).

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4	.9	Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 9, 2002, and incorporated herein by reference thereto).
4	.10	Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 9, 2002, and incorporated herein by reference thereto).
4	.11	Amendment No. 1, dated March 12, 2003, to Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 14, 2003, and incorporated herein by reference thereto).
4	.12	Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).
4	.13	Amendment No. 1, dated September 16, 2003, to Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.4 to the Company’s Form 8-K filed September 24, 2003, and incorporated herein by reference thereto).
4	.14	Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed October 30, 2003, and incorporated herein by reference thereto).
4	.15	Amendment No. 1, dated September 13, 2004, to Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A., as successor to Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 13, 2004, and incorporated herein by reference thereto).
4	.16	Supplemental Indenture No. 4, dated as of April 27, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed April 28, 2005, and incorporated herein by reference thereto).
4	.17	Supplemental Indenture No. 5, dated as of November 30, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed November 30, 2005, and incorporated herein by reference thereto).
4	.18	Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit 4.9 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).
4	.19	Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit 4.10 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).
10	.1	Second Amended and Restated Loan Agreement, dated June  22, 2005, by and among Health Care REIT, Inc. and certain of its subsidiaries, the banks signatory thereto, KeyBank National Association, as administrative agent, Deutsche Bank Securities Inc., as syndication agent, and UBS Securities LLC, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as documentation agents (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed June 28, 2005, and incorporated herein by reference thereto).
10	.2	Credit Agreement, dated as of May 31, 2005, by and among Health Care REIT, Inc. and certain of its subsidiaries and Fifth Third Bank (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed June 6, 2005, and incorporated herein by reference thereto).
10	.3	ISDA Master Agreement and Schedule dated as of May 6, 2004 by and between Bank of America, N.A. and Health Care REIT, Inc. (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed July 23, 2004, and incorporated herein by reference thereto).

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10	.4	Interest Rate Swap Confirmation dated May 10, 2004 between Health Care REIT, Inc. and Bank of America, N.A. (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed July 23, 2004, and incorporated herein by reference thereto).
10	.5	Interest Rate Swap Confirmation dated May 6, 2004 between Health Care REIT, Inc. and Deutsche Bank AG (filed with the Commission as Exhibit 10.5 to the Company’s Form 10-Q filed July 23, 2004, and incorporated herein by reference thereto).
10	.6	Health Care REIT, Inc. Interest Rate & Currency Risk Management Policy adopted on May 6, 2004 (filed with the Commission as Exhibit 10.6 to the Company’s Form 10-Q filed July  23, 2004, and incorporated herein by reference thereto).
10	.7	The 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Appendix II to the Company’s Proxy Statement for the 1995 Annual Meeting of Stockholders, filed September 29, 1995, and incorporated herein by reference thereto).*
10	.8	First Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 4.2 to the Company’s Form S-8 (File No. 333-40771) filed November 21, 1997, and incorporated herein by reference thereto).*
10	.9	Second Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 4.3 to the Company’s Form S-8 (File No. 333-73916) filed November 21, 2001, and incorporated herein by reference thereto).*
10	.10	Third Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 10.15 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.11	Stock Plan for Non-Employee Directors of Health Care REIT, Inc. (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed May 10, 2004, and incorporated herein by reference thereto).*
10	.12	First Amendment to the Stock Plan for Non-Employee Directors of Health Care REIT, Inc. effective April 21, 1998 (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed May 10, 2004, and incorporated herein by reference thereto).*
10	.13	Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with the Commission as Appendix A to the Company’s Proxy Statement for the 2005 Annual Meeting of Stockholders, filed March 28, 2005, and incorporated herein by reference thereto).*
10	.14	Form of Stock Option Agreement for Executive Officers under the 1995 Stock Incentive Plan (filed with the Commission as Exhibit 10.17 to the Company’s Form 10-K filed March 16, 2005, and incorporated herein by reference thereto).*
10	.15	Form of Restricted Stock Agreement for Executive Officers under the 1995 Stock Incentive Plan (filed with the Commission as Exhibit 10.18 to the Company’s Form 10-K filed March 16, 2005, and incorporated herein by reference thereto).*
10	.16	Form of Stock Option Agreement under the Stock Plan for Non-Employee Directors (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q/A filed October 27, 2004, and incorporated herein by reference thereto).*
10	.17	Form of Restricted Stock Agreement under the Stock Plan for Non-Employee Directors (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 16, 2005, and incorporated herein by reference thereto).*
10	.18	Form of Stock Option Agreement (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan.*
10	.19	Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan.*
10	.20	Form of Stock Option Agreement (without Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan.*
10	.21	Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan.*
10	.22	Form of Restricted Stock Agreement for the Chief Executive Officer under the 2005 Long-Term Incentive Plan.*

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10	.23	Form of Restricted Stock Agreement for Executive Officers under the 2005 Long-Term Incentive Plan.*
10	.24	Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2005 Long-Term Incentive Plan.*
10	.25	Second Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and George L. Chapman (filed with the Commission as Exhibit 10.17 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.26	Second Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and Raymond W. Braun (filed with the Commission as Exhibit 10.18 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.27	Second Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and Erin C. Ibele (filed with the Commission as Exhibit 10.19 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.28	Amended and Restated Employment Agreement, effective January 1, 2004, by and between Health Care REIT, Inc. and Charles J. Herman, Jr. (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.29	Employment Agreement, effective April 28, 2003, by and between Health Care REIT, Inc. and Scott A. Estes (filed with the Commission as Exhibit 10.21 to the Company’s Form 10-K filed March 12, 2004, and incorporated herein by reference thereto).*
10	.30	Employment Agreement, effective July 1, 2004, by and between Health Care REIT, Inc. and Jeffrey H. Miller (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed July 23, 2004, and incorporated herein by reference thereto).*
10	.31	Health Care REIT, Inc. Supplemental Executive Retirement Plan, effective as of January 1, 2001 (filed with the Commission as Exhibit 10.19 to the Company’s Form 10-K filed March 10, 2003, and incorporated herein by reference thereto).*
10	.32	Health Care REIT, Inc. Executive Loan Program, effective as of August 1999 (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 10, 2003, and incorporated herein by reference thereto).*
10	.33	Form of Indemnification Agreement between the Company and each director, executive officer and officer of the Company (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 18, 2005, and incorporated herein by reference thereto).*
10	.34	Summary of Executive Compensation Program.*
10	.35	Summary of Director Compensation.*
12		Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
14		Code of Business Conduct and Ethics (filed with the Commission as Exhibit 14 to the Company’s Form 10-K filed March  12, 2004, and incorporated herein by reference thereto).
21		Subsidiaries of the Company.
23		Consent of Ernst & Young LLP, independent registered public accounting firm.
24		Powers of Attorney.
31	.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31	.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32	.1	Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer.
32	.2	Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer.

* Management Contract or Compensatory Plan or Arrangement.

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EX-10.18

EXHIBIT 10.18

STOCK OPTION AGREEMENT

      THIS STOCK OPTION AGREEMENT (the “Agreement”), made this                      day of                                         , 20___ between Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and                                                              (the “Participant”).

WITNESSETH:

     WHEREAS, the Participant is an employee and executive officer of the Corporation; and

     WHEREAS, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the “Plan”) in order to provide non-employee directors and select officers and key employees with incentives to achieve long-term corporate objectives; and

     WHEREAS, the Compensation Committee of the Corporation’s Board of Directors decided that the Participant should be granted stock options to purchase shares of the Corporation’s common stock, $1.00 par value per share (“Common Stock”), on the terms and conditions set forth below, and in accordance with the terms of the Plan.

     NOW, THEREFORE, in consideration of the covenants and agreements herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

     1. Grant of Options.

          Subject to the terms and conditions of this Agreement, the Corporation hereby grants to the Participant the right and option to purchase up to a total of                                          (                    ) shares of the Common Stock of the Corporation, at the option price of $                     per share (the “Options”).

          The Options shall consist of options to purchase                      shares of Common Stock intended to qualify as incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and options to purchase                      shares of Common Stock not intended to qualify as ISOs (“Nonstatutory Options”).

     2. Period of Exercise.

          The Options shall become exercisable by the Participant in five installments. Subject to the accelerated vesting provided for in Sections 9, 10, 11 and 12 below, at any time during the term of the Options, the maximum number of shares of Common Stock the Participant may purchase by exercising Nonstatutory Options, and the maximum number which the Participant may purchase by exercising ISOs, shall be limited as specified in the following schedule:

	MAXIMUM NUMBER OF	MAXIMUM NUMBER OF
	SHARES THAT MAY BE	SHARES THAT MAY BE
	PURCHASED BY EXERCISING	PURCHASED BY
PERIOD	NONSTATUTORY OPTIONS	EXERCISING ISOs
From                                         , 20___ to                                         , 20___	Up to                      shares	Up to                      shares
From                                         , 20___ to                                         , 20___	Up to                      shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to                      shares (less any shares previously purchased by exercising ISOs)
From                                         , 20___ to                                         , 20___	Up to                      shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to                      shares (less any shares previously purchased by exercising ISOs)
From                                         , 20___ to                                         , 20___	Up to                      shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to                      shares (less any shares previously purchased by exercising ISOs)
From                                         , 20___ to                                         , 20___	Up to                      shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to                      shares (less any shares previously purchased by exercising ISOs)

          If, during any of these periods, the Participant fails to exercise the Options with respect to all or any portion of the shares that may be acquired at such time, the Participant shall be entitled to exercise the Options with respect to the remaining portion of such shares at any subsequent time prior to the termination date of the Options.

          The Options intended to be ISOs are subject to the $100,000 annual limit on vesting of ISOs as set forth in Section 422(d) of the Code. To the extent the aggregate fair market value (determined at the date of grant) of the shares of Common Stock with respect to which those ISOs first become exercisable by the Participant during any calendar year under this Section 2 (when aggregated with any prior ISOs granted to the Participant under stock option plans of the Corporation) exceeds $100,000, whether by reason of accelerated vesting under Sections 9, 10, 11 or 12 or otherwise, the Options shall consist of ISOs for the maximum number of shares that may be covered by ISOs without violating Section 422(d) of the Code, and the remaining Options becoming exercisable in that year shall be treated as Nonstatutory Options.

     3. Termination Date of Options.

          The Options granted herein, and the related Dividend Equivalent Rights under Section 8 below, shall terminate on                                         , 20___, the tenth anniversary of the date of grant, and the Participant shall have no right to exercise the Options at any time thereafter.

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     4. Manner of Exercise.

          If the Participant elects to exercise the Options to purchase shares of Common Stock, the Participant shall give written notice of such exercise to the Corporate Secretary of the Corporation. The notice of exercise shall state the number of shares of Common Stock as to which the Options are being exercised, and the Corporation shall determine whether the Options exercised are ISOs or Nonstatutory Options.

          The Participant may exercise the Options to purchase all, or any lesser whole number, of the number of shares of Common Stock that the Participant is then permitted to purchase under Section 2.

     5. Payment for Shares.

          Full payment of the option price for the shares of Common Stock purchased by exercising the Options shall be due at the time the notice of exercise is delivered pursuant to Section 4. Such payment may be made (i) in cash, (ii) by delivery of shares of Common Stock currently owned by the Participant with a fair market value equal to the option price, or (iii) in any other form acceptable to the Corporation.

          Alternatively, the Participant shall be deemed to have paid the full option price due upon exercise of the Options, if the Participant’s notice of exercise is accompanied by an irrevocable instruction to the Corporation to deliver the shares of Common Stock issuable upon exercise of the Options (less any shares withheld to satisfy the Participant’s tax obligations pursuant to Section 7 below) promptly to a broker-dealer designated by Participant, together with an irrevocable instruction to such broker-dealer to sell at least that portion of the shares necessary to pay the option price (and any tax withholding related expenses specified by the parties), and that portion of the sale proceeds needed to pay the option price is delivered directly to the Corporation no later than the close of business on the settlement date.

     6. Issuance of Stock Certificates for Shares.

          The stock certificates for any shares of Common Stock issuable to the Participant upon exercise of the Options shall be delivered to the Participant (or to the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution) as promptly after the date of exercise as is feasible, but not before the Participant has paid the option price for such shares and made any arrangements for tax withholding, as required by Section 7.

     7. Tax Withholding.

          Whenever the Participant exercises Options, the Corporation shall notify the Participant of the amount of tax (if any) that must be withheld by the Corporation under all applicable federal, state and local tax laws. With respect to each exercise of the Options, the Participant agrees to make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash, (b) authorize the Corporation to withhold a portion of the shares of

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Common Stock otherwise issuable upon the exercise with a value equal to the required amount, (c) deliver to the Corporation shares of Common Stock with a value equal to the required amount, (d) authorize the deduction of the required amount from the Participant’s compensation, or (e) otherwise provide for payment of the required amount in any other manner satisfactory to the Corporation.

