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<SEC-DOCUMENT>0000950129-04-003960.txt : 20040609
<SEC-HEADER>0000950129-04-003960.hdr.sgml : 20040609
<ACCEPTANCE-DATETIME>20040609161040
ACCESSION NUMBER:		0000950129-04-003960
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20040609

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LTC PROPERTIES INC
		CENTRAL INDEX KEY:			0000887905
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				710720518
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-115991
		FILM NUMBER:		04856140

	BUSINESS ADDRESS:	
		STREET 1:		22917 PACIFIC COAST HWY
		STREET 2:		SUITE 350
		CITY:			MALIBU
		STATE:			CA
		ZIP:			90265
		BUSINESS PHONE:		3104556010

	MAIL ADDRESS:	
		STREET 1:		22917 PACIFIC COAST HWY
		STREET 2:		SUITE 350
		CITY:			MALIBU
		STATE:			CA
		ZIP:			90265
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>v99608b3e424b3.htm
<DESCRIPTION>424(B)(3) TO REG. NO. 333-115991
<TEXT>
<HTML>
<HEAD>
<TITLE>LTC Properties, Inc.</TITLE>
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<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt">As filed pursuant to<BR>
Rule 424(b)(3) SEC File<BR>
No. 333-115991




<P align="center" style="font-size: 10pt"><B>LTC PROPERTIES, INC.<BR>
865,387 SHARES OF COMMON STOCK</B>


<P align="left" style="font-size: 10pt">This prospectus covers the resale of up to 865,387 shares of our Common Stock
by the Selling Stockholders (the Selling Stockholders). See &#147;Selling
Stockholders.&#148; The Selling Stockholders under certain conditions are entitled
to convert limited partnership interests into shares of our Common Stock. The
Selling Stockholders may, from time to time, offer and sell any of the shares
of Common Stock received as the result of a conversion of limited partnership
interests, at fixed prices, at market prices or at negotiated prices, and may
engage a broker, dealer or underwriter to sell the shares. For additional
information on the possible methods of sale that may be used by a Selling
Stockholder, you should refer to the section entitled &#147;Plan of Distribution&#148; on
page of this prospectus. We will not receive any proceeds from the sale of
any of the 865,387 shares when and if sold by the Selling Stockholders.


<P align="left" style="font-size: 10pt">We are the general partner under eight separate limited partnerships. Control
over those partnerships is based on the provisions of the partnership
agreements that provide us with a controlling financial interest in the
partnerships. Under the terms of the partnership agreements, we, as the
general partner, are responsible for the management of the partnerships&#146;
assets, business and affairs. Our rights and duties in management of the
partnerships include making all operating decisions, setting the capital
budgets, executing all contracts, making all employment decisions, and the
purchase and disposition of assets, among others. In addition, the general
partner assumes the risk for all operating losses, capital losses, and is
entitled to substantially all capital gains (appreciation).


<P align="left" style="font-size: 10pt">In connection with each of the partnership agreements, we, as general partner
and each limited partner also entered into Exchange Rights Agreements (the
Exchange Rights Agreements), pursuant to which the limited partners, under
certain circumstances, have the right (an Exchange Right) to require us to
issue shares of our Common Stock in exchange for units of the requesting
limited partners&#146; partnership interest in the partnership tendered for
exchange. Each partnership agreement establishes a specific value of a share
of our Common Stock which determines the number of shares of our Common Stock
that is subject, under certain circumstances, to issuance to the limited
partners. In the event a limited partner exercises an Exchange Right, we have
the option to either issue our Common Stock or pay the limited partner the
equivalent value in cash, as determined by an agreed upon formula.


<P align="left" style="font-size: 10pt"><B>Investing in our Common Stock involves risks that are described under &#147;Risk
Factors&#148; beginning on page 8 of this prospectus.</B>


<P align="left" style="font-size: 10pt"><B>Our Common Stock is traded on the New York Stock Exchange (or NYSE) under the
symbol &#147;LTC.&#148; Our executive offices are located at 22917 Pacific Coast
Highway, suite 350, Malibu, California 90265, telephone number (310)&nbsp;455-6010,
facsimile number (805)&nbsp;981-8663 and web site: www.ltcproperties.com.</B>


<P align="left" style="font-size: 10pt"><B>Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.</B>



<P align="center" style="font-size: 10pt"><B>The date of this
prospectus is June&nbsp;9, 2004</B>



<P align="center" style="font-size: 10pt">3
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<DIV align="left">
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</DIV>
<DIV align="left">
<A name="tocpage"></A>
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<P align="center" style="font-size: 10pt"><B>TABLE OF CONTENTS</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="75%">
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<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Prospectus</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Page</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#101">PROSPECTUS SUMMARY</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#102">FORWARD-LOOKING STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#103">ABOUT OUR COMPANY</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#104">RISK FACTORS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#105">USE OF PROCEEDS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#106">SELLING STOCKHOLDERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#107">DESCRIPTION OF OUR COMMON STOCK</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#108">RESTRICTIONS ON OWNERSHIP AND TRANSFER</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#109">CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#110">CERTAIN US FEDERAL INCOME TAX CONSIDERATIONS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#111">PLAN OF DISTRIBUTION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#112">LEGAL MATTERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#113">EXPERTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#114">WHERE YOU CAN FIND ADDITIONAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#115">DOCUMENTS INCORPORATED BY REFERENCE</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>

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<DIV align="left">
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</DIV>
<P align="left" style="font-size: 10pt">No dealer, salesperson or other person has been authorized to give any
information or make any representations other than those contained in or
incorporated by reference in this prospectus and any accompanying prospectus
supplement and, if given or made, such other information or representations
must not be relied upon as having been authorized by LTC Properties, Inc., or
by any of the Selling Stockholders. This prospectus and any accompanying
prospectus supplement do not constitute an offer to sell, or a solicitation of
an offer to buy, to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this prospectus and any
accompanying prospectus supplement nor any sale made hereunder shall, under any
circumstances, create an implication that the information contained herein is
correct as of any time subsequent to the date hereof.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this prospectus, unless otherwise indicated, the &#147;company,&#148; &#147;we,&#148; &#147;us&#148;
and &#147;our&#148; refer to LTC Properties, Inc. and our consolidated subsidiaries.

<DIV align="left">
<A name="101"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>PROSPECTUS SUMMARY</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is only a summary of what we believe to be the most
important aspects of this prospectus, including the documents incorporated by
reference. We urge you to read this entire prospectus, including the more
detailed consolidated financial statements, notes to the consolidated financial
statements and other information incorporated by reference from our other
filings with the SEC. Investing in our Common Stock involves risks.
Therefore, carefully consider the information provided under the heading &#147;Risk
Factors&#148; beginning on page 8. Each time a Selling Stockholder exercises an
Exchange Right and we elect to issue shares of our Common Stock, we will
provide a prospectus supplement that will contain specific information about
the terms of that exercise. The prospectus supplement may also add, update or
change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading &#147;Where You Can Find Additional Information.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should rely only on the information contained and incorporated by
reference in this prospectus. We have not authorized any other person to
provide you with different or inconsistent information from that contained in
this prospectus and the applicable prospectus supplement. If anyone provides
you with different or inconsistent information, you should not rely on it. You
should assume that the information in this prospectus and the applicable
prospectus supplement, as well as the information we previously filed with the
SEC and incorporated by reference, is accurate only as of the date on the front
cover of this prospectus and the applicable prospectus supplement. Our
business, financial condition, results of operations and prospects may have
changed since those dates.