     8. Dividend Equivalent Rights.

          The Participant is hereby granted rights to receive deferred payments equivalent in value to the dividends that would have been payable on the shares of Common Stock issuable under the Options if such shares were outstanding on the dividend record dates between the date the Options were granted to the Participant and the date the Options are exercised to acquire such shares (“Dividend Equivalent Rights”). An unfunded bookkeeping account shall be created for the Participant and the Participant’s rights to the balances credited to such account shall be no greater than those of an unsecured creditor of the Corporation.

          On each dividend record date occurring after the date of grant of the Options and while any Options remain outstanding and unexercised, the Participant’s account shall be credited with a dollar amount equal to the dividends that would have been payable with respect to the shares of Common Stock issuable under the Options if such shares were outstanding on the dividend record date:

     (a) In the case of a cash dividend declared on the Common Stock, the amount credited to the Participant’s account with respect thereto shall be equal to the dividend declared per share of Common Stock multiplied by the number of shares of Common Stock subject to the unexercised portion of the Options as of the dividend record date; and

     (b) In the case of a stock dividend declared on the Common Stock, the amount credited to the Participant’s account with respect thereto shall be equal to the dividend declared per share of Common Stock multiplied by (i) the number of shares of Common Stock subject to the unexercised portion of the Options and (ii) the current fair market value of a share of Common Stock on the dividend payment date.

          When the Options with respect to which the Participant has been granted Dividend Equivalent Rights first become exercisable (whether under Section 2 above or Sections 9, 10, 11 or 12 below), the Participant shall be entitled to receive from the Corporation a distribution equal to (i) the dollar amount then accumulated in his or her account, as described above, and not previously distributed as provided in this paragraph, multiplied by (ii) a fraction the numerator of which shall be the number of shares subject to the Options that first become exercisable on such date and the denominator of which shall be the sum of such number and the total number of shares subject to Options that have not yet become exercisable; plus after shares have become exercisable (iii) distributions equal to the quarterly dividend declared per share of Common Stock multiplied by the number of shares of Common Stock that have become exercisable, which distributions shall be paid quarterly on or about the time of the dividend pay dates. The Participant’s account shall be debited by a dollar amount equal to the distribution.

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This distribution shall be delivered to the Participant in the form of a cash payment. No distribution shall be made until the Participant has made arrangements with the Corporation to withhold all applicable payroll taxes from the distribution, or to satisfy the tax withholding obligations in some other manner, as described in Section 7 above.

          Upon expiration or termination of the Options, all rights and claims to the Dividend Equivalent Rights will be terminated.

     9. Termination of Employment; Change in Corporate Control.

          In the event of a Change in Corporate Control (as described below), or if the Participant’s employment with the Corporation is terminated before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options (as provided in subsections (a) and (b) below), the Participant shall have the right to exercise the Options during a period of ninety (90) days following the date of the Change in Corporate Control or termination of employment (as applicable), but in no event later than                                         , 20___, and the Options shall expire at the end of such period.

     (a) In the event of a Change in Corporate Control, or if the Participant’s employment is terminated involuntarily without “Cause” (as defined in the Participant’s Employment Agreement), any portion of the Options not previously exercisable under Section 2 shall become immediately exercisable and the Participant shall be entitled to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8.

     (b) In the case of an involuntary termination not described in subsection (a) above, or a voluntary termination by the Participant not following a Change in Corporate Control, the maximum number of shares the Participant may purchase by exercising the Options shall be the number of shares which could be purchased at the date of termination pursuant to Section 2. Participant shall not be entitled to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8.

          For purposes of this Section 9, termination of employment as a result of the expiration of the Participant’s Employment Agreement shall be considered a voluntary termination if the notice of non-renewal was delivered by the Participant and an involuntary termination if the notice of non-renewal was delivered by the Corporation and in both instances, the Participant is no longer employed by the Corporation.

          For purposes of this Section 9, a “Change in Corporate Control” shall include any of the following events:

     (i) The acquisition in one or more transactions of more than twenty percent of the Corporation’s outstanding Common Stock (or the equivalent in voting power of any class or classes of securities of the Corporation entitled to vote in elections of directors)

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by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

     (ii) Any transfer or sale of substantially all of the assets of the Corporation, or any merger or consolidation of the Corporation into or with another corporation in which the Corporation is not the surviving entity;

     (iii) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than “Continuing Directors.” For this purpose, those persons who were members of the Board of Directors on May 5, 2005, shall be “Continuing Directors.” Any person who is nominated for election as a member of the Board after May 5, 2005 shall also be considered a “Continuing Director” for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or

     (iv) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Corporation’s Common Stock.

     10. Effect of Death.

          If the Participant dies before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options, any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Participant’s executor, administrator, or any person to whom the Options may be transferred by the Participant’s will or by the laws of descent and distribution, shall have the right to (i) exercise the Options, to the extent not previously exercised, at any time prior to the first anniversary of the date of death, but in no event later than                                         , 20___, and (ii) to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8 above. For this purpose, the terms of this Agreement shall be deemed to apply to such person as if he or she was the Participant.

     11. Effect of Permanent and Total Disability.

          If the termination of the Participant’s employment occurs after a finding of the Participant’s permanent and total disability, (i) any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Options may be exercised at any time during the period of twelve (12) months following the date of termination of employment, but in no event later than                                         , 20___, and (ii) the Participant shall be entitled to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8.

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     12. Effect of Retirement.

          If the termination of the Participant’s employment occurs as a result of the Participant’s retirement after age 55 and the sum of the Participant’s age and years of service to the Corporation is equal to 65 or more, (i) Options shall vest as provided in Section 2 and shall be exercisable during the period of five (5) years following the date of termination of employment, but in no event later than                                         , 20___, and (ii) the Participant shall be entitled to receive distributions relating to the Participant’s Dividend Equivalent Rights as provided in Section 8.

     13. Nontransferability.

          The Participant’s rights under this Agreement may not be assigned or transferred by the Participant other than by will or the laws of descent and distribution. The Options may not be exercised by anyone other than the Participant or, in the case of the Participant’s death, by the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution.

     14. Securities Laws.

          The Corporation may from time to time impose any conditions on the exercise of the Options as it deems necessary or advisable to ensure that the Options granted hereunder, and each exercise thereof, satisfy the applicable requirements of federal and state securities laws. Such conditions to satisfy applicable federal and state securities laws may include, without limitation, the partial or complete suspension of the right to exercise the Options until the offering of the shares covered by the Options have been registered under the Securities Act of 1933, as amended, or the printing of legends on all stock certificates issued to the Participant describing the restrictions on transfer of such shares.

     15. Rights Prior to Issuance of Certificates.

          Neither the Participant nor any person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution shall have any of the rights of a stockholder with respect to any shares of Common Stock until the date of the issuance to him or her of certificates for such Common Stock as provided in Section 6 above.

     16. Options Not to Affect Employment.

          Neither this Agreement nor the Options granted hereunder shall confer upon the Participant any right to continued employment with the Corporation. This Agreement shall not in any way modify or restrict any rights the Corporation may have to terminate such employment under the terms of the Participant’s Employment Agreement.

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     17. Miscellaneous.

          (a) This Agreement may be executed in one or more counterparts all of which taken together will constitute one and the same instrument.

          (b) The terms of this Agreement may only be amended, modified or waived by a written agreement executed by both of the parties hereto.

          (c) The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided, however, that matters of corporate law, including the issuance of shares of the Common Stock, shall be governed by the Delaware General Corporation Law.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

ATTEST:		HEALTH CARE REIT, INC.
	By:
Vice President-Administration and Corporate Secretary		President and Chief Financial Officer

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EX-10.19

EXHIBIT 10.19

STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT (the “Agreement”), made this                      day of                     , 20___ between Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and                                          (the “Participant”).

WITNESSETH:

     WHEREAS, the Participant is an employee and executive officer of the Corporation; and

     WHEREAS, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the “Plan”) in order to provide non-employee directors and select officers and key employees with incentives to achieve long-term corporate objectives; and

     WHEREAS, the Compensation Committee of the Corporation’s Board of Directors decided that the Participant should be granted stock options to purchase shares of the Corporation’s common stock, $1.00 par value per share (“Common Stock”), on the terms and conditions set forth below, and in accordance with the terms of the Plan.

     NOW, THEREFORE, in consideration of the covenants and agreements herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

     1. Grant of Options.

          Subject to the terms and conditions of this Agreement, the Corporation hereby grants to the Participant the right and option to purchase up to a total of                      (                    ) shares of the Common Stock of the Corporation, at the option price of $                      per share (the “Options”).

          The Options shall consist of options to purchase                      shares of Common Stock intended to qualify as incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and options to purchase                      shares of Common Stock not intended to qualify as ISOs (“Nonstatutory Options”).

     2. Period of Exercise.

          The Options shall become exercisable by the Participant in five installments. Subject to the accelerated vesting provided for in Sections 9, 10 and 11 below, at any time during the term of the Options, the maximum number of shares of Common Stock the Participant may purchase by exercising Nonstatutory Options, and the maximum number which the Participant may purchase by exercising ISOs, shall be limited as specified in the following schedule:

	MAXIMUM NUMBER OF
	SHARES THAT MAY BE	MAXIMUM NUMBER OF
	PURCHASED BY	SHARES THAT MAY BE
	EXERCISING	PURCHASED BY
PERIOD	NONSTATUTORY OPTIONS	EXERCISING ISOs
From                     , 20___ to                     , 20___	Up to ___ shares	Up to ___ shares
From                     , 20___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                     , 20___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                     , 20___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                     , 20 ___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)

          If, during any of these periods, the Participant fails to exercise the Options with respect to all or any portion of the shares that may be acquired at such time, the Participant shall be entitled to exercise the Options with respect to the remaining portion of such shares at any subsequent time prior to the termination date of the Options.

          The Options intended to be ISOs are subject to the $100,000 annual limit on vesting of ISOs as set forth in Section 422(d) of the Code. To the extent the aggregate fair market value (determined at the date of grant) of the shares of Common Stock with respect to which those ISOs first become exercisable by the Participant during any calendar year under this Section 2 (when aggregated with any prior ISOs granted to the Participant under stock option plans of the Corporation) exceeds $100,000, whether by reason of accelerated vesting under Sections 9, 10 or 11 or otherwise, the Options shall consist of ISOs for the maximum number of shares that may be covered by ISOs without violating Section 422(d) of the Code, and the remaining Options becoming exercisable in that year shall be treated as Nonstatutory Options.

     3. Termination Date of Options.

          The Options granted herein, and the related Dividend Equivalent Rights under Section 8 below, shall terminate on                     , 20___, the tenth anniversary of the date of grant, and the Participant shall have no right to exercise the Options at any time thereafter.

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     4. Manner of Exercise.

          If the Participant elects to exercise the Options to purchase shares of Common Stock, the Participant shall give written notice of such exercise to the Corporate Secretary of the Corporation. The notice of exercise shall state the number of shares of Common Stock as to which the Options are being exercised, and the Corporation shall determine whether the Options exercised are ISOs or Nonstatutory Options.

          The Participant may exercise the Options to purchase all, or any lesser whole number, of the number of shares of Common Stock that the Participant is then permitted to purchase under Section 2.

     5. Payment for Shares.

          Full payment of the option price for the shares of Common Stock purchased by exercising the Options shall be due at the time the notice of exercise is delivered pursuant to Section 4. Such payment may be made (i) in cash, (ii) by delivery of shares of Common Stock currently owned by the Participant with a fair market value equal to the option price, or (iii) in any other form acceptable to the Corporation.

          Alternatively, the Participant shall be deemed to have paid the full option price due upon exercise of the Options, if the Participant’s notice of exercise is accompanied by an irrevocable instruction to the Corporation to deliver the shares of Common Stock issuable upon exercise of the Options (less any shares withheld to satisfy the Participant’s tax obligations pursuant to Section 7 below) promptly to a broker-dealer designated by Participant, together with an irrevocable instruction to such broker-dealer to sell at least that portion of the shares necessary to pay the option price (and any tax withholding related expenses specified by the parties), and that portion of the sale proceeds needed to pay the option price is delivered directly to the Corporation no later than the close of business on the settlement date.

     6. Issuance of Stock Certificates for Shares.

          The stock certificates for any shares of Common Stock issuable to the Participant upon exercise of the Options shall be delivered to the Participant (or to the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution) as promptly after the date of exercise as is feasible, but not before the Participant has paid the option price for such shares and made any arrangements for tax withholding, as required by Section 7.

     7. Tax Withholding.

          Whenever the Participant exercises Options, the Corporation shall notify the Participant of the amount of tax (if any) that must be withheld by the Corporation under all applicable federal, state and local tax laws. With respect to each exercise of the Options, the Participant agrees to make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash, (b) authorize the Corporation to withhold a portion of the shares of

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Common Stock otherwise issuable upon the exercise with a value equal to the required amount, (c) deliver to the Corporation shares of Common Stock with a value equal to the required amount, (d) authorize the deduction of the required amount from the Participant’s compensation, or (e) otherwise provide for payment of the required amount in any other manner satisfactory to the Corporation.

     8. Dividend Equivalent Rights.

          The Participant is hereby granted rights to receive deferred payments equivalent in value to the dividends that would have been payable on the shares of Common Stock issuable under the Options if such shares were outstanding on the dividend record dates between the date the Options were granted to the Participant and the date the Options are exercised to acquire such shares (“Dividend Equivalent Rights”). An unfunded bookkeeping account shall be created for the Participant and the Participant’s rights to the balances credited to such account shall be no greater than those of an unsecured creditor of the Corporation.

          On each dividend record date occurring after the date of grant of the Options and while any Options remain outstanding and unexercised, the Participant’s account shall be credited with a dollar amount equal to the dividends that would have been payable with respect to the shares of Common Stock issuable under the Options if such shares were outstanding on the dividend record date:

     (a) In the case of a cash dividend declared on the Common Stock, the amount credited to the Participant’s account with respect thereto shall be equal to the dividend declared per share of Common Stock multiplied by the number of shares of Common Stock subject to the unexercised portion of the Options as of the dividend record date; and

     (b) In the case of a stock dividend declared on the Common Stock, the amount credited to the Participant’s account with respect thereto shall be equal to the dividend declared per share of Common Stock multiplied by (i) the number of shares of Common Stock subject to the unexercised portion of the Options and (ii) the current fair market value of a share of Common Stock on the dividend payment date.

          When the Options with respect to which the Participant has been granted Dividend Equivalent Rights first become exercisable (whether under Section 2 above or Sections 9, 10 or 11 below), the Participant shall be entitled to receive from the Corporation a distribution equal to (i) the dollar amount then accumulated in his or her account, as described above, and not previously distributed as provided in this paragraph, multiplied by (ii) a fraction the numerator of which shall be the number of shares subject to the Options that first become exercisable on such date and the denominator of which shall be the sum of such number and the total number of shares subject to Options that have not yet become exercisable; plus after shares have become exercisable (iii) distributions equal to the quarterly dividend declared per share of Common Stock multiplied by the number of shares of Common Stock that have become exercisable, which distributions shall be paid quarterly on or about the time of the dividend pay dates. The Participant’s account shall be debited by a dollar amount equal to the distribution. This

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distribution shall be delivered to the Participant in the form of a cash payment. No distribution shall be made until the Participant has made arrangements with the Corporation to withhold all applicable payroll taxes from the distribution, or to satisfy the tax withholding obligations in some other manner, as described in Section 7 above.

          Upon expiration or termination of the Options, all rights and claims to the Dividend Equivalent Rights will be terminated.

     9. Termination of Employment; Change in Corporate Control.

          In the event of a Change in Corporate Control (as described below), or if the Participant’s employment with the Corporation is terminated before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options (as provided in subsections (a) and (b) below), the Participant shall have the right to exercise the Options during a period of ninety (90) days following the date of the Change in Corporate Control or termination of employment (as applicable), but in no event later than ___, 20___, and the Options shall expire at the end of such period.

     (a) In the event of a Change in Corporate Control, or if the Participant’s employment is terminated involuntarily without “Cause” (as defined in the Participant’s Employment Agreement), any portion of the Options not previously exercisable under Section 2 shall become immediately exercisable and the Participant shall be entitled to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8.

     (b) In the case of an involuntary termination not described in subsection (a) above, or a voluntary termination by the Participant not following a Change in Corporate Control, the maximum number of shares the Participant may purchase by exercising the Options shall be the number of shares which could be purchased at the date of termination pursuant to Section 2. Participant shall not be entitled to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8.

          For purposes of this Section 9, termination of employment as a result of the expiration of the Participant’s Employment Agreement shall be considered a voluntary termination if the notice of non-renewal was delivered by the Participant and an involuntary termination if the notice of non-renewal was delivered by the Corporation and in both instances, the Participant is no longer employed by the Corporation.

          For purposes of this Section 9, a “Change in Corporate Control” shall include any of the following events:

     (i) The acquisition in one or more transactions of more than twenty percent of the Corporation’s outstanding Common Stock (or the equivalent in voting power of any class or classes of securities of the Corporation entitled to vote in elections of directors)

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by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

     (ii) Any transfer or sale of substantially all of the assets of the Corporation, or any merger or consolidation of the Corporation into or with another corporation in which the Corporation is not the surviving entity;

     (iii) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than “Continuing Directors.” For this purpose, those persons who were members of the Board of Directors on May 5, 2005, shall be “Continuing Directors.” Any person who is nominated for election as a member of the Board after May 5, 2005 shall also be considered a “Continuing Director” for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or

     (iv) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Corporation’s Common Stock.

     10. Effect of Death.

          If the Participant dies before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options, any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Participant’s executor, administrator, or any person to whom the Options may be transferred by the Participant’s will or by the laws of descent and distribution, shall have the right to (i) exercise the Options, to the extent not previously exercised, at any time prior to the first anniversary of the date of death, but in no event later than ___, 20___, and (ii) to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8 above. For this purpose, the terms of this Agreement shall be deemed to apply to such person as if he or she was the Participant.

     11. Effect of Permanent and Total Disability or Retirement After Age 65.

          If the termination of the Participant’s employment occurs after a finding of the Participant’s permanent and total disability, or as a result of retirement after age 65, (i) any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Options may be exercised at any time during the period of twelve (12) months following the date of termination of employment, or retirement, as the case may be, but in no event later than ___, 20___, and (ii) the Participant shall be entitled to receive a cash payment of any balance then credited to the Participant’s Dividend Equivalent Rights account pursuant to Section 8.

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     12. Nontransferability.

          The Participant’s rights under this Agreement may not be assigned or transferred by the Participant other than by will or the laws of descent and distribution. The Options may not be exercised by anyone other than the Participant or, in the case of the Participant’s death, by the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution.

     13. Securities Laws.

          The Corporation may from time to time impose any conditions on the exercise of the Options as it deems necessary or advisable to ensure that the Options granted hereunder, and each exercise thereof, satisfy the applicable requirements of federal and state securities laws. Such conditions to satisfy applicable federal and state securities laws may include, without limitation, the partial or complete suspension of the right to exercise the Options until the offering of the shares covered by the Options have been registered under the Securities Act of 1933, as amended, or the printing of legends on all stock certificates issued to the Participant describing the restrictions on transfer of such shares.

     14. Rights Prior to Issuance of Certificates.

          Neither the Participant nor any person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution shall have any of the rights of a stockholder with respect to any shares of Common Stock until the date of the issuance to him or her of certificates for such Common Stock as provided in Section 6 above.

     15. Options Not to Affect Employment.

          Neither this Agreement nor the Options granted hereunder shall confer upon the Participant any right to continued employment with the Corporation. This Agreement shall not in any way modify or restrict any rights the Corporation may have to terminate such employment under the terms of the Participant’s Employment Agreement.

     16. Miscellaneous.

          (a) This Agreement may be executed in one or more counterparts all of which taken together will constitute one and the same instrument.

          (b) The terms of this Agreement may only be amended, modified or waived by a written agreement executed by both of the parties hereto.

          (c) The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided, however, that matters of corporate law, including the issuance of shares of the Common Stock, shall be governed by the Delaware General Corporation Law.

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     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

ATTEST:	HEALTH CARE REIT, INC.
	By:
Vice President-Administration		Chairman and
and Corporate Secretary		Chief Executive Officer

8

EX-10.20

EXHIBIT 10.20

STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT (the “Agreement”), made this                       day of                                         , 20___ between Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and                                                              (the “Participant”).

WITNESSETH:

     WHEREAS, the Participant is an employee and executive officer of the Corporation; and

     WHEREAS, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the “Plan”) in order to provide non-employee directors and select officers and key employees with incentives to achieve long-term corporate objectives; and

     WHEREAS, the Compensation Committee of the Corporation’s Board of Directors decided that the Participant should be granted stock options to purchase shares of the Corporation’s common stock, $1.00 par value per share (“Common Stock”), on the terms and conditions set forth below, and in accordance with the terms of the Plan.

     NOW, THEREFORE, in consideration of the covenants and agreements herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

     1. Grant of Options.

          Subject to the terms and conditions of this Agreement, the Corporation hereby grants to the Participant the right and option to purchase up to a total of                                                              (                    ) shares of the Common Stock of the Corporation, at the option price of $                     per share (the “Options”).

          The Options shall consist of options to purchase                      shares of Common Stock intended to qualify as incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and options to purchase                      shares of Common Stock not intended to qualify as ISOs (“Nonstatutory Options”).

     2. Period of Exercise.

          The Options shall become exercisable by the Participant in five installments. Subject to the accelerated vesting provided for in Sections 8, 9, 10 and 11 below, at any time during the term of the Options, the maximum number of shares of Common Stock the Participant may purchase by exercising Nonstatutory Options, and the maximum number which the Participant may purchase by exercising ISOs, shall be limited as specified in the following schedule:

	MAXIMUM NUMBER OF	MAXIMUM NUMBER OF
	SHARES THAT MAY BE	SHARES THAT MAY BE
	PURCHASED BY EXERCISING	PURCHASED BY
PERIOD	NONSTATUTORY OPTIONS	EXERCISING ISOs
From                                         , 20___ to                                         , 20___	Up to ___ shares	Up to ___ shares
From                                         , 20___ to                                         , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                                         , 20___ to                                         , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                                         , 20___ to                                         , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                                         , 20___ to                                         , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)

          If, during any of these periods, the Participant fails to exercise the Options with respect to all or any portion of the shares that may be acquired at such time, the Participant shall be entitled to exercise the Options with respect to the remaining portion of such shares at any subsequent time prior to the termination date of the Options.

          The Options intended to be ISOs are subject to the $100,000 annual limit on vesting of ISOs as set forth in Section 422(d) of the Code. To the extent the aggregate fair market value (determined at the date of grant) of the shares of Common Stock with respect to which those ISOs first become exercisable by the Participant during any calendar year under this Section 2 (when aggregated with any prior ISOs granted to the Participant under stock option plans of the Corporation) exceeds $100,000, whether by reason of accelerated vesting under Sections 8, 9, 10 or 11 or otherwise, the Options shall consist of ISOs for the maximum number of shares that may be covered by ISOs without violating Section 422(d) of the Code, and the remaining Options becoming exercisable in that year shall be treated as Nonstatutory Options.

     3. Termination Date of Options.

          The Options granted herein shall terminate on                                         , 20___, the tenth anniversary of the date of grant, and the Participant shall have no right to exercise the Options at any time thereafter.

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     4. Manner of Exercise.

          If the Participant elects to exercise the Options to purchase shares of Common Stock, the Participant shall give written notice of such exercise to the Corporate Secretary of the Corporation. The notice of exercise shall state the number of shares of Common Stock as to which the Options are being exercised, and the Corporation shall determine whether the Options exercised are ISOs or Nonstatutory Options.

          The Participant may exercise the Options to purchase all, or any lesser whole number, of the number of shares of Common Stock that the Participant is then permitted to purchase under Section 2.

     5. Payment for Shares.

          Full payment of the option price for the shares of Common Stock purchased by exercising the Options shall be due at the time the notice of exercise is delivered pursuant to Section 4. Such payment may be made (i) in cash, (ii) by delivery of shares of Common Stock currently owned by the Participant with a fair market value equal to the option price, or (iii) in any other form acceptable to the Corporation.

          Alternatively, the Participant shall be deemed to have paid the full option price due upon exercise of the Options, if the Participant’s notice of exercise is accompanied by an irrevocable instruction to the Corporation to deliver the shares of Common Stock issuable upon exercise of the Options (less any shares withheld to satisfy the Participant’s tax obligations pursuant to Section 7 below) promptly to a broker-dealer designated by Participant, together with an irrevocable instruction to such broker-dealer to sell at least that portion of the shares necessary to pay the option price (and any tax withholding related expenses specified by the parties), and that portion of the sale proceeds needed to pay the option price is delivered directly to the Corporation no later than the close of business on the settlement date.

     6. Issuance of Stock Certificates for Shares.

          The stock certificates for any shares of Common Stock issuable to the Participant upon exercise of the Options shall be delivered to the Participant (or to the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution) as promptly after the date of exercise as is feasible, but not before the Participant has paid the option price for such shares and made any arrangements for tax withholding, as required by Section 7.