<P align="center" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="102"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>FORWARD-LOOKING STATEMENTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus contains or incorporates by reference forward-looking
statements within the meaning of Section&nbsp;27A of the Securities Act of 1933 and
Section&nbsp;21E of the Securities Exchange Act of 1934. You can identify some of
the forward-looking statements by their use of forward-looking words, such as
&#147;believes,&#148; &#147;expects,&#148; &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;seeks,&#148; &#147;approximately,&#148;
&#147;intends,&#148; &#147;plans,&#148; &#147;estimates&#148; or &#147;anticipates,&#148; or the negative of those
words or similar words. Forward-looking statements involve inherent risks and
uncertainties regarding events, conditions and financial trends that may affect
our future plans of operation, business strategy, results of operations and
financial position. A number of important factors could cause actual results to
differ materially from those included within or contemplated by such
forward-looking statements, including, but not limited to, the status of the
economy, the status of capital markets including prevailing interest rates,
compliance with and changes to regulations and payment policies within the
healthcare industry, changes in financing terms, competition within the
healthcare and senior housing industries, and changes in federal, state and
local legislation. For a discussion of these and other factors that could cause
actual results to differ from those contemplated in the forward-looking
statements, please see the discussion under &#147;Risk Factors&#148; contained in this
prospectus supplement and in other information contained in our publicly
available filings with the Securities and Exchange Commission. We do not
undertake any responsibility to update any of these factors or to announce
publicly any revisions to forward-looking statements, whether as a result of
new information, future events or otherwise.


<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="103"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>ABOUT OUR COMPANY</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a self-administered real estate investment trust that invests
primarily in long-term care and other health care related properties through
mortgage loans, property lease transactions and other investments. As of March
31, 2004, long-term care properties, which include skilled nursing and assisted
living properties, comprised approximately 98% of our investment portfolio. We
have been operating since August&nbsp;1992.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Skilled nursing facilities provide restorative, rehabilitative and nursing
care for people not requiring the more extensive and sophisticated treatment
available at acute care hospitals. Many skilled nursing facilities provide
ancillary services that include occupational, speech, physical, respiratory and
IV therapies, as well as provide sub-acute care services which are paid either
by the patient, the patient&#146;s family, or through federal Medicare or state
Medicaid programs.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assisted living facilities serve elderly persons who require assistance
with activities of daily living, but do not require the constant supervision
skilled nursing facilities provide. Services are usually available 24-hours a
day and include personal supervision and assistance with eating, bathing,
grooming and administering medication. The facilities provide a combination of
housing, supportive services, personalized assistance and health care designed
to respond to individual needs.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2004, we had approximately $521&nbsp;million in carrying value
of net real estate investments. At that date, our portfolio included 96
assisted living properties, 84 skilled nursing properties and one charter
school in 30 states. We had approximately $383&nbsp;million (74%) invested in owned
and leased properties, approximately $75&nbsp;million (14%) invested in mortgage
loans, and investments in certificates of a real estate mortgage investment
conduit (or REMIC) with a carrying value of approximately $63&nbsp;million (12%).


<P align="left" style="font-size: 10pt"><B>Owned Properties</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2004, we owned 53 skilled nursing properties with a total of
6,095 beds, 88 assisted living properties with 4,182 units and one school
located in 23 states. The properties are leased pursuant to non-cancelable
leases generally with an initial term of 10 to 30&nbsp;years. The leases provide
for a fixed minimum base rent during the initial and renewal periods. Most of
the leases provide for annual fixed rent increases or increases based on
consumer price indices over the term of the lease. In addition, certain of our
leases provide for additional rent through revenue participation (as defined in
the lease agreement) in incremental revenues generated by the facilities over a
defined base period effective at various times during the term of the lease.
Each lease is a triple net lease which requires the lessee to pay additional
charges including all taxes, insurance, assessments, maintenance and repair
(capital and non-capital expenditures) and other costs necessary in the
operation of the facility. Many of the leases contain renewal options and one
contains a limited period option that permits the operator to purchase the
property.


<P align="left" style="font-size: 10pt"><B>Mortgage Loans</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2004, we had 38 mortgage loans secured by first mortgages on
31 skilled nursing properties with a total of 3,875 beds and eight assisted
living properties with a total of 369 units located in 19 states. These
mortgage loans had interest rates ranging from 9.5% to 12.7% and maturities
ranging from 2004 to 2018. In addition, the loans may contain guarantees,
provide for facility fees and generally have 25-year amortization schedules.
The majority of the mortgage loans provide for annual increases in the interest
rate based upon a specified increase of 10 to 25 basis points.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, the mortgage loans may not be prepaid except in the event of
the sale of the collateral property to a third party that is not affiliated
with the borrower, although partial prepayments (including the prepayment
premium) are often permitted where a mortgage loan is secured by more than one
property upon the sale of one or more, but not all, of the collateral
properties to a third party which is not an affiliate of the borrower. The
terms of the mortgage loans generally impose a premium upon prepayment of the
loans depending upon the period in which the prepayment occurs, whether such
prepayment was permitted or required, and certain other conditions such as upon
the sale of the property under a pre-existing purchase option, destruction or
condemnation, or other circumstances as approved by us. On certain loans, such
prepayment amount is based upon a percentage of the then outstanding balance of
the loan, usually declining ratably each year. For other loans, the prepayment
premium is based on a yield maintenance formula. In addition to a lien on the
mortgaged property, the loans are generally secured by certain non-real estate
assets of the properties and contain certain other security provisions in the
form of letters of credit, pledged collateral accounts, security deposits,
cross-default and cross-collateralization features and certain guarantees.


<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>REMIC Certificates</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2004, we had $63&nbsp;million net book value of REMIC
Certificates. Of this $63&nbsp;million, $56&nbsp;million represents face value
certificated interests in the principal balances of the underlying mortgage
pools which at March&nbsp;31, 2004, had a total unpaid principal balance of $201
million. Additionally, there were also $138&nbsp;million senior certificates
outstanding that have priority over the $56&nbsp;million of face value certificates
we retained.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our investment in the $56&nbsp;million of face value certificates is backed by
the difference between the $201&nbsp;million in mortgage pool principal and the $138
million of senior certificates outstanding, or $63&nbsp;million, resulting in a
collateral cushion over our net book value of $7&nbsp;million.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The remaining $7&nbsp;million of REMIC certificates are Interest Only (of I/O)
certificates that represent the present value of the expected cash flows
resulting from the mortgage pools that result from the spread in interest that
arises between what the underlying mortgage loans are paying in interest versus
the interest being paid on the principal based certificates. These cash flows
have been discounted at a rate of 35% to arrive at the estimated fair market
value of the I/O certificates.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest only certificates and certificates with an investment rating of
&#147;BB&#148; or higher are classified as available-for-sale and unrated certificates
and certificates with an investment rating of &#147;B&#148; or lower are classified as
held-to-maturity. As of March&nbsp;31, 2004, available-for-sale certificates were
recorded at their fair value of approximately $13&nbsp;million.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2004, held-to-maturity certificates had a book value of $50
million and an estimated fair value of $39&nbsp;million. As of March&nbsp;31, 2004, the
effective yield on the available-for-sale certificates and the held-to-maturity
certificates, based on expected future cash flows discounted to give effect to
potential risks associated with prepayments and unanticipated credit losses,
was 34.8% and 11.9%, respectively.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the REMIC transactions, we serve as the sub-servicer and, in
such capacity, are responsible for performing substantially all of the
servicing duties relating to the mortgage loans represented by the REMIC
certificates. We receive monthly fees equal to a fixed percentage of the then
outstanding mortgage loan balance in the REMIC, which in our opinion, represent
currently prevailing terms for similar transactions. In addition, we will act
as the special servicer to restructure any mortgage loans in the REMIC that
default.


<P align="left" style="font-size: 10pt"><B>OUR STRATEGY</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our primary objectives are to sustain and enhance stockholder equity value
and provide current income for distribution to stockholders through real estate
investments in long-term care properties and other health care related
properties managed by experienced operators. To meet these objectives, we
attempt to invest in properties or in mortgages that provide opportunity for
additional value and current returns to our stockholders and to diversify our
investment portfolio by geographic location, operator and form of investment.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For investments in skilled nursing properties, we favor low
cost per bed opportunities, whether in fee simple properties or in
mortgages. Thus, as of March&nbsp;31, 2004, the average per bed cost of
our owned skilled nursing properties was approximately $27,000 per
bed while that of our mortgages was approximately $16,000 per bed.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For assisted living investments we have attempted to diversify
our portfolio both geographically and across product levels. Thus,
we believe that although the majority of our investments are in
affordably priced units, our portfolio also includes a significant
number of upscale units in appropriate markets with certain
operators.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As skilled nursing facilities reimbursement cuts have created
cost and pricing pressures in that industry, we have tended to
emphasize fee simple investments in the assisted living sector where
we believe properties tend to be both newer and less dependent, if at
all, on any government reimbursement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive offices are located at 22917 Pacific Coast Hwy,
Suite&nbsp;350, Malibu, California 90265, and our telephone number is (310)
455-6010.


<P align="center" style="font-size: 10pt">7
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="104"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>RISK FACTORS</B>


<P align="left" style="font-size: 10pt">You should carefully consider the risks described below and in the accompanying
prospectus before making an investment decision in us. The risks and
uncertainties described below are not the only ones facing us and there may be
additional risks that we do not presently know of or that we currently consider
immaterial.


<P align="left" style="font-size: 10pt">For a discussion of certain risks that purchasers of our Common Stock should
consider, we refer you to the discussion under the caption &#147;Cautionary
Statements&#148; in Item&nbsp;1 of our Annual Report on Form 10-K for the year ended
December&nbsp;31, 2003, and other reports we file under the Securities Exchange Act
of 1934, which are incorporated by reference into this prospectus supplement,
including factors identified under the headings &#147;Business&#148; and &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations&#148;, and
in the other documents incorporated by reference into this prospectus. All of
these risks could adversely affect our business, financial condition, results
of operations and cash flows. As a result, our ability to pay dividends on, and
the market price of, our equity securities may be adversely affected if any of
such risks are realized. See &#147;Documents Incorporated by Reference&#148; on page 25
of this prospectus.


<DIV align="left">
<A name="105"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>USE OF PROCEEDS</B>


<P align="left" style="font-size: 10pt">We will not receive any proceeds from the sale of any shares of our Common
Stock by the Selling Stockholders. The Common Stock would be originally issued
to the Selling Stockholders in exchange for the Selling Stockholders&#146; limited
partner interest in a partnership and our investment in that partnership would
increase accordingly.



<P align="center" style="font-size: 10pt">8
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="106"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>SELLING STOCKHOLDERS</B>


<P align="left" style="font-size: 10pt">We are the general partner under eight separate limited partnerships. In
connection with each of the partnership agreements, we, as general partner and
each limited partner also entered into Exchange Rights Agreements (the Exchange
Rights Agreements), pursuant to which the limited partners, under certain
circumstances, have the right (an Exchange Right) to require us to issue shares
of our Common Stock in exchange for units of the requesting limited partners&#146;
partnership interest in the partnership tendered for exchange. Each
partnership agreement establishes a specific value of a share of our Common
Stock which determines the number of shares of our Common Stock that is
subject, under certain circumstances, to issuance to the limited partners. In
the event a limited partner exercises an Exchange Right, we have the option to
either issue our Common Stock or pay the limited partner the equivalent value
in cash, as determined by an agreed upon formula.


<P align="left" style="font-size: 10pt">In order to exercise an Exchange Right, the limited partner must deliver to us
a notice that is irrevocable and specifies the number of shares of Common Stock
contingently issuable. If the Exchange Notice is duly tendered, within 10&nbsp;days
we shall either deliver or cause to be delivered to the Exchange Holder, at our
option, either:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Common Stock equal to the number of units tendered; or</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash in the amount equal to (i)&nbsp;the number of Common Stock that
otherwise would be deliverable multiplied by (ii)&nbsp;the sum of (x)&nbsp;the
Market Value of a share of our Common Stock as of the date the
Exchange Notice is received by us plus (y)&nbsp;five cents ($.05).</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">The individual limited partnerships, the date of formation, the specified
values and number of shares of Common Stock subject to each Exchange Rights
Agreement, as amended, are as follows:


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Specified Per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name of Partnership</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Date of Formation</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Share Value</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Common Stock</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners I</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June 30, 1995</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">13.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">80,072</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners II</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 1, 1996</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">159,505</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners III<SUP>(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January 30, 1996</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">28,110</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners IV</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January 30, 1996</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">15,753</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners V <SUP>(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June 13, 1998</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">15.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">222,220</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners VI</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June 14, 1996</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,540</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners VII<SUP>(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June 14, 1996</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">15.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">120,305</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LTC Partners IX</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 11, 1998</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">17.00</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">201,882</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top"><HR size="1" noshade>&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">865,387</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top"><HR size="1" noshade>&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We have purchased the limited partnership interest of one original limited partner
of these limited partnerships.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">The Selling Stockholders are persons who may receive, or have received, shares
of Common Stock in exchange for limited partnership units of the partnership
upon exercise of the Exchange Rights. The limited partnership units were issued
in private transactions exempt from registration under the Securities Act of
1933.


<P align="left" style="font-size: 10pt">The following table, to our knowledge, sets forth information regarding the
beneficial ownership of our Common Stock by the Selling Stockholders as of May
24, 2004 and the number of shares being offered hereby by each Selling
Stockholder. With respect to the information presented concerning the Selling
Stockholders listed in the table below, we have not conducted any independent
inquiry or investigation to ascertain such information and have relied solely
on the information in the Partnership Agreements. None of the Selling
Stockholders has, or within the past three years has had, any position, office
of other material relationship with us or any of our affiliates.


<P align="left" style="font-size: 10pt">Beneficial ownership is determined in accordance with the rules of the SEC, and
includes voting or investment power with respect to shares, as well as any
shares as to which the Selling Stockholder has the right to acquire beneficial
ownership within sixty (60)&nbsp;days after May&nbsp;24, 2004 through the exercise of an
Exchange Right. All of the Exchange Rights are immediately exercisable, and
therefore, all shares issuable upon the exercise of the Exchange Rights are
included in the table



<P align="center" style="font-size: 10pt">9
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">below as being beneficially owned by the Selling Stockholder. The inclusion of
any shares in this table does not constitute an admission of beneficial
ownership for the Selling Stockholder.