     7. Tax Withholding.

          Whenever the Participant exercises Options, the Corporation shall notify the Participant of the amount of tax (if any) that must be withheld by the Corporation under all applicable federal, state and local tax laws. With respect to each exercise of the Options, the Participant agrees to make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash, (b) authorize the Corporation to withhold a portion of the shares of

3

Common Stock otherwise issuable upon the exercise with a value equal to the required amount, (c) deliver to the Corporation shares of Common Stock with a value equal to the required amount, (d) authorize the deduction of the required amount from the Participant’s compensation, or (e) otherwise provide for payment of the required amount in any other manner satisfactory to the Corporation.

     8. Termination of Employment; Change in Corporate Control.

          In the event of a Change in Corporate Control (as described below), or if the Participant’s employment with the Corporation is terminated before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options (as provided in subsections (a) and (b) below), the Participant shall have the right to exercise the Options during a period of ninety (90) days following the date of the Change in Corporate Control or termination of employment (as applicable), but in no event later than                                         , 20___, and the Options shall expire at the end of such period.

     (a) In the event of a Change in Corporate Control, or if the Participant’s employment is terminated involuntarily without “Cause” (as defined in the Participant’s Employment Agreement), any portion of the Options not previously exercisable under Section 2 shall become immediately exercisable.

     (b) In the case of an involuntary termination not described in subsection (a) above, or a voluntary termination by the Participant not following a Change in Corporate Control, the maximum number of shares the Participant may purchase by exercising the Options shall be the number of shares which could be purchased at the date of termination pursuant to Section 2.

          For purposes of this Section 8, termination of employment as a result of the expiration of the Participant’s Employment Agreement shall be considered a voluntary termination if the notice of non-renewal was delivered by the Participant and an involuntary termination if the notice of non-renewal was delivered by the Corporation and in both instances, the Participant is no longer employed by the Corporation.

          For purposes of this Section 8, a “Change in Corporate Control” shall include any of the following events:

     (i) The acquisition in one or more transactions of more than twenty percent of the Corporation’s outstanding Common Stock (or the equivalent in voting power of any class or classes of securities of the Corporation entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

     (ii) Any transfer or sale of substantially all of the assets of the Corporation, or any merger or consolidation of the Corporation into or with another corporation in which the Corporation is not the surviving entity;

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     (iii) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than “Continuing Directors.” For this purpose, those persons who were members of the Board of Directors on May 5, 2005, shall be “Continuing Directors.” Any person who is nominated for election as a member of the Board after May 5, 2005 shall also be considered a “Continuing Director” for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or

     (iv) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Corporation’s Common Stock.

     9. Effect of Death.

          If the Participant dies before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options, any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Participant’s executor, administrator, or any person to whom the Options may be transferred by the Participant’s will or by the laws of descent and distribution, shall have the right to exercise the Options, to the extent not previously exercised, at any time prior to the first anniversary of the date of death, but in no event later than                                         , 20_. For this purpose, the terms of this Agreement shall be deemed to apply to such person as if he or she was the Participant.

     10. Effect of Permanent and Total Disability.

          If the termination of the Participant’s employment occurs after a finding of the Participant’s permanent and total disability, any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Options may be exercised at any time during the period of twelve (12) months following the date of termination of employment, but in no event later than                                         , 20_.

     11. Effect of Retirement.

          If the termination of the Participant’s employment occurs as a result of the Participant’s retirement after age 55 and the sum of the Participant’s age and years of service to the Corporation is equal to 65 or more, Options shall vest as provided in Section 2 and shall be exercisable during the period of five (5) years following the date of termination of employment, but in no event later than                                         , 20___.

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     12. Nontransferability.

          The Participant’s rights under this Agreement may not be assigned or transferred by the Participant other than by will or the laws of descent and distribution. The Options may not be exercised by anyone other than the Participant or, in the case of the Participant’s death, by the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution.

     13. Securities Laws.

          The Corporation may from time to time impose any conditions on the exercise of the Options as it deems necessary or advisable to ensure that the Options granted hereunder, and each exercise thereof, satisfy the applicable requirements of federal and state securities laws. Such conditions to satisfy applicable federal and state securities laws may include, without limitation, the partial or complete suspension of the right to exercise the Options until the offering of the shares covered by the Options have been registered under the Securities Act of 1933, as amended, or the printing of legends on all stock certificates issued to the Participant describing the restrictions on transfer of such shares.

     14. Rights Prior to Issuance of Certificates.

          Neither the Participant nor any person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution shall have any of the rights of a stockholder with respect to any shares of Common Stock until the date of the issuance to him or her of certificates for such Common Stock as provided in Section 6 above.

     15. Options Not to Affect Employment.

          Neither this Agreement nor the Options granted hereunder shall confer upon the Participant any right to continued employment with the Corporation. This Agreement shall not in any way modify or restrict any rights the Corporation may have to terminate such employment under the terms of the Participant’s Employment Agreement.

     16. Miscellaneous.

          (a) This Agreement may be executed in one or more counterparts all of which taken together will constitute one and the same instrument.

          (b) The terms of this Agreement may only be amended, modified or waived by a written agreement executed by both of the parties hereto.

          (c) The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided, however, that matters of corporate law, including the issuance of shares of the Common Stock, shall be governed by the Delaware General Corporation Law.

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     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

ATTEST:	HEALTH CARE REIT, INC.
	By:
Vice President-Administration and Corporate Secretary		President and Chief Financial Officer

7

EX-10.21

EXHIBIT 10.21

STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT (the “Agreement”), made this                      day of                     , 20___ between Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and                                          (the “Participant”).

WITNESSETH:

     WHEREAS, the Participant is an employee and executive officer of the Corporation; and

     WHEREAS, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the “Plan”) in order to provide non-employee directors and select officers and key employees with incentives to achieve long-term corporate objectives; and

     WHEREAS, the Compensation Committee of the Corporation’s Board of Directors decided that the Participant should be granted stock options to purchase shares of the Corporation’s common stock, $1.00 par value per share (“Common Stock”), on the terms and conditions set forth below, and in accordance with the terms of the Plan.

     NOW, THEREFORE, in consideration of the covenants and agreements herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

     1. Grant of Options.

          Subject to the terms and conditions of this Agreement, the Corporation hereby grants to the Participant the right and option to purchase up to a total of                                           (                    ) shares of the Common Stock of the Corporation, at the option price of $                     per share (the “Options”).

          The Options shall consist of options to purchase                      shares of Common Stock intended to qualify as incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and options to purchase                      shares of Common Stock not intended to qualify as ISOs (“Nonstatutory Options”).

     2. Period of Exercise.

          The Options shall become exercisable by the Participant in five installments. Subject to the accelerated vesting provided for in Sections 8, 9 and 10 below, at any time during the term of the Options, the maximum number of shares of Common Stock the Participant may purchase by exercising Nonstatutory Options, and the maximum number which the Participant may purchase by exercising ISOs, shall be limited as specified in the following schedule:

	MAXIMUM NUMBER OF
	SHARES THAT MAY BE	MAXIMUM NUMBER OF
	PURCHASED BY	SHARES THAT MAY BE
	EXERCISING	PURCHASED BY
PERIOD	NONSTATUTORY OPTIONS	EXERCISING ISOs
From                     , 20___ to                     , 20___	Up to ___ shares	Up to ___ shares
From                     , 20___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                     , 20___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                     , 20___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)
From                     , 20___ to                     , 20___	Up to ___ shares (less any shares previously purchased by exercising Nonstatutory Options)	Up to ___ shares (less any shares previously purchased by exercising ISOs)

          If, during any of these periods, the Participant fails to exercise the Options with respect to all or any portion of the shares that may be acquired at such time, the Participant shall be entitled to exercise the Options with respect to the remaining portion of such shares at any subsequent time prior to the termination date of the Options.

          The Options intended to be ISOs are subject to the $100,000 annual limit on vesting of ISOs as set forth in Section 422(d) of the Code. To the extent the aggregate fair market value (determined at the date of grant) of the shares of Common Stock with respect to which those ISOs first become exercisable by the Participant during any calendar year under this Section 2 (when aggregated with any prior ISOs granted to the Participant under stock option plans of the Corporation) exceeds $100,000, whether by reason of accelerated vesting under Sections 8, 9 or 10 or otherwise, the Options shall consist of ISOs for the maximum number of shares that may be covered by ISOs without violating Section 422(d) of the Code, and the remaining Options becoming exercisable in that year shall be treated as Nonstatutory Options.

     3. Termination Date of Options.

          The Options granted herein shall terminate on                     , 20___, the tenth anniversary of the date of grant, and the Participant shall have no right to exercise the Options at any time thereafter.

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     4. Manner of Exercise.

          If the Participant elects to exercise the Options to purchase shares of Common Stock, the Participant shall give written notice of such exercise to the Corporate Secretary of the Corporation. The notice of exercise shall state the number of shares of Common Stock as to which the Options are being exercised, and the Corporation shall determine whether the Options exercised are ISOs or Nonstatutory Options.

          The Participant may exercise the Options to purchase all, or any lesser whole number, of the number of shares of Common Stock that the Participant is then permitted to purchase under Section 2.

     5. Payment for Shares.

          Full payment of the option price for the shares of Common Stock purchased by exercising the Options shall be due at the time the notice of exercise is delivered pursuant to Section 4. Such payment may be made (i) in cash, (ii) by delivery of shares of Common Stock currently owned by the Participant with a fair market value equal to the option price, or (iii) in any other form acceptable to the Corporation.

          Alternatively, the Participant shall be deemed to have paid the full option price due upon exercise of the Options, if the Participant’s notice of exercise is accompanied by an irrevocable instruction to the Corporation to deliver the shares of Common Stock issuable upon exercise of the Options (less any shares withheld to satisfy the Participant’s tax obligations pursuant to Section 7 below) promptly to a broker-dealer designated by Participant, together with an irrevocable instruction to such broker-dealer to sell at least that portion of the shares necessary to pay the option price (and any tax withholding related expenses specified by the parties), and that portion of the sale proceeds needed to pay the option price is delivered directly to the Corporation no later than the close of business on the settlement date.

     6. Issuance of Stock Certificates for Shares.

          The stock certificates for any shares of Common Stock issuable to the Participant upon exercise of the Options shall be delivered to the Participant (or to the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution) as promptly after the date of exercise as is feasible, but not before the Participant has paid the option price for such shares and made any arrangements for tax withholding, as required by Section 7.

     7. Tax Withholding.

          Whenever the Participant exercises Options, the Corporation shall notify the Participant of the amount of tax (if any) that must be withheld by the Corporation under all applicable federal, state and local tax laws. With respect to each exercise of the Options, the Participant agrees to make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash, (b) authorize the Corporation to withhold a portion of the shares of

3

Common Stock otherwise issuable upon the exercise with a value equal to the required amount, (c) deliver to the Corporation shares of Common Stock with a value equal to the required amount, (d) authorize the deduction of the required amount from the Participant’s compensation, or (e) otherwise provide for payment of the required amount in any other manner satisfactory to the Corporation.

     8. Termination of Employment; Change in Corporate Control.

          In the event of a Change in Corporate Control (as described below), or if the Participant’s employment with the Corporation is terminated before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options (as provided in subsections (a) and (b) below), the Participant shall have the right to exercise the Options during a period of ninety (90) days following the date of the Change in Corporate Control or termination of employment (as applicable), but in no event later than ___, 20___, and the Options shall expire at the end of such period.

     (a) In the event of a Change in Corporate Control, or if the Participant’s employment is terminated involuntarily without “Cause” (as defined in the Participant’s Employment Agreement), any portion of the Options not previously exercisable under Section 2 shall become immediately exercisable.

     (b) In the case of an involuntary termination not described in subsection (a) above, or a voluntary termination by the Participant not following a Change in Corporate Control, the maximum number of shares the Participant may purchase by exercising the Options shall be the number of shares which could be purchased at the date of termination pursuant to Section 2.

          For purposes of this Section 8, termination of employment as a result of the expiration of the Participant’s Employment Agreement shall be considered a voluntary termination if the notice of non-renewal was delivered by the Participant and an involuntary termination if the notice of non-renewal was delivered by the Corporation and in both instances, the Participant is no longer employed by the Corporation.

          For purposes of this Section 8, a “Change in Corporate Control” shall include any of the following events:

     (i) The acquisition in one or more transactions of more than twenty percent of the Corporation’s outstanding Common Stock (or the equivalent in voting power of any class or classes of securities of the Corporation entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

     (ii) Any transfer or sale of substantially all of the assets of the Corporation, or any merger or consolidation of the Corporation into or with another corporation in which the Corporation is not the surviving entity;

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     (iii) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than “Continuing Directors.” For this purpose, those persons who were members of the Board of Directors on May 5, 2005, shall be “Continuing Directors.” Any person who is nominated for election as a member of the Board after May 5, 2005 shall also be considered a “Continuing Director” for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or

     (iv) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Corporation’s Common Stock.

     9. Effect of Death.

          If the Participant dies before the Options expire or have been exercised with respect to all of the shares of Common Stock subject to the Options, any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Participant’s executor, administrator, or any person to whom the Options may be transferred by the Participant’s will or by the laws of descent and distribution, shall have the right to exercise the Options, to the extent not previously exercised, at any time prior to the first anniversary of the date of death, but in no event later than                     , 20___. For this purpose, the terms of this Agreement shall be deemed to apply to such person as if he or she was the Participant.

     10. Effect of Permanent and Total Disability or Retirement After Age 65.

          If the termination of the Participant’s employment occurs after a finding of the Participant’s permanent and total disability, or as a result of retirement after age 65, any portion of the Options not previously exercisable under Section 2 shall become exercisable, and the Options may be exercised at any time during the period of twelve (12) months following the date of termination of employment, or retirement, as the case may be, but in no event later than ___, 20___.

     11. Nontransferability.

          The Participant’s rights under this Agreement may not be assigned or transferred by the Participant other than by will or the laws of descent and distribution. The Options may not be exercised by anyone other than the Participant or, in the case of the Participant’s death, by the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution.

     12. Securities Laws.

          The Corporation may from time to time impose any conditions on the exercise of the Options as it deems necessary or advisable to ensure that the Options granted hereunder, and each exercise thereof, satisfy the applicable requirements of federal and state securities laws.

5

Such conditions to satisfy applicable federal and state securities laws may include, without limitation, the partial or complete suspension of the right to exercise the Options until the offering of the shares covered by the Options have been registered under the Securities Act of 1933, as amended, or the printing of legends on all stock certificates issued to the Participant describing the restrictions on transfer of such shares.

     13. Rights Prior to Issuance of Certificates.

          Neither the Participant nor any person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution shall have any of the rights of a stockholder with respect to any shares of Common Stock until the date of the issuance to him or her of certificates for such Common Stock as provided in Section 6 above.

     14. Options Not to Affect Employment.

          Neither this Agreement nor the Options granted hereunder shall confer upon the Participant any right to continued employment with the Corporation. This Agreement shall not in any way modify or restrict any rights the Corporation may have to terminate such employment under the terms of the Participant’s Employment Agreement.

     15. Miscellaneous.

          (a) This Agreement may be executed in one or more counterparts all of which taken together will constitute one and the same instrument.

          (b) The terms of this Agreement may only be amended, modified or waived by a written agreement executed by both of the parties hereto.

          (c) The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided, however, that matters of corporate law, including the issuance of shares of the Common Stock, shall be governed by the Delaware General Corporation Law.

6

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

ATTEST:	HEALTH CARE REIT, INC.
	By:
Vice President-Administration		Chairman and
and Corporate Secretary		Chief Executive Officer

7

EX-10.22

EXHIBIT 10.22

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (the “Agreement”), made this ___day of                                         , 20___, between Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and                                                              (the “Participant”).

WITNESSETH:

     WHEREAS, the Participant is an employee and executive officer of the Corporation; and

     WHEREAS, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the “Plan”) in order to provide non-employee directors and select officers and key employees with incentives to achieve long-term corporate objectives; and

     WHEREAS, the Compensation Committee of the Corporation’s Board of Directors has decided that the Participant should be granted restricted shares of the Corporation’s common stock, $1.00 par value per share (“Common Stock”), on the terms and conditions set forth below in accordance with the terms of the Plan.

     NOW, THEREFORE, in consideration of the past and future services provided to the Corporation by the Participant and the various covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

     1. Grant of Restricted Stock.

          The Corporation hereby grants to the Participant a total of                                         ___ (___) shares of the Common Stock of the Corporation (the “Restricted Shares”), subject to the transfer restrictions, vesting schedule and other conditions set forth in this Agreement. The Participant shall not be required to provide the Corporation with any payment (other than his or her past and future services to the Corporation) in exchange for such Restricted Shares.

          As provided in Section 4, the Corporation shall cause the Restricted Shares to be issued and a stock certificate or certificates representing the Restricted Shares to be registered in the name of the Participant promptly upon execution of this Agreement. On or before the date of execution of this Agreement, the Participant shall deliver to the Corporation one or more stock powers endorsed in blank relating to the Restricted Shares.

     2. Restrictions.

          (a) The Participant shall have all rights and privileges of a stockholder of the Corporation with respect to the Restricted Shares, including voting rights and the right to receive dividends paid with respect to the Restricted Shares, except that the following restrictions shall apply until such time or times as these restrictions lapse under Section 3 or any other provision of this Agreement:

     (i) the Participant shall not be entitled to delivery of the certificate or certificates for any of the Restricted Shares until the restrictions imposed by this Agreement have lapsed with respect to those Restricted Shares;

     (ii) the Restricted Shares may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by the Participant before these restrictions have lapsed, except with the consent of the Corporation; and

     (iii) the Restricted Shares shall be subject to forfeiture upon termination of the Participant’s employment with the Corporation to the extent set forth in Section 6 below.

If any portion of the Restricted Shares become vested under Section 3 below (or Sections 6, 7, 8 or 9), such newly vested shares shall no longer be subject to the preceding restrictions and shall no longer be considered Restricted Shares.

          (b) Any attempt to dispose of Restricted Shares in a manner contrary to the restrictions set forth in this Agreement shall be ineffective.

     3. Vesting; When Restrictions Lapse.

          The Restricted Shares shall vest in five annual installments, on                                         , 20___ and the next four anniversaries of such date, or at such earlier time as the restrictions may lapse pursuant to Sections 6, 7, 8 or 9 of this Agreement. In the absence of any accelerated vesting and lapse of the restrictions under Sections 6, 7, 8 or 9, the restrictions set forth in this Agreement shall lapse with respect to the following numbers of shares on the following dates:

	NUMBER OF SHARES
DATE	THAT BECOME VESTED
, 20___                                         , 20___                                         , 20___                                         , 20___                                         , 20___	shares                      shares                      shares                      shares                      shares

     4. Issuance of Stock Certificates for Shares.

          The stock certificate or certificates representing the Restricted Shares shall be issued promptly following the execution of this Agreement, and shall be delivered to the Corporate Secretary or such other custodian as may be designated by the Corporation, to be held until the restrictions lapse under Sections 3, 6, 7, 8 or 9. Such stock certificate or certificates shall bear the following legend:

2

“The transferability of the shares of stock represented by this Certificate are subject to the terms and conditions (including forfeiture) of a Restricted Stock Agreement entered into between the registered owner and Health Care REIT, Inc. A copy of such Restricted Stock Agreement is on file in the offices of the Corporate Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500, Toledo, Ohio 43604.”

Once the restrictions imposed by this Agreement have lapsed with respect to any portion of the Restricted Shares, a stock certificate or certificates for such portion of the Restricted Shares shall be returned and exchanged for a new unlegended stock certificate representing the newly vested shares. The new certificates shall be delivered to the Participant (or to the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution) promptly after the date on which the restrictions imposed on such shares by this Agreement have lapsed, but not before the Participant has made arrangements satisfactory to the Corporation for tax withholding (as required by Section 5), and provided that any certificate representing the portion of the newly vested shares (if any) that the Participant applies to satisfy his or her tax withholding obligations pursuant to Section 5(b) below shall be delivered to the Corporation rather than the Participant.

     5. Tax Withholding.

          Whenever the restrictions applicable to all or a portion of the Restricted Shares lapse under the terms of this Agreement, the Corporation shall notify the Participant of the amount of tax that must be withheld by the Corporation under all applicable federal, state and local tax laws. The Participant agrees to make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash, (b) deliver to the Corporation shares of Common Stock currently held by the Participant (including newly vested Restricted Shares) with a value equal to the required amount, (c) authorize the deduction of the required amount from the Participant’s compensation, or (d) otherwise provide for payment of the required amount in a manner satisfactory to the Corporation.

     6. Termination of Employment; Change in Corporate Control.

          If the Participant’s employment with the Corporation is involuntarily terminated for “Cause” (as defined in the Participant’s Employment Agreement) during the term of this Agreement, or if the Participant voluntarily terminates his or her employment with the Corporation (other than after a Change in Corporate Control (as described below) occurring after the date hereof or as provided in Sections 7, 8 or 9 below), including any termination after the term of the Participant’s Employment Agreement expires by reason of the Participant’s election not to extend the term of the Employment Agreement, any Restricted Shares that remain subject to the restrictions imposed by this Agreement shall be forfeited.

          If the Participant’s employment is terminated involuntarily without Cause, including an involuntary termination without Cause as a result of the Corporation’s election not to extend the term of the Participant’s Employment Agreement, or in the event of a Change in

3

Corporate Control, vesting shall be accelerated, the restrictions imposed by this Agreement on the remaining Restricted Shares shall lapse immediately, and no Restricted Shares shall be forfeited.

          For purposes of this Section 6, a “Change in Corporate Control” shall include any of the following events:

     (a) The acquisition in one or more transactions of more than twenty percent of the Corporation’s outstanding Common Stock (or the equivalent in voting power of any class or classes of securities of the Corporation entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

     (b) Any transfer or sale of substantially all of the assets of the Corporation, or any merger or consolidation of the Corporation into or with another corporation in which the Corporation is not the surviving entity;

     (c) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than “Continuing Directors.” For this purpose, those persons who were members of the Board of Directors on May 5, 2005, shall be “Continuing Directors.” Any person who is nominated for election as a member of the Board after May 5, 2005 shall also be considered a “Continuing Director” for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or

     (d) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Corporation’s Common Stock.

     7. Effect of Death.

          If the termination of the Participant’s employment occurs as a result of the Participant’s death, vesting shall be accelerated and all of the restrictions imposed on the Restricted Shares by this Agreement shall lapse immediately.

     8. Effect of Permanent and Total Disability.

          If the termination of the Participant’s employment occurs after a finding of the Participant’s permanent and total disability, vesting shall be accelerated and all of the restrictions imposed on the Restricted Shares by this Agreement shall lapse immediately.

     9. Effect of Retirement.

          If the termination of the Participant’s employment occurs as a result of the Participant’s retirement after age 55 and the sum of the Participant’s age and years of service to

4

the Corporation is equal to 65 or more, vesting shall be accelerated and all of the restrictions imposed on the Restricted Shares by this Agreement shall lapse immediately upon retirement, provided that the Participant delivered to the Corporation, at least six months prior to the date of his or her retirement, written notice specifying such retirement date and the Participant remained in the continuous service of the Corporation from the date such notice was provided until his or her retirement date. Such written notice may not be modified or revoked. The Participant’s retirement under any circumstances other than as specified in the preceding provisions of this Section 9 shall result in the immediate forfeiture of all Restricted Shares that remain subject to the restrictions imposed by this Agreement.

     10. Securities Laws.

          The Corporation may from time to time impose such conditions on the transfer of the Restricted Shares as it deems necessary or advisable to ensure that any transfers of the Restricted Shares will satisfy the applicable requirements of federal and state securities laws. Such conditions may include, without limitation, the partial or complete suspension of the right to transfer the Restricted Shares until the Restricted Shares have been registered under the Securities Act of 1933, as amended.

     11. Grant Not to Affect Employment.

          Neither this Agreement nor the Restricted Shares granted hereunder shall confer upon the Participant any right to continued employment with the Corporation. This Agreement shall not in any way modify or restrict any rights the Corporation may have to terminate such employment under the terms of the Participant’s Employment Agreement with the Corporation.

     12. Miscellaneous.

          (a) This Agreement may be executed in one or more counterparts, all of which taken together will constitute one and the same instrument.

          (b) The terms of this Agreement may only be amended, modified or waived by a written agreement executed by both of the parties hereto.

          (c) The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided, however, that matters of corporate law, including the issuance of shares of Common Stock, shall be governed by the Delaware General Corporation Law.

5

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

ATTEST:	HEALTH CARE REIT, INC.
	By:
Vice President-Administration and Corporate Secretary		President and Chief Financial Officer

6

EX-10.23

EXHIBIT 10.23

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (the “Agreement”), made this ___ day of ___, 20___, between Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and ___ (the “Participant”).

WITNESSETH:

     WHEREAS, the Participant is an employee and executive officer of the Corporation; and

     WHEREAS, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the “Plan”) in order to provide non-employee directors and select officers and key employees with incentives to achieve long-term corporate objectives; and

     WHEREAS, the Compensation Committee of the Corporation’s Board of Directors has decided that the Participant should be granted restricted shares of the Corporation’s common stock, $1.00 par value per share (“Common Stock”), on the terms and conditions set forth below in accordance with the terms of the Plan.

     NOW, THEREFORE, in consideration of the past and future services provided to the Corporation by the Participant and the various covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

     1. Grant of Restricted Stock.

          The Corporation hereby grants to the Participant a total of ___ (___) shares of the Common Stock of the Corporation (the “Restricted Shares”), subject to the transfer restrictions, vesting schedule and other conditions set forth in this Agreement. The Participant shall not be required to provide the Corporation with any payment (other than his or her past and future services to the Corporation) in exchange for such Restricted Shares.