<P align="left" style="font-size: 10pt">As we are not obligated to issue Common Stock upon exercise of Exchange Rights
and the Selling Stockholders may sell all, some or none of such shares of
Common Stock, no estimate can be made of the aggregate number of shares of
Common Stock that are to be offered hereby, or the aggregate number of shares
of Common Stock that will be owned by each Selling Stockholder upon completion
of the offering to which this prospectus relates. The number of shares in the
column &#147;Number of Shares Being Offered &#147; consists of the number of shares of
Common Stock the Selling Stockholder may receive in upon exercise of Exchange
Rights, except as noted. Unless otherwise indicated below, we believe each
Selling Stockholder has sole voting and investment power with respect to its
shares of our Common Stock.


<P align="left" style="font-size: 10pt">We will not receive any of the proceeds from the sale of our Common Stock by
the Selling Stockholders.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="75%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Shares Beneficially Owned After</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially<BR> Owned Prior to</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Offering</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Selling Stockholder</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Offering</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Being Offered</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Zev Karkomi</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Estate of Harvey J. Angell</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">168,365</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Don A. Karchmer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Kapri Associates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Louise Bussian Block Revocable
Living Trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Robert J. Block Revocable Living
Trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">John E. Bingaman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Thomas E. Stewart</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Peter Kamberos</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Maria Pappas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Estate of Harvey J. Angell (the Estate) previously submitted valid
Exchange Notices and we issued to the Estate 168,365 shares of our Common
Stock in a private placement exempt from registration under the Securities
Act of 1933. These shares are &#147;restricted securities&#148; as defined in Rule
144 of the Securities Act of 1933. Upon the effectiveness of this
registration statement, we intend to remove the restrictive legend from
these shares and such shares will be eligible for sale under the
registration statement. We are not aware of any agreements, arrangements
or undertakings with respect to the sale of any of these shares of our
Common Stock.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt">10
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
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</DIV>

<P align="center" style="font-size: 10pt"><B>DESCRIPTION OF OUR COMMON STOCK</B>



<P align="left" style="font-size: 10pt">GENERAL



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following description of our Common Stock sets forth certain general
terms and provisions of the Common Stock to which any prospectus supplement may
relate. The statements below describing our Common Stock are in all respects
subject to and qualified in their entirety by reference to the applicable
provisions of our Charter and bylaws.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our Common Stock will be entitled to receive dividends when, as
and if authorized by our Board of Directors and declared by us, out of assets
legally available therefore. Payment and declaration of dividends on the
Common Stock and purchases of shares thereof by us will be subject to certain
restrictions if we fail to pay dividends on our Preferred Stock. Upon our
liquidation, dissolution or winding up, holders of Common Stock will be
entitled to share equally and ratably in any assets available for distribution
to them, after payment or provision for payment of our debts and other
liabilities and the preferential amounts owing with respect to any of our
outstanding Preferred Stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Common Stock will possess voting rights for the election of directors
and in respect of other corporate matters, with each share entitling the holder
thereof to one vote. Holders of Common Stock will not have cumulative voting
rights in the election of directors, which means that holders of more than 50%
of all of the shares of our Common Stock voting for the election of directors
will be able to elect all of the directors if they choose to do so and,
accordingly, the holders of the remaining shares will be unable to elect any
directors. Holders of shares of Common Stock will not have preemptive rights,
which mean they have no right to acquire any additional shares of Common Stock
that may be issued by us at a subsequent date. Our Common Stock will, when
issued, be fully paid and nonassessable and will not be subject to preemptive
or similar rights.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Maryland law and our Charter, a distribution (whether by dividend,
redemption or other acquisition of shares) to holders of shares of our Common
Stock may be made only if, after giving effect to the distribution, we are able
to pay our indebtedness as it becomes due in the usual course of business and
our total assets are greater than our total liabilities plus the amount
necessary to satisfy the preferential rights upon dissolution of stockholders
whose preferential rights on dissolution are superior to the holders of our
Common Stock and we can pay our debts as they become due. We have complied
with these requirements in all of our prior distributions to holders of our
Common Stock. For a description of other provisions of our Charter and bylaws
that could have the effect of delaying, deterring or preventing a change in our
control, please see &#147;Certain Provisions of Maryland Law and Our Charter and
Bylaws&#148; below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rights, preferences and privileges of holders of our Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of our Preferred Stock which are outstanding or which we
may designate and issue in the future.

<DIV align="left">
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</DIV>

<P align="center" style="font-size: 10pt"><B>RESTRICTIONS ON OWNERSHIP AND TRANSFER</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to other qualifications, for us to qualify as a REIT, (1)&nbsp;not
more than 50% in value of our outstanding capital stock may be owned, actually
or constructively, by five or fewer individuals during the last half of our
taxable year, and (2)&nbsp;such capital stock must be beneficially owned by 100 or
more persons during at least 335&nbsp;days of a taxable year of 12&nbsp;months or during
a proportionate part of a shorter taxable year.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To ensure that we continue to meet the requirements for qualification as a
REIT, our Charter, subject to some exceptions, provides that no holder may own,
or be deemed to own by virtue of the attribution provisions of the Code, shares
of any class or series of our capital stock in excess of 9.8% (ownership limit)
of the number of then outstanding shares of such class or series of our capital
stock. Our Board of Directors may waive the ownership limit with respect to a
stockholder if evidence satisfactory to the Board of Directors and our tax
counsel is presented that the changes in ownership will not then or in the
future jeopardize our status as a REIT. Any transfer of capital stock or any
security convertible into capital stock that would result in actual or
constructive ownership of capital stock by a stockholder in excess of the
ownership limit or that would result in our failure to meet the requirements
for qualification as a REIT, including any transfer that results in the capital
stock being owned by fewer than 100 persons or results in our company being
&#147;closely held&#148; within the meaning of section 856(h) of the Code, not
withstanding any provisions of our Charter to the contrary, will be null and
void, and the intended transferee will acquire no rights to the capital stock.
The foregoing restrictions on transferability and ownership will not apply if
the Board of Directors determines that it is no longer in our best interest to
attempt to qualify, or to continue to qualify, as a REIT.


<P align="center" style="font-size: 10pt">11
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any shares of our capital stock held by a stockholder in excess of the
applicable ownership limit become &#147;Excess Shares.&#148; Upon shares of any class or
series of capital stock becoming Excess Shares, such shares will be deemed
automatically to have been converted into a class separate and distinct from
their original class and from any other class of Excess Shares. Upon any
outstanding Excess Shares ceasing to be Excess Shares, such shares will be
automatically reconverted back into shares of their original class or series of
capital stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holder of Excess Shares will not be entitled to vote the Excess Shares
nor will such Excess Shares be considered issued and outstanding for purposes
of any stockholder vote or the determination of a quorum for such vote. The
Board of Directors, in its sole discretion, may choose to accumulate all
distributions and dividends payable upon the Excess Shares of any particular
holder in a non-interest bearing escrow account payable to the holder of the
Excess Shares upon such Excess Shares ceasing to be Excess Shares.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we will have the right to redeem all or any portion of the
Excess Shares from the holder at the redemption price, which will be the
average market price (as determined in the manner set forth in the Charter) of
the capital stock for the prior 30&nbsp;days from the date we give notice of our
intent to redeem such Excess Shares, or as determined by the Board of Directors
in good faith. The redemption price will only be payable upon the liquidation
of our company and will not exceed the sum of the per share distributions
designated as liquidating distributions declared subsequent to the redemption
date with respect to unredeemed shares of record of the class from which such
Excess Shares were converted. We will rescind the redemption of the Excess
Shares in the event that within 30&nbsp;days of the redemption date, due to a sale
of shares by the holder, such holder would not be the holder of Excess Shares,
unless such rescission would jeopardize our tax status as a REIT or would be
unlawful in any regard.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each stockholder will upon demand be required to disclose to us in writing
any information with respect to the actual and constructive ownership of shares
of our capital stock as our Board of Directors deems necessary to comply with
the provisions of the Code applicable to REITs, to comply with the requirements
of any taxing authority or governmental agency or to determine any such
compliance.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ownership limit may have the effect of precluding the acquisition of
control of our company unless the Board of Directors determines that
maintenance of REIT status is no longer in our best interests.