          As provided in Section 4, the Corporation shall cause the Restricted Shares to be issued and a stock certificate or certificates representing the Restricted Shares to be registered in the name of the Participant promptly upon execution of this Agreement. On or before the date of execution of this Agreement, the Participant shall deliver to the Corporation one or more stock powers endorsed in blank relating to the Restricted Shares.

     2. Restrictions.

          (a) The Participant shall have all rights and privileges of a stockholder of the Corporation with respect to the Restricted Shares, including voting rights and the right to receive dividends paid with respect to the Restricted Shares, except that the following restrictions shall apply until such time or times as these restrictions lapse under Section 3 or any other provision of this Agreement:

     (i) the Participant shall not be entitled to delivery of the certificate or certificates for any of the Restricted Shares until the restrictions imposed by this Agreement have lapsed with respect to those Restricted Shares;

     (ii) the Restricted Shares may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by the Participant before these restrictions have lapsed, except with the consent of the Corporation; and

     (iii) the Restricted Shares shall be subject to forfeiture upon termination of the Participant’s employment with the Corporation to the extent set forth in Section 6 below.

If any portion of the Restricted Shares become vested under Section 3 below (or Sections 6, 7 or 8), such newly vested shares shall no longer be subject to the preceding restrictions and shall no longer be considered Restricted Shares.

          (b) Any attempt to dispose of Restricted Shares in a manner contrary to the restrictions set forth in this Agreement shall be ineffective.

     3. Vesting; When Restrictions Lapse.

          The Restricted Shares shall vest in five annual installments, on ___, 20___ and the next four anniversaries of such date, or at such earlier time as the restrictions may lapse pursuant to Sections 6, 7 or 8 of this Agreement. In the absence of any accelerated vesting and lapse of the restrictions under Sections 6, 7 or 8, the restrictions set forth in this Agreement shall lapse with respect to the following numbers of shares on the following dates:

	NUMBER OF SHARES
DATE	THAT BECOME VESTED
___, 20___	___shares
___, 20___	___shares
___, 20___	___shares
___, 20___	___shares
___, 20___	___shares

     4. Issuance of Stock Certificates for Shares.

          The stock certificate or certificates representing the Restricted Shares shall be issued promptly following the execution of this Agreement, and shall be delivered to the Corporate Secretary or such other custodian as may be designated by the Corporation, to be held until the restrictions lapse under Sections 3, 6, 7 or 8. Such stock certificate or certificates shall bear the following legend:

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“The transferability of the shares of stock represented by this Certificate are subject to the terms and conditions (including forfeiture) of a Restricted Stock Agreement entered into between the registered owner and Health Care REIT, Inc. A copy of such Restricted Stock Agreement is on file in the offices of the Corporate Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500, Toledo, Ohio 43604.”

Once the restrictions imposed by this Agreement have lapsed with respect to any portion of the Restricted Shares, a stock certificate or certificates for such portion of the Restricted Shares shall be returned and exchanged for a new unlegended stock certificate representing the newly vested shares. The new certificates shall be delivered to the Participant (or to the person to whom the rights of the Participant shall have passed by will or the laws of descent and distribution) promptly after the date on which the restrictions imposed on such shares by this Agreement have lapsed, but not before the Participant has made arrangements satisfactory to the Corporation for tax withholding (as required by Section 5), and provided that any certificate representing the portion of the newly vested shares (if any) that the Participant applies to satisfy his or her tax withholding obligations pursuant to Section 5(b) below shall be delivered to the Corporation rather than the Participant.

     5. Tax Withholding.

          Whenever the restrictions applicable to all or a portion of the Restricted Shares lapse under the terms of this Agreement, the Corporation shall notify the Participant of the amount of tax that must be withheld by the Corporation under all applicable federal, state and local tax laws. The Participant agrees to make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash, (b) deliver to the Corporation shares of Common Stock currently held by the Participant (including newly vested Restricted Shares) with a value equal to the required amount, (c) authorize the deduction of the required amount from the Participant’s compensation, or (d) otherwise provide for payment of the required amount in a manner satisfactory to the Corporation.

     6. Termination of Employment; Change in Corporate Control.

          If the Participant’s employment with the Corporation is involuntarily terminated for “Cause” (as defined in the Participant’s Employment Agreement) during the term of this Agreement, or if the Participant voluntarily terminates his or her employment with the Corporation (other than after a Change in Corporate Control (as described below) occurring after the date hereof or as provided in Sections 7 or 8 below), including any termination after the term of the Participant’s Employment Agreement expires by reason of the Participant’s election not to extend the term of the Employment Agreement, any Restricted Shares that remain subject to the restrictions imposed by this Agreement shall be forfeited.

          If the Participant’s employment is terminated involuntarily without Cause, including an involuntary termination without Cause as a result of the Corporation’s election not to extend the term of the Participant’s Employment Agreement, or in the event of a Change in

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Corporate Control, vesting shall be accelerated, the restrictions imposed by this Agreement on the remaining Restricted Shares shall lapse immediately, and no Restricted Shares shall be forfeited.

          For purposes of this Section 6, a “Change in Corporate Control” shall include any of the following events:

     (a) The acquisition in one or more transactions of more than twenty percent of the Corporation’s outstanding Common Stock (or the equivalent in voting power of any class or classes of securities of the Corporation entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

     (b) Any transfer or sale of substantially all of the assets of the Corporation, or any merger or consolidation of the Corporation into or with another corporation in which the Corporation is not the surviving entity;

     (c) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than “Continuing Directors.” For this purpose, those persons who were members of the Board of Directors on May 5, 2005, shall be “Continuing Directors.” Any person who is nominated for election as a member of the Board after May 5, 2005 shall also be considered a “Continuing Director” for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or

     (d) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Corporation’s Common Stock.

     7. Effect of Death.

          If the termination of the Participant’s employment occurs as a result of the Participant’s death, vesting shall be accelerated and all of the restrictions imposed on the Restricted Shares by this Agreement shall lapse immediately.

     8. Effect of Permanent and Total Disability or Retirement After Age 65.

          If the termination of the Participant’s employment occurs after a finding of the Participant’s permanent and total disability, or as a result of retirement after age 65, vesting shall be accelerated and all of the restrictions imposed on the Restricted Shares by this Agreement shall lapse immediately.

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     9. Securities Laws.

          The Corporation may from time to time impose such conditions on the transfer of the Restricted Shares as it deems necessary or advisable to ensure that any transfers of the Restricted Shares will satisfy the applicable requirements of federal and state securities laws. Such conditions may include, without limitation, the partial or complete suspension of the right to transfer the Restricted Shares until the Restricted Shares have been registered under the Securities Act of 1933, as amended.

     10. Grant Not to Affect Employment.

          Neither this Agreement nor the Restricted Shares granted hereunder shall confer upon the Participant any right to continued employment with the Corporation. This Agreement shall not in any way modify or restrict any rights the Corporation may have to terminate such employment under the terms of the Participant’s Employment Agreement with the Corporation.

     11. Miscellaneous.

          (a) This Agreement may be executed in one or more counterparts, all of which taken together will constitute one and the same instrument.

          (b) The terms of this Agreement may only be amended, modified or waived by a written agreement executed by both of the parties hereto.

          (c) The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided, however, that matters of corporate law, including the issuance of shares of Common Stock, shall be governed by the Delaware General Corporation Law.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

ATTEST:	HEALTH CARE REIT, INC.
	By:
Vice President-Administration		Chairman and
and Corporate Secretary		Chief Executive Officer

5

EX-10.24

EXHIBIT 10.24

DEFERRED STOCK UNIT
GRANT AGREEMENT
FOR NON-EMPLOYEE DIRECTOR

     THIS DEFERRED STOCK UNIT GRANT AGREEMENT (the “Agreement”), made this                      day of                                         , 20___ (the “Grant Date”), between Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and                                          (the “Director”).

WITNESSETH:

     WHEREAS, the Director serves as a member of the Board of Directors of the Corporation;

     WHEREAS, the Corporation maintains the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the “Plan”) in order to promote the growth and profitability of the Corporation by providing officers, key employees and non-employee directors with incentives to achieve long-term corporate objectives, to assist the Corporation in attracting and retaining officers, key employees and non-employee directors of outstanding competence, and to provide such individuals with an opportunity to acquire an equity interest in the Corporation;

     WHEREAS, the Plan authorizes awards under the Plan to be made to non-employee directors with the approval of the Compensation Committee of the Board of Directors; and

     WHEREAS, the Compensation Committee has determined that each non-employee director of the Corporation shall be granted Deferred Stock Units with respect to shares of the Corporation’s common stock on the terms and conditions set forth below.

     NOW, THEREFORE, in consideration of the past and future services the Director has provided to the Corporation as a member of the Board, and the various covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

     1. Grant of Deferred Stock Units.

          The Corporation hereby grants to the Director Deferred Stock Units with respect to a total of                                          (                    ) shares of common stock, $1.00 par value per share, of the Corporation (the “Common Stock”), subject to satisfaction of the vesting conditions and other terms set forth in this Agreement. The Director shall not be required to make any payment to the Corporation (other than his or her services as a director) in exchange for such Deferred Stock Units or in exchange for the issuance of shares of Common Stock upon vesting of Deferred Stock Units.

     2. Deferred Delivery of Shares.

          The Director shall not be entitled to the issuance of shares of Common Stock or to receive any distributions with respect to the Deferred Stock Units, except as provided in Section 9 below, until such time as the Deferred Stock Units may vest under Section 3 below. Further,

except as provided in Section 9 below, the Director shall not have any of the rights and privileges of a stockholder of the Corporation (including voting rights and the right to receive dividends) with respect to the shares of Common Stock to be issued pursuant to the Deferred Stock Units until such time as the Deferred Stock Units vest and the shares of Common Stock are issued to the Director.

     3. Vesting; When Deferred Stock Units Vest.

          Subject to the terms and conditions of this Agreement, the Deferred Stock Units shall vest in three annual installments, on the first three anniversaries of the Grant Date, subject to the Director’s continued service as a member of the Board of Directors through such dates, or at such earlier time as the Deferred Stock Units may vest pursuant to Sections 7 or 8 of this Agreement. In the absence of any accelerated vesting under Sections 7 or 8, the Deferred Stock Units granted under this Agreement shall vest with respect to the following numbers of shares on the following vesting dates:

VESTING	NUMBER OF DSUs
DATES	THAT BECOME VESTED
, 20___	shares
, 20___	shares
, 20___	shares

The Deferred Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by the Director, and the shares of Common Stock potentially issuable to the Director pursuant to these Deferred Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered by the Director until such shares are so issued.

          Any attempt to dispose of the Deferred Stock Units in a manner contrary to the restrictions set forth in this Agreement shall be ineffective.

     4. Issuance of Stock Certificates for Shares.

          Whenever any or all of the Deferred Stock Units granted to the Director under this Agreement become vested pursuant to Section 3 or Sections 7 or 8 below, the Corporation shall cause a number of shares of Common Stock equal to the number of newly vested Deferred Stock Units to be issued to the Director and a stock certificate or certificates representing these shares of Common Stock to be registered in the name of the Director. The stock certificate or stock certificates representing such shares of Common Stock shall be delivered to the Director (or to his or her designated nominee) upon the vesting date (or as soon as practicable after the vesting date, but in no event later than December 31 of the year in which the vesting date occurred or, if later, the 15th day of the third calendar month following the vesting date). Once shares of Common Stock have been issued as a result of the vesting of Deferred Stock Units, the

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corresponding vested Deferred Stock Unit shall be considered cancelled and shall be of no further force or effect.

     5. No Tax Withholding.

          The Corporation shall issue to the Internal Revenue Service and to the Director a Form 1099 and any other reporting form that may be required to report the amount of tax which the Director has incurred under applicable federal, state and local tax laws. The Corporation will not withhold such taxes, and the Director acknowledges that the Director may need to adjust his or her estimated tax payments to take the additional taxable income into account.

     6. Termination of Service on the Board.

          (a) Except as provided in Sections 6(b), 7 or 8 below, if the Director resigns from service as a member of the Board of Directors, decides not to stand for reelection at the expiration of the Director’s term of office, is not nominated by the Board to stand for election at the Annual Stockholders’ Meeting at which the Director’s term of office expires, or, if nominated, is not reelected, then any Deferred Stock Units held by the Director which have not yet vested shall not be forfeited, but shall remain unvested until such time as such Deferred Stock Units would otherwise have become vested as provided in Section 3 (disregarding, for purposes of this Section 6(a), the requirement of continued service on the Board of Directors as specified in Section 3).