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</DIV>

<P align="center" style="font-size: 10pt"><B>CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following description of certain provisions of Maryland law and of our
Charter and bylaws is only a summary. For a complete description, we refer you
to Maryland law, our Charter and our bylaws. We have incorporated by reference
our Charter and bylaws as exhibits to the registration statement of which this
prospectus is a part.


<P align="left" style="font-size: 10pt">BOARD OF DIRECTORS &#150; NUMBER AND VACANCIES



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws provide that the number of our directors shall be six unless a
majority of the members of our Board of Directors establishes some other number
not less than three and not more than nine. Our Board of Directors is
currently comprised of five directors. Our bylaws also provide, that
notwithstanding the preceding sentence, upon the occurrence of a default in the
payment of dividends on any class or series of our Preferred Stock, or any
other event, which would entitle the holders of any class or series of our
Preferred Stock to elect additional directors to our Board of Directors, the
number of our directors will thereupon be increased by the number of additional
directors to be elected by the holders of such class or series of our Preferred
Stock (even if the resulting number of directors is more than nine), and such
increase in the number of directors shall remain in effect for so long as the
holders of such class or series of our Preferred Stock are entitled to elect
such additional directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws provide that a vacancy on our Board of Directors which arises
through the death, resignation or removal of a director or as a result of an
increase by our Board of Directors in the number of directors may be filled by
the vote of a majority of the remaining directors even if such majority is less
than a quorum, and a director so elected by our Board of Directors to fill a
vacancy shall serve until the next annual meeting of our stockholders and until
his successor shall be duly elected and qualified. Our stockholders may elect
a successor to fill a vacancy on our Board of Directors which results from the
removal of a director.


<P align="center" style="font-size: 10pt">12
</DIV>

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<P align="left" style="font-size: 10pt">REMOVAL OF DIRECTORS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Maryland law, our stockholders may remove any director, with or
without cause, by the affirmative vote of a majority of all the votes entitled
to be cast generally for the election of our directors except in certain
circumstances specified in the statute which do not apply.


<P align="left" style="font-size: 10pt">BUSINESS COMBINATIONS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Maryland law, &#147;business combinations&#148; between a Maryland corporation
and an interested stockholder or an affiliate of an interested stockholder are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, share exchange, or, in circumstances specified
in the statute, an asset transfer or issuance or reclassification of equity
securities. An interested stockholder is defined as:


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any person who beneficially owns ten percent or more of the
voting power of the corporation&#146;s shares; or</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an affiliate or associate of the corporation who, at any time
within the two-year period prior to the date in question, was the
beneficial owner of ten percent or more of the voting power of the
then outstanding voting stock of the corporation.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A person is not an interested stockholder under the statute if the board
of directors approved in advance the transaction by which such person otherwise
would have become an interested stockholder. In approving such a transaction,
however, the board of directors may provide that its approval is subject to
compliance, at or after the time of approval, with any terms and conditions
determined by the board.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After the five-year prohibition, any business combination between the
Maryland corporation and an interested stockholder generally must be
recommended by the board of directors of the corporation and approved by the
affirmative vote of at least:


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>80% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation, voting together as a
single voting group; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>two-thirds of the votes entitled to be cast by holders of
voting stock of the corporation other than voting stock held by the
interested stockholder with whom or with whose affiliate the business
combination is to be effected or held by an affiliate or associate of
the interested stockholder.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These super-majority vote requirements do not apply if the corporation&#146;s
common stockholders receive a minimum price, as defined under Maryland law, for
their shares in the form of cash or other consideration in the same form as
previously paid by the interested stockholder for its shares.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The statute permits various exemptions from its provisions, including
business combinations that are exempted by the board of directors before the
time that the interested stockholder becomes an interested stockholder.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business combination statute may discourage others from trying to
acquire control of us and increase the difficulty of consummating any offer.


<P align="left" style="font-size: 10pt">CONTROL SHARE ACQUISITIONS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law provides that control shares of a Maryland corporation
acquired in a control share acquisition have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter. Shares owned by the acquiror, by officers or by directors who are
employees of the corporation are excluded from shares entitled to vote on the
matter. Control shares are voting shares of stock which, if aggregated with
all other shares of stock owned by the acquiror or in respect of which the
acquiror is able to exercise or direct the exercise of voting power (except
solely by virtue of a revocable proxy), would entitle the acquiror to exercise
voting power in electing directors within one of the following ranges of voting
power:


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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>one-tenth or more but less than one-third,</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>one-third or more but less than a majority, or</TD>
</TR>

</TABLE>

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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a majority or more of all voting power.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control shares do not include shares the acquiring person is then entitled
to vote as a result of having previously obtained stockholder approval. A
control share acquisition means the acquisition of control shares, subject to
certain exceptions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A person who has made or proposes to make a control share acquisition may
compel the board of directors of the corporation to call a special meeting of
stockholders to be held within 50&nbsp;days of demand to consider the voting rights
of the shares. The right to compel the calling of a special meeting is subject
to the satisfaction of certain conditions, including an undertaking to pay the
expenses of the meeting. If no request for a meeting is made, the corporation
may itself present the question at any stockholders meeting.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then the corporation may redeem for fair value any or all of the
control shares, except those for which voting rights have previously been
approved. The right of the corporation to redeem control shares is subject to
certain conditions and limitations. Fair value is determined, without regard
to the absence of voting rights for the control shares, as of the date of the
last control share acquisition by the acquiror or of any meeting of
stockholders at which the voting rights of the shares are considered and not
approved. If voting rights for control shares are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The
fair value of the shares as determined for purposes of appraisal rights may not
be less than the highest price per share paid by the acquiror in the control
share acquisition.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The control share acquisition statute does not apply (a)&nbsp;to shares
acquired in a merger, consolidation or share exchange if the corporation is a
party to the transaction, or (b)&nbsp;to acquisitions approved or exempted by the
charter or bylaws of the corporation.


<P align="left" style="font-size: 10pt">AMENDMENT TO THE CHARTER



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of any class or series of our capital stock at
the time outstanding, any amendment to our Charter must be approved by our
stockholders by the affirmative vote of not less than two thirds of all of the
votes entitled to be cast on the matter.


<P align="left" style="font-size: 10pt">DISSOLUTION OF LTC PROPERTIES, INC.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The dissolution of our company must be approved by our stockholders by the
affirmative vote of not less than two thirds of all of the votes entitled to be
cast on the matter.


<P align="left" style="font-size: 10pt">ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws provide that with respect to an annual meeting of stockholders,
nominations of persons for election to the Board of Directors and the proposal
of business to be considered by stockholders may be made only (i)&nbsp;by, or at the
direction of, a majority of the Board of Directors or a duly authorized
committee thereof or (ii)&nbsp;by any holder of record (both as of the time notice
of such nomination or matter is given by the stockholder as set forth in our
bylaws and as of the record date for the annual meeting in question) of any
shares of our capital stock entitled to vote at such annual meeting who
complies with the notice procedures set forth in our bylaws. Any stockholder,
who seeks to make such a nomination or to bring any matter before an annual
meeting, or his representative, must be present in person at the annual
meeting.


<P align="left" style="font-size: 10pt">ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE CHARTER AND BYLAWS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business combination provisions and the control share acquisition
provisions of Maryland law, the advance notice provisions of our bylaws and
certain other provisions of Maryland law and our Charter and bylaws could
delay, defer or prevent a transaction or a change in control of our company
that might involve a premium price for holders of our Common Stock or otherwise
be in their best interest. See &#147;Risk Factors &#150; Certain Provisions of Maryland
Law and our Charter and Bylaws as well as Stockholder Rights Plan Could Hinder,
Delay Or Prevent Changes in Control.&#148;


<P align="center" style="font-size: 10pt">14
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<P align="center" style="font-size: 10pt"><B>CERTAIN US FEDERAL INCOME TAX CONSIDERATIONS</B>



<P align="left" style="font-size: 10pt">GENERAL



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the federal income tax considerations to us
which are anticipated to be material to purchasers of the securities to which
any prospectus supplement may relate. 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 law, is for general
information only and is not tax advice. Your tax treatment will vary depending
upon the terms of the specific securities that you acquire, as well as your
particular situation. The material federal income tax considerations relevant
to your ownership of the securities to which any prospectus supplement may
relate will be provided in the applicable prospectus supplement relating to the
particular securities being offered.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information in this section is based on:


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Internal Revenue Code (or the Code);</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>current, temporary and proposed Treasury regulations promulgated under the Code;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the legislative history of the Code;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>current administrative interpretations and practices of the Internal Revenue Service; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>court decisions,</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">in each case, as of the date of this prospectus. Future legislation, Treasury
regulations, administrative interpretations and practices and/or court
decisions may adversely affect the tax considerations contained in this
discussion or the desirability of an investment in a REIT relative to other
investments. Any change could apply retroactively to transactions preceding
the date of the change. Except as described below, we have not requested, and
do not plan to request, any rulings from the Internal Revenue Service
concerning our tax treatment, and the statements in this prospectus are not
binding on the Internal Revenue Service or any court. Thus, we can provide no
assurance that the tax considerations contained in this discussion will not be
challenged by the Internal Revenue Service or if challenged, will not be
sustained by a court.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You are advised to consult any applicable prospectus supplement, as well
as your own tax advisor, regarding the tax consequences to you of the
acquisition, ownership and sale of the securities to which any applicable
prospectus supplement may relate, including the federal, state, local, foreign
and other tax consequences.


<P align="left" style="font-size: 10pt">CERTAIN INCOME TAX CONSIDERATIONS RELATING TO OUR REIT ELECTION



<P align="left" style="font-size: 10pt">Taxation of a REIT



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have elected to be taxed as a REIT under Sections&nbsp;856 through 860 of
the Code. We believe that we have been organized and have operated in such a
manner as to qualify for taxation as a REIT under the Code commencing with our
taxable year ending December&nbsp;31, 1992. We intend to continue to operate in
such a manner, but there is no assurance that we have operated or will continue
to operate in a manner so as to qualify or remain qualified.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of Reed Smith LLP, our legal tax counsel, we have been
organized in conformity with the requirements for qualification as a REIT, and
our method of operation will enable us to meet the requirements for continued
qualification and taxation as a REIT under the Code. This opinion is based on
various factual assumptions relating to our organization and operation, and is
conditioned upon certain representations made by us as to factual matters. In
addition, this opinion is based upon our factual representations concerning our
business and properties as set forth in this prospectus supplement and will
assume that the actions described in this prospectus supplement have been
completed as described. Moreover, our qualification and taxation as a REIT
depends upon our ability to meet, through actual annual operating results,
distribution levels, diversity of share ownership and the various qualification
tests imposed under the Code, the results of which have not been and will not
be reviewed by our tax counsel. Accordingly, no assurance can be given that our
actual results of operation for any particular taxable year will satisfy such
requirements. Further, the anticipated income tax treatment described in our
Annual Report on Form 10-K for the year ended December&nbsp;31, 2003 and this
prospectus may be changed, perhaps retroactively, by legislative or
administrative action at any time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we continue to qualify for taxation as a REIT, we generally will not be
subject to federal corporate income taxes on our net income that is currently
distributed to our stockholders. This treatment substantially eliminates the
&#147;double


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<P align="left" style="font-size: 10pt">taxation&#148; (once at the corporate level when earned and once at stockholder
level when distributed) that generally results from investment in a non-REIT
corporation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, we will be subject to federal income tax as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First, we will be taxed at regular corporate rates on any undistributed
taxable income, including undistributed net capital gains.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second, under certain circumstances, we may be subject to the alternative
minimum tax, if our dividend distributions are less than our alternative
minimum taxable income.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third, if we have (i)&nbsp;net income from the sale or other disposition of
foreclosure property which is held primarily for sale to customers in the
ordinary course of business or (ii)&nbsp;other non-qualifying income from
foreclosure property, we may elect to be subject to tax at the highest
corporate rate on such income, if necessary to maintain our REIT status.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth, if we have net income from prohibited transactions (which are, in
general, certain sales or other dispositions of property (other than
foreclosure property) held primarily for sale to customers in the ordinary
course of business), such income will be subject to a 100% tax.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fifth, if we fail to satisfy the 75% gross income test or the 95% gross
income test (as discussed below), but nonetheless maintain our qualification as
a REIT because certain other requirements have been met, we will be subject to
a 100% tax on an amount equal to (a)&nbsp;the gross income attributable to the
greater of the amount by which we fail the 75% or 95% test multiplied by (b)&nbsp;a
fraction intended to reflect our profitability.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sixth, if we fail to distribute during each calendar year at least the sum
of (i)&nbsp;85% of our ordinary income for such year, (ii)&nbsp;95% of our REIT capital
gain net income for such year, and (iii)&nbsp;any undistributed taxable income from
prior periods, we will be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seventh, if we acquire an asset which meets the definition of a built-in
gain asset from a corporation which is or has been a C corporation (i.e.,
generally a corporation subject to full corporate-level tax) in certain
transactions in which the basis of the built-in gain asset in our hands is
determined by reference to the basis of the asset in the hands of the C
corporation, and if we subsequently recognize gain on the disposition of such
asset during the ten-year period, called the recognition period, beginning on
the date on which we acquired the asset, then, to the extent of the built-in
gain (i.e., the excess of (a)&nbsp;the fair market value of such asset over (b)&nbsp;our
adjusted basis in such asset, both determined as of the beginning of the
recognition period), such gain will be subject to tax at the highest regular
corporate tax rate, pursuant to IRS regulations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eighth, if we have taxable REIT subsidiaries, 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 reapportionment under certain federal income tax principles in
order to more clearly reflect income for the taxable REIT subsidiary.