          (b) Notwithstanding the foregoing, if the Director is removed from the Board by the stockholders of the Corporation for cause, or the Director resigns or decides not to stand for reelection following delivery of notice to the stockholders of a proposal to remove the Director for cause (for these purposes, cause shall include, but not be limited to, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform the Director’s duties and responsibilities for any reason other than illness or incapacity), then all Deferred Stock Units which have not previously become vested shall immediately be forfeited.

     7. Effect of Death or Disability.

          (a) If the Director ceases to serve as a member of the Board as a result of the Director’s death before the Deferred Stock Units granted under this Agreement have become vested, vesting of any unvested Deferred Stock Units granted to the Director under this Agreement shall be accelerated, and stock certificates for the number of shares of Common Stock equal to the number of newly vested Deferred Stock Units shall be delivered to the Director’s executor, administrator, or any person to whom the Director’s rights with respect to the Deferred Stock Units may be transferred by the Director’s will or by the laws of descent.

          (b) If the Director ceases to serve as a member of the Board as a result of the Director’s total disability before the Deferred Stock Units granted under this Agreement have become vested, vesting of any unvested Deferred Stock Units granted to the Director under this Agreement shall be accelerated, and stock certificates for the number of shares of Common Stock equal to the number of newly vested Deferred Stock Units shall be delivered to the Director

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pursuant to Section 4, free of any restrictions. A Director shall have total disability only if he or she is “disabled” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

          (c) Any stock certificates deliverable under Sections 7(a) or 7(b) shall be delivered immediately upon the Director’s death or total disability, as applicable (or as soon as practicable thereafter, but in no event later than December 31 of the year in which the applicable event occurred or, if later, the 15th day of the third calendar month following the event).

     8. Effect of Change in Corporate Control.

          Notwithstanding the other terms of this Agreement, in the event of a Change in Corporate Control (as defined below), the vesting of the Deferred Stock Units granted under this Agreement shall be accelerated, any previously unvested Deferred Stock Units shall vest immediately, and the Director shall become entitled to immediately receive a number of shares of Common Stock equal to the number of previously unvested Deferred Stock Units. Any stock certificates deliverable under this Section 8 shall be delivered immediately upon the Change in Corporate Control (or as soon as practicable thereafter, but in no event later than December 31 of the year in which the Change in Corporate Control occurs or, if later, the 15th day of the third calendar month following the Change in Corporate Control).

          For purposes of this Section 8, a “Change in Corporate Control” shall mean a “change in ownership or effective control” in respect of the Corporation within the meaning of Section 409A of the Code.

     9. Dividend Equivalent Rights.

          During such time as any Deferred Stock Units remain outstanding and unvested, whenever the Corporation pays dividends on the Common Stock, the Director will have the right to receive a cash payment from the Corporation with respect to each Deferred Stock Unit in an amount equal to any dividends paid on a share of Common Stock (a “Dividend Equivalent Right”). The Director will have a Dividend Equivalent Right with respect to each Deferred Stock Unit that is outstanding on the dividend record date. The Director will have no Dividend Equivalent Rights as of the dividend record date in respect of any Deferred Stock Units that have vested and been exchanged for Common Stock; provided that the Director is the record holder of such Common Stock on or before such dividend record date. In all events, each Dividend Equivalent Right shall be paid not later than the 15th day of the third month following the calendar year in which the applicable dividend record date occurs.

     10. Securities Laws.

          The Corporation may from time to time impose such conditions on the vesting of the Deferred Stock Units, and/or the issuance of shares of Common Stock upon vesting of the Deferred Stock Units, as it deems reasonably necessary to ensure that any grant of the Deferred Stock Units and issuance of shares under this Agreement will satisfy the applicable requirements of federal and state securities laws. Such conditions may include, without limitation, the partial

4

or complete suspension of the right to receive shares of Common Stock upon the vesting of the Deferred Stock Units until the Common Stock has been registered under the Securities Act of 1933, as amended. In all events, if the issuance of any shares of Common Stock is delayed by application of this Section 10, such issuance shall occur on the earliest date on which it would not violate applicable law.

     11. Grant Not to Affect Status as Director.

          Neither this Agreement nor the Deferred Stock Units granted hereunder shall confer upon the Director any right to continue the Director’s service as a member of the Board of Directors of the Corporation.

     12. Adjustments to Deferred Stock Units.

          In the event of any change or changes in the outstanding Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or any similar transaction, the number of Deferred Stock Units granted to the Director under this Agreement shall be adjusted by the Compensation Committee pursuant to Section 11.2 of the Plan in such manner as the Committee deems appropriate to prevent substantial dilution or enlargement of the rights granted to the Director.

     13. Miscellaneous.

          (a) This Agreement may be executed in one or more counterparts, all of which taken together will constitute one and the same instrument.

          (b) The terms of this Agreement may only be amended, modified or waived by a written agreement executed by both of the parties hereto.

          (c) The provisions of the Plan are hereby made a part of this Agreement. In the event of any conflict between the provisions of this Agreement and those of the Plan, the provisions of this Agreement shall control.

          (d) The Deferred Stock Units under this Agreement are deferred compensation subject to Section 409A of the Code. This Agreement is intended to satisfy the requirements of Section 409A of the Code and shall be interpreted in a manner consistent with such requirements. To the extent that changes are necessary to ensure that the Deferred Stock Units comply with any additional requirements imposed by future IRS guidance on the application of Section 409A of the Code, the Director and the Corporation agree to cooperate and work together in good faith to timely amend this Agreement to comply with Section 409A of the Code.

          (e) The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided, however, that matters of corporate law, including the issuance of shares of Common Stock, shall be governed by the Delaware General Corporation Law.

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          (f) Notwithstanding anything herein to the contrary, payments and the issuance of shares of Common Stock hereunder will be delayed to the extent required to comply with Section 409A(a)(2)(B) of the Code.

     IN WITNESS WHEREOF, the parties have executed this Deferred Stock Unit Grant Agreement on the date and year first above written.

ATTEST:	HEALTH CARE REIT, INC.
	By:
Vice President-Administration		Chairman and
and Corporate Secretary		Chief Executive Officer
	DIRECTOR:
	Name	:

6

EX-10.34

EXHIBIT 10.34

HEALTH CARE REIT, INC.

Summary of Executive Compensation Program

     The three key components of the executive officer compensation program of Health Care REIT, Inc. (the “Company”) are base salaries, annual incentive compensation and long-term incentive awards under the Company’s 2005 Long-Term Incentive Plan (the “Plan”).

     Base Salaries. The executive officers’ base salaries are established in their employment agreements if they have one, and the Compensation Committee of the Board of Directors may adjust those base salaries from time to time, as it deems appropriate.

     Annual Incentive Compensation. Annual incentive compensation payments to executive officers are based on the achievement of pre-established corporate and individual goals for the performance year. Eighty percent of the incentive compensation opportunity for Messrs. Chapman and Braun, and generally 60% of the incentive compensation opportunity for the other executive officers, are based on objective corporate performance goals. The remainder of each executive’s incentive compensation opportunity is based on other pre-established performance factors. With respect to Mr. Herman, 50% of his annual incentive compensation is based on the factors mentioned above and 50% is based on his direct contribution to the investment activity of the Company. For each executive, a range of earnings opportunity is established at the beginning of the performance period, expressed as a percentage of base salary, corresponding to three levels of performance (threshold, target and high performance levels) for the annual cash bonus. The 2005 corporate performance goals set by the Compensation Committee for the annual incentive program relate to (1) funds available for distribution (FAD) per share (a measure of financial earnings performance for REITs); (2) net real estate investments; and (3) maintenance of credit ratings.

     On January 23, 2006, the Compensation Committee awarded annual cash bonuses for performance in 2005 to the named executive officers (the executive officers who are expected to be named in the Company’s 2006 Proxy Statement), in the amounts set forth below. In addition, the Compensation Committee established the 2006 base salaries for each named executive officer:

NAME	TITLE	2005 CASH BONUS		2006 BASE SALARY
George L. Chapman	Chairman and Chief Executive Officer	$	619,445	$	536,852
Raymond W. Braun	President and Chief Financial Officer	$	357,500	$	338,000
Charles J. Herman, Jr.	Vice President and Chief Investment Officer	$	301,684	$	275,000
Jeffrey H. Miller	Vice President and General Counsel	$	168,520	$	263,120
Scott A. Estes	Vice President – Finance	$	102,060	$	187,110

          Long-Term Incentive Compensation. The Plan has been the Company’s primary vehicle for providing long-term incentive compensation to executive officers, and is intended to enable the Company to provide its executive officers and other key employees with competitive equity-based compensation in order to align management and stockholder interests, enhance focus on the creation of

stockholder value, and support the long-term retention of key contributors. Under the terms of the Plan, the Compensation Committee has authority to approve stock options, restricted stock or other equity-based incentive awards to executive officers and key employees and to determine the terms of these awards.

          Similar to the annual incentive program, long-term incentive awards for executive officers are based on the achievement of pre-established corporate and individual goals for the performance years. For each executive officer, a range of earnings opportunity, expressed in dollar values, is established at the beginning of the performance period corresponding to three levels of performance (threshold, target and high performance levels) for long-term compensation. For 2005, 75% of the value of the long-term incentive compensation award was based on corporate performance goals set by the Compensation Committee, which related to (1) three-year total stockholder return relative to the three-year NAREIT Index; (2) net real estate investments; and (3) dividend/FAD payout ratio. The remaining 25% of the value of the long-term award was based on a qualitative assessment of individual performance. Based on performance relative to these goals, the Compensation Committee approved on January 23, 2006 a specific dollar amount of long-term incentive compensation value for each executive officer, and then converted these dollar amounts into a number of restricted shares and a number of options with and without dividend equivalent rights. Seventy-five percent of the value of the long-term incentive compensation earned by each executive officer was granted in the form of shares of restricted stock, 12.5% was granted as stock options with dividend equivalent rights and the remaining 12.5% was granted as stock options without dividend equivalent rights. The options and restricted shares vest ratably over five years, and cash payments attributable to dividend equivalent rights will accrue and be paid only when the corresponding option has vested. Occasionally, due to extraordinary performance, additional awards may be granted.

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EX-10.35

EXHIBIT 10.35

HEALTH CARE REIT, INC.

Summary of Director Compensation

     For the 2006 calendar year, each non-employee member of the Board of Directors of Health Care REIT, Inc. (the “Company”) will receive an annual retainer of $45,000, payable in equal quarterly installments. Additionally, each of the chairs of the Audit Committee and the Compensation Committee will receive an additional retainer of $10,000 and the chair of the Nominating/Corporate Governance Committee will receive an additional retainer of $7,500. If the Board of Directors holds more than four meetings in a year, each non-employee member of the Board will receive $1,500 for each meeting attended in excess of four meetings. With respect to the Audit, Compensation, Executive and Nominating/Corporate Governance Committees, if any of these committees holds more than four meetings in a year, each non-employee member of these committees will receive $1,000 for each meeting attended in excess of four meetings.

     Non-employee directors of the Company are eligible to receive a variety of equity awards under the Company’s 2005 Long-Term Incentive Plan (the “Plan”). On January 23, 2006, the Compensation Committee, which administers the Plan, granted each of the non-employee directors deferred stock units with a value of $70,000. The deferred stock units are converted into shares of common stock of the Company in three equal installments on the first three anniversaries of the date of the grant. Recipients of the deferred stock units are also entitled to dividend equivalent rights.