<P align="left" style="font-size: 10pt">Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>which is managed by one or more trustees or directors;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the beneficial ownership of which is evidenced by transferable shares,
or by transferable certificates of beneficial interest;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>which would be taxable, but for Sections&nbsp;856 through 860 of the Code,
as a domestic corporation;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>which is neither a financial institution; nor, an insurance company
subject to certain provisions of the Code;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the beneficial ownership of which is held by 100 or more persons;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>during the last half of each taxable year not more than 50% in
value of the outstanding stock of which is owned, actually or
constructively, by five or fewer individuals (including specified
entities); and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>which meets certain other tests, described below, regarding the
amount of its distributions and the nature of its income and assets.</TD>
</TR>

</TABLE>

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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code provides that conditions (1)&nbsp;to (4), inclusive, must be met
during the entire taxable year and that condition (5)&nbsp;must be met during at
least 335&nbsp;days of a taxable year of 12&nbsp;months, or during a proportionate part
of a taxable year of less than 12&nbsp;months. For purposes of conditions (5)&nbsp;and
(6), pension funds and certain other tax-exempt entities are treated as
individuals, subject to a &#147;look-through&#148; exception in the case of condition
(6). Pursuant to applicable Treasury Regulations, in order to be able to elect
to be taxed as a REIT, we must maintain certain records and request certain
information from our stockholders designed to disclose the actual ownership of
our stock. Based on publicly available information, we believe we have
satisfied the share ownership requirements set forth in (5)&nbsp;and (6)&nbsp;above. In
addition, Sections&nbsp;9.2 and 9.3 of our Charter provides for restrictions
regarding transfer and ownership of shares. These restrictions are intended
to assist us in continuing to satisfy the share ownership requirements
described in (5)&nbsp;and (6)&nbsp;above. These restrictions, however, may not ensure
that we will, in all cases, be able to satisfy the share ownership requirements
described in (5)&nbsp;and (6)&nbsp;above.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 was due to
reasonable cause and not willful neglect, no penalty would be imposed.

<P align="left" style="font-size: 10pt">Income Tests. There presently are two gross income requirements that we must
satisfy to qualify as a REIT:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>First, at least 75% of our gross income (excluding gross income
from &#147;prohibited transactions,&#148; as defined below) for each taxable
year must be derived directly or indirectly from investments relating
to real property or mortgages on real property, including rents from
real property, or from certain types of temporary investment income.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Second, at least 95% of our gross income for each taxable year
must be directly or indirectly derived from income that qualifies
under the 75% test or from dividends (including dividends from
taxable REIT subsidiaries), interest and gain from the sale or other
disposition of stock or securities and payments to us under an
interest rate swap, cap agreement, option, futures contract, forward
rate agreement or any similar financial instrument entered into by us
to hedge indebtedness incurred or to be incurred.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cancellation of indebtedness income generated by us is not taken into
account in applying the 75% and 95% income tests discussed above. A
&#147;prohibited transaction&#148; is a sale or other disposition of property (other than
foreclosure property) held for sale to customers in the ordinary course of
business. Any gain realized from a prohibited transaction is subject to a 100%
penalty tax.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rents received by us will qualify as &#147;rents from real property&#148; for
purposes of satisfying the gross income tests for a REIT only if several
conditions are met:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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
the personal property will not qualify as &#147;rents from real property.&#148;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 &#147;independent contractor&#148; from whom we
derive no income, except that we may directly provide services that
are &#147;usually or customarily rendered&#148; 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 &#147;rendered to the
occupant for his convenience.&#148;</TD>
</TR>

</TABLE>

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</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For taxable years beginning after August&nbsp;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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term &#147;interest&#148; 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 &#147;interest&#148; solely by reason of being based on a fixed percentage of
receipts or sales.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the year if we are
eligible for relief. These relief provisions will be generally available if:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our failure to meet the tests was due to reasonable cause and not due to willful neglect,</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We attach a schedule of the sources of our income to our return; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any incorrect information on the schedule was not due to fraud with intent to evade tax.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;the gross
income attributable to the greater of the amount by which we failed the 75% or
95% test, multiplied by (b)&nbsp;a fraction intended to reflect our profitability.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asset Tests. At 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 operations), 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% or either the vote or value of the outstanding
securities of any issuer other than a qualified REIT subsidiary, another REIT
or a taxable REIT subsidiary (the 10% vote and value test&#148;). Further, no more
than 20% of our total assets may be represented by securities of one or more
taxable REIT subsidiaries 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, another REIT or a taxable REIT subsidiary. Each of
the 10% vote and value test and the 20% and 5% asset tests must be satisfied at
the end of any 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in Taxable REIT Subsidiaries. For taxable years beginning
after December&nbsp;1, 2000, REITs may own more than 10% or the voting power and
value of securities in taxable REIT subsidiaries. At this time, we do not have
any taxable REIT subsidiaries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ownership of a Partnership Interest or Stock in a Corporation. We own
interests in various partnerships. In the case of a REIT that is a partner in
a partnership, Treasury regulations provide that for purposes of the REIT
income and asset tests the REIT will be deemed to own its proportionate share
of the assets of the partnership, and will be deemed to be entitled to the
income of the partnership attributable to such share. The ownership of an
interest in a partnership by a REIT may involve special tax risks, including
the challenge by the Internal Revenue Service of the allocations of income and
expense items of the partnership, which would affect the computation of taxable
income of the REIT, and the status of the partnership as a partnership (as
opposed to an association taxable as a corporation) for federal income tax
purposes.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also own interests in a number of subsidiaries which are intended to be
treated as qualified real estate investment trust subsidiaries. The Code
provides that such subsidiaries will be ignored for federal income tax purposes
and all assets, liabilities and items of income, deduction and credit of such
subsidiaries will be treated as assets, liabilities and such items of our
company. If any partnership or qualified real estate investment trust
subsidiary in which we own an interest were treated as a regular corporation
(and not as a partnership or qualified real estate investment trust subsidiary)
for federal income tax purposes, we would likely fail to satisfy the REIT asset
test prohibiting a REIT from owning greater than 10% of the voting power of the
stock or value of securities of any issuer, as described above, and would
therefore fail to qualify as a REIT. We


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<P align="left" style="font-size: 10pt">believe that each of the partnerships and subsidiaries in which we own an
interest will be treated for tax purposes as a partnership or qualified real
estate investment trust subsidiary, respectively, although no assurance can be
given that the Internal Revenue Service will not successfully challenge the
status of any such entity.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real Estate Mortgage Investment Conduits (or REMIC). A regular or
residual interest in a REMIC will be treated as a real estate asset for
purposes of the REIT asset tests, and income derived with respect to such
interest will be treated as interest on an obligation secured by a mortgage on
real property, assuming that at least 95% of the assets of the REMIC are real
estate assets. If less than 95% of the assets of the REMIC are real estate
assets, only a proportionate share of the assets of and income derived from the
REMIC will be treated as qualifying under the REIT asset and income tests. All
of our REMIC Certificates are secured by real estate assets, therefore we
believe that our REMIC interests fully qualify for purposes of the REIT income
and asset tests.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual Distribution Requirements. In order to qualify as a REIT, we are
required to distribute dividends (other than capital gain dividends) to our
stockholders annually in an amount at least equal to:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the sum of:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(A)&nbsp;90% of our &#147;real estate investment trust taxable income&#148;
(computed without regard to the dividends paid deduction and our net
capital gain); and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(B)&nbsp;90% of the net income, if any (after tax), from foreclosure
property; minus</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the excess of certain items of non-cash income over 5% of our real
estate investment trust taxable income.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We must pay these annual distributions in the taxable year to which they
relate or in the following year if (1)&nbsp;we pay during January to stockholders of
record in either October, November, or December of the prior year or (2)&nbsp;if we
elect, declare the dividend before the due date of the tax return (including
extensions) and pay on or before the first regular dividend payment date after
such declaration.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts distributed must not be preferential; that is, every stockholder
of the class of stock with respect 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that we do not distribute all of our net long-term capital
gain or distribute at least 90% but less than 100%, of our &#147;real estate
investment trust taxable income,&#148; as adjusted, it will be subject to tax on
such amounts at regular corporate tax rates. Furthermore, if we should fail to
distribute during each calendar year (or, in the case of distributions with
declaration and record dates in the last three months of the calendar year, by
the end of the following January) at least the sum of:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>85% of our real estate investment trust ordinary income for such year;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>95% of our real estate investment trust capital gain net income for
such year; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any undistributed taxable income from prior periods;</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">we would be subject to a 4% excise tax on the excess of such required
distributions over the amounts actually distributed. Any real estate
investment trust taxable income and net capital gain on which this excise tax
is imposed for any year is treated as an amount distributed during that year
for purposes of calculating such tax.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to make timely distributions sufficient to satisfy these annual
distribution requirements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure to Qualify. If we fail to qualify for taxation as a REIT in any
taxable year, and certain relief provisions do not apply, we will be subject to
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 by us, nor will any
distributions be required to be made. Unless entitled to relief under specific
statutory provisions, we will also 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 the statutory relief. Failure to qualify for even one year could
substantially reduce distributions to stockholders and could result in our
incurring substantial indebtedness (to the extent borrowings are feasible) or
liquidating substantial investments in order to pay the resulting taxes.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State and local taxation. We may be subject to state or local taxation in
various state or local jurisdictions, including those in which we transact
business or reside. The state and local tax treatment of our Company may not
conform to the federal income tax consequences discussed above.