EX-12

EXHIBIT 12

STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED
CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS

	Year Ended December 31
	2001			2002			2003			2004			2005
	(dollars in thousands)
Earnings:
Income from continuing operations before extraordinary items (1)	$	50,853		$	58,312		$	71,779		$	82,099		$	79,154
Fixed charges		34,644			44,644			59,833			76,824			85,999
Capitalized interest		(841	)		(170	)		(1,535	)		(875	)		(665	)
Equity (earnings) losses in less than 50% owned subsidiary		(332	)		(15	)		(270	)
Earnings	$	84,324		$	102,771		$	129,807		$	158,048		$	164,488
Fixed charges:
Interest expense (2)	$	32,028		$	42,101		$	55,377		$	72,556		$	82,624
Capitalized interest		841			170			1,535			875			665
Amortization of loan expenses		1,775			2,373			2,921			3,393			2,710
Fixed charges	$	34,644		$	44,644		$	59,833		$	76,824		$	85,999
Consolidated ratio of earnings to fixed charges		2.43			2.30			2.17			2.06			1.91
Earnings:
Income from continuing operations before extraordinary items (1)	$	50,853		$	58,312		$	71,779		$	82,099		$	79,154
Fixed charges		34,644			44,644			59,833			76,824			85,999
Capitalized interest		(841	)		(170	)		(1,535	)		(875	)		(665	)
Equity (earnings) losses in less than 50% owned subsidiary		(332	)		(15	)		(270	)
Earnings	$	84,324		$	102,771		$	129,807		$	158,048		$	164,488
Fixed charges:
Interest expense (2)	$	32,028		$	42,101		$	55,377		$	72,556		$	82,624
Capitalized interest		841			170			1,535			875			665
Amortization of loan expenses		1,775			2,373			2,921			3,393			2,710
Fixed charges		34,644			44,644			59,833			76,824			85,999
Preferred stock dividends		13,505			12,468			9,218			12,737			21,594
Combined fixed charges and preferred stock dividends	$	48,149		$	57,112		$	69,051		$	89,561		$	107,593
Consolidated ratio of earnings to combined fixed charges and preferred stock dividends		1.75			1.80			1.88			1.76			1.53

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE COMPANY

	State of Organization	Date of
Name of Subsidiary	and Type of Entity	Organization
HCRI Pennsylvania Properties, Inc.	Pennsylvania corporation	November 1, 1993
HCRI Overlook Green, Inc.	Pennsylvania corporation	July 9, 1996
HCRI Texas Properties, Inc.	Delaware corporation	December 27, 1996
HCRI Texas Properties, Ltd.	Texas limited partnership	December 30, 1996
Health Care REIT International, Inc.	Delaware corporation	February 11, 1998
HCN Atlantic GP, Inc.	Delaware corporation	February 20, 1998
HCN Atlantic LP, Inc.	Delaware corporation	February 20, 1998
HCRI Nevada Properties, Inc.	Nevada corporation	March 27, 1998
HCRI Southern Investments I, Inc.	Delaware corporation	June 11, 1998
HCRI Louisiana Properties, L.P.	Delaware limited partnership	June 11, 1998
HCN BCC Holdings, Inc.	Delaware corporation	September 25, 1998
HCRI Tennessee Properties, Inc.	Delaware corporation	September 25, 1998
HCRI Limited Holdings, Inc.	Delaware corporation	September 25, 1998
Pennsylvania BCC Properties, Inc.	Pennsylvania corporation	September 25, 1998
HCRI North Carolina Properties, LLC	Delaware limited liability company	December 10, 1999
HCRI Massachusetts Properties, Inc.	Delaware corporation	March 17, 2000
HCRI Massachusetts Properties Trust	Massachusetts trust	March 30, 2000
HCRI Indiana Properties, Inc.	Delaware corporation	June 15, 2000
HCRI Indiana Properties, LLC	Indiana limited liability company	June 16, 2000
HCRI Holdings Trust	Massachusetts trust	September 11, 2000
HCRI Maryland Properties, LLC	Maryland limited liability company	July 19, 2001
HCRI Massachusetts Properties Trust II	Massachusetts trust	September 26, 2001
HCRI Beachwood, Inc.	Ohio corporation	October 11, 2001
HCRI Broadview, Inc.	Ohio corporation	October 11, 2001
HCRI Westlake, Inc.	Ohio corporation	October 11, 2001
HCRI Westmoreland, Inc.	Delaware corporation	October 16, 2001
HCRI Wisconsin Properties, LLC	Wisconsin limited liability company	December 11, 2001
HCRI North Carolina Properties I, Inc.	North Carolina corporation	January 1, 2002
HCRI North Carolina Properties II, Inc.	North Carolina corporation	January 1, 2002
HCRI North Carolina Properties III, Limited Partnership	North Carolina limited partnership	January 1, 2002
HCRI Kentucky Properties, LLC	Kentucky limited liability company	January 7, 2002
HCRI Mississippi Properties, Inc.	Mississippi corporation	March 28, 2002
HCRI Illinois Properties, LLC	Delaware limited liability company	August 21, 2002
HCRI Missouri Properties, LLC	Delaware limited liability company	August 21, 2002
HCRI Surgical Properties, LLC	Ohio limited liability company	September 30, 2002
HCRI Tucson Properties, Inc.	Delaware corporation	November 14, 2002
HCRI Stonecreek Properties, LLC	Delaware limited liability company	June 25, 2003
HCRI Cold Spring Properties, LLC	Delaware limited liability company	June 25, 2003
HCRI Eddy Pond Properties Trust	Massachusetts trust	June 26, 2003
HCRI Investments, Inc.	Delaware corporation	July 30, 2003
HCRI Forest City Holdings, Inc.	North Carolina corporation	August 19, 2003
HCRI Asheboro Holdings, Inc.	North Carolina corporation	August 19, 2003
HCRI Smithfield Holdings, Inc.	North Carolina corporation	August 19, 2003
HCRI Greenville Holdings, Inc.	North Carolina corporation	August 19, 2003
HCRI Forest City Properties, LP	North Carolina limited partnership	August 19, 2003
HCRI Asheboro Properties, LP	North Carolina limited partnership	August 19, 2003
HCRI Smithfield Properties, LP	North Carolina limited partnership	August 19, 2003

	State of Organization	Date of
Name of Subsidiary	and Type of Entity	Organization
HCRI Greenville Properties, LP	North Carolina limited partnership	August 19, 2003
HCRI Kirkland Properties, LLC	Delaware limited liability company	August 22, 2003
HCRI Ridgeland Pointe Properties, LLC	Delaware limited liability company	August 22, 2003
HCRI Drum Hill Properties, LLC	Delaware limited liability company	August 22, 2003
HCRI Fairmont Properties, LLC	Delaware limited liability company	August 22, 2003
HCRI Abingdon Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Gaston Place Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Gaston Manor Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Eden Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Weddington Park Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Union Park Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Concord Place Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Salisbury Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Burlington Manor Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Skeet Club Manor Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI High Point Manor Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Hickory Manor Holdings, Inc.	North Carolina corporation	September 10, 2003
HCRI Statesville Place Holdings I, Inc.	North Carolina corporation	September 10, 2003
HCRI Statesville Place Holdings II, Inc.	North Carolina corporation	September 10, 2003
HCRI Abingdon Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Gaston Place Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Gaston Manor Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Eden Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Weddington Park Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Union Park Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Concord Place Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Salisbury Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Burlington Manor Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Skeet Club Manor Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI High Point Manor Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Hickory Manor Properties, LP	North Carolina limited partnership	September 10, 2003
HCRI Statesville Place Properties I, LP	North Carolina limited partnership	September 10, 2003
HCRI Statesville Place Properties II, LP	North Carolina limited partnership	September 10, 2003
HCRI Chicago Properties, Inc.	Delaware corporation	November 18, 2003
HCRI General Properties, Inc.	Delaware corporation	August 5, 2004
HCRI Kansas Properties, LLC	Delaware limited liability company	September 3, 2004
HCRI Hunters Glen Properties, LLC	Delaware limited liability company	September 21, 2004
HCRI Wilburn Gardens Properties, LLC	Delaware limited liability company	September 21, 2004
HCRI Draper Place Properties Trust	Massachusetts trust	September 24, 2004
HCRI Marina Place Properties Trust	Massachusetts trust	September 24, 2004
HCRI Tennessee Properties, LLC	Delaware limited liability company	November 12, 2004
HH Florida, LLC	Delaware limited liability company	November 23, 2004
HCRI New Hampshire Properties, LLC	Delaware limited liability company	May 24, 2005
HCRI Dayton Place — Denver Properties, LLC	Delaware limited liability company	May 24, 2005
HCRI Provider Properties, LLC	Delaware limited liability company	November 10, 2005
1920 Cleveland Road West, LLC	Delaware limited liability company	December 15, 2005
721 Hickory Street, LLC	Delaware limited liability company	December 15, 2005
111 Lazelle Road East, LLC	Delaware limited liability company	December 15, 2005
1425 Yorkland Road, LLC	Delaware limited liability company	December 15, 2005
222 East Beech Street — Jefferson, L.L.C.	Delaware limited liability company	December 16, 2005

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference of our reports dated February 22, 2006, with respect to the consolidated financial statements and schedules of Health Care REIT, Inc., Health Care REIT, Inc.’s management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Health Care REIT, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2005 in the following registration statements of Health Care REIT, Inc.:

• Registration Statement (Form S-8 No. 333-01239) dated February 27, 1996 pertaining to the Health Care REIT, Inc. 1995 Stock Incentive Plan;

• Registration Statement (Form S-8 No. 333-40769) dated November 21, 1997 pertaining to the Health Care REIT, Inc. Stock Plan for Non-Employee Directors;

• Registration Statement (Form S-8 No. 333-40771) dated November 21, 1997 pertaining to the Health Care REIT, Inc. 1995 Stock Incentive Plan;

• Registration Statement (Form S-8 No. 333-73916) dated November 21, 2001 pertaining to the Health Care REIT, Inc. 1995 Stock Incentive Plan;

• Registration Statement (Form S-3 No. 333-107280) dated July 23, 2003, as amended on August 1, 2003, pertaining to $937,557,819 of securities of Health Care REIT, Inc.;

• Registration Statement (Form S-3 No. 333-110877) dated December 2, 2003 pertaining to 811,335 shares of common stock of Health Care REIT, Inc. with respect to the resale of shares of common stock received in connection with the conversion of shares of the 6% Series E Cumulative Convertible and Redeemable Preferred Stock;

• Registration Statement (Form S-3 No. 333-110902) dated December 3, 2003, as amended on December 11, 2003, pertaining to the Health Care REIT, Inc. Amended and Restated Dividend Reinvestment and Stock Purchase Plan;

• Registration Statement (Form S-8 No. 333-120915) dated December 1, 2004 pertaining to the Health Care REIT, Inc. Stock Plan for Non-Employee Directors;

• Registration Statement (Form S-3 No. 333-120917) dated December 1, 2004, as amended on May 19, 2005, pertaining to $831,794,619 of securities of Health Care REIT, Inc.; and

• Registration Statement (Form S-8 No. 333-126195) dated June 28, 2005 pertaining to the Health Care REIT, Inc. 2005 Long-Term Incentive Plan.

/S/ ERNST & YOUNG LLP

Toledo, Ohio
March 7, 2006

EX-24

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacity as director, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ William C. Ballard, Jr.  

William C. Ballard, Jr., Director 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacity as director, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ Pier C. Borra  

Pier C. Borra, Director 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacity as director, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ Thomas J. DeRosa  

Thomas J. DeRosa, Director 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacity of director, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ Jeffrey H. Donahue  

Jeffrey H. Donahue, Director 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacity of director, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ Peter J. Grua  

Peter J. Grua, Director 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN her true and lawful attorney-in-fact and agent, with full power to act, her true and lawful attorney-in-fact and agent, for her and in her name, place and stead, in the capacity as director, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as she might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set her hand this 24th day of February, 2006.

/s/ Sharon M. Oster  

Sharon M. Oster, Director 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacity of director, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ R. Scott Trumbull  

R. Scott Trumbull, Director 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and the Chairman of the Board and Principal Executive Officer of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints RAYMOND W. BRAUN, his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacities as director and Chairman of the Board and Principal Executive Officer, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ George L. Chapman  

George L. Chapman, Director, 

Chairman of the Board and Principal Executive Officer 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, the President and Principal Financial Officer of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in the capacities as President and Principal Financial Officer, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ Raymond W. Braun  

Raymond W. Braun, President and 

Principal Financial Officer 

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, the Controller and Principal Accounting Officer of Health Care REIT, Inc. (the “Company”), a Delaware corporation that is about to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10-K Annual Report for the year ended December 31, 2005, hereby constitutes and appoints GEORGE L. CHAPMAN his true and lawful attorney-in-fact and agent, with full power to act, his true and lawful attorney-in-fact and agent, for his and in his name, place and stead, in the capacity as Controller and Principal Accounting Officer, to sign such Form 10-K which is about to be filed, and any and all amendments to such Form 10-K, and to file such Form 10-K and each such amendment so signed, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned hereunto set his hand this 24th day of February, 2006.

/s/ Paul D. Nungester, Jr.  

Paul D. Nungester, Jr., Controller and 

Principal Accounting Officer 

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, George L. Chapman, certify that:

1. I have reviewed this annual report on Form 10-K of Health Care REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  GEORGE L. CHAPMAN

George L. Chapman,

Chief Executive Officer

Date: March 10, 2006

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Raymond W. Braun, certify that:

1. I have reviewed this annual report on Form 10-K of Health Care REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  RAYMOND W. BRAUN

Raymond W. Braun,

Chief Financial Officer

Date: March 10, 2006

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350

I, George L. Chapman, the Chief Executive Officer of Health Care REIT, Inc. (the “Company”), certify that (i) the Annual Report on Form 10-K for the Company for the year ended December 31, 2005 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  GEORGE L. CHAPMAN

George L. Chapman

Chief Executive Officer

Dated: March 10, 2006

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350

I, Raymond W. Braun, the Chief Financial Officer of Health Care REIT, Inc. (the “Company”), certify that (i) the Annual Report on Form 10-K for the Company for the year ended December 31, 2005 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  RAYMOND W. BRAUN

Raymond W. Braun

Chief Financial Officer

Dated: March 10, 2006

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.