<P align="left" style="font-size: 10pt">TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summary applies to you only if you are a &#147;US stockholder.&#148;
A US stockholder is a stockholder of our shares of stock who, for United State
federal income tax purposes, is:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a citizen or resident alien of the United States;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a corporation or partnership or other entity classified as a
corporation or partnership for these purposes, created or organized
in or under laws of the United States or of any state or in the
District of Columbia, unless, in the case of a partnership, Treasury
Regulations provide otherwise;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an estate the income of which is subject to United States
federal income taxation regardless of its source; or</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trust whose administration is subject to the primary
supervision of a United States court and which has one or more United
States persons, within the meaning of the Code who have the authority
to control all substantial decisions of the trust.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As long as we qualify as a REIT, distributions made to our taxable US
stockholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by such US
stockholders as ordinary income and will not be eligible for the dividends
received deduction for corporations. 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 or are
designated as unrecaptured &#167;1250 gain distributions, which are taxable at a 25%
rate) without regard to the period for which the stockholder has held its
stock. However, corporate stockholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;28, 2003, President Bush signed into law the Jobs and Growth Tax
Relief Reconciliation Act of 2003. The Jobs and Growth Tax Relief
Reconciliation Act of 2003 generally will reduce the maximum tax rate
applicable to you on capital gains recognized on the sale or other disposition
of shares of our stock from 20% to 15%.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Jobs and Growth Tax Relief Reconciliation Act of 2003 also generally
will reduce the maximum marginal rate of tax payable by individuals on
dividends received from corporations that are subject to a corporate level of
tax. Except in limited circumstances, this reduced tax rate will not apply to
dividends paid to you by us on shares of our stock, 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 shares of our stock held by you that are attributable to
(1)&nbsp;dividends received by us from non-REIT corporations or other taxable REIT
subsidiaries, (2)&nbsp;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) and (3)&nbsp;distributions by us that we designate as long-term capital gains
dividends (except for some distributions taxable to you at a maximum rate of
25%).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The dividend and capital gains tax rate reductions provided in the Jobs
and Growth Tax Relief Reconciliation Act of 2003 generally are effective for
taxable years ending on or after May&nbsp;6, 2003 through December&nbsp;31, 2008.
Without future legislative changes, the maximum long-term capital gains and
dividend rates discussed above will increase in 2009.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions in excess of our current and accumulated earnings and
profits will not be currently taxable to you to the extent that they do not
exceed the adjusted basis of your stock, but rather will reduce the adjusted
basis of such stock. To the extent that distributions in excess of current and
accumulated earnings and profits exceed the adjusted basis of your stock, such
distributions will be included in income as long-term capital gain (or
short-term capital gain if the stock has been held for one year or less)
assuming you hold the stock as a capital asset. In addition, any distribution
declared in October, November or December of any year and payable to you as a
stockholder of record on a specified date in any such month, will be treated as
both paid by us and received by you on December&nbsp;31 of the applicable year,
provided that we actually pay the distribution during January of the following
calendar year. Stockholders may not include in their individual income tax
returns any of our net operating losses or capital losses.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
these 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;General&#148; and &#147;Annual
Distribution Requirements&#148; 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 &#147;deficiency dividend&#148; 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
&#147;complete termination&#148; of your interest in all classes of our equity
securities, is a &#147;substantially disproportionate redemption&#148; or is &#147;not
essentially equivalent to a dividend&#148; 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 or Preferred Stock). You also must take
into account any equity securities that are considered to be constructively
owned by you.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;not essentially equivalent to a dividend&#148; and, thus, would result
in gain or loss to you. However, whether a distribution is &#147;not essentially
equivalent to a dividend&#148; 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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%
(prior to the effective date of the Jobs and Growth Tax Relief Reconciliation
Act of 2003, described below, the maximum long-term capital gain rate was 20%).
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%.


<P align="left" style="font-size: 10pt">Backup withholding



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will report to our US stockholders and the IRS the amount of
distributions paid during each calendar year, and the amount of tax withheld,
if any. Under the backup withholding rules, a stockholder may be subject to
backup withholding with respect to distributions paid unless such holder (a)&nbsp;is
a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, or (b)&nbsp;provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with applicable requirements of the backup withholding
rules. The amount of such withholding will be equal to the product of the
fourth lowest rate applicable to single filers and the amount of


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<P align="left" style="font-size: 10pt">the distribution. This rate is currently 28% for tax years beginning
after 2002. Any amount paid to the IRS as backup withholding will be
creditable against the stockholder&#146;s income tax liability. In addition, we may
be required to withhold a portion of capital gain distributions to any
stockholders who fail to certify their non-foreign status to us. See
"&#151;Taxation of Foreign Stockholders.&#148; A stockholder that does not provide us
with his correct taxpayer identification number may also be subject to
penalties imposed by the IRS.


<P align="left" style="font-size: 10pt">TAXATION OF TAX-EXEMPT STOCKHOLDERS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, a stockholder that is a tax-exempt entity not subject to tax
on its investment income will not be subject to tax on our distributions. In
Revenue Ruling 66-106, 1966-1 C.B. 151, the IRS ruled that amounts distributed
as dividends by a REIT do not constitute unrelated business taxable income as
defined in the Code when received by a qualified plan. Based on that ruling,
regardless of whether we incur indebtedness in connection with the acquisition
of properties, our distributions paid to a stockholder that is a tax-exempt
entity will not be treated as unrelated business taxable income, provided that
(i)&nbsp;the tax-exempt entity has not financed the acquisition of its stock with
acquisition indebtedness within the meaning of the Code and the stock otherwise
is not used in an unrelated trade or business of the tax-exempt entity and (ii)
we are not a pension-held REIT. This ruling applies to a stockholder that is
an organization that qualifies under Code Section&nbsp;401(a), an IRA or any other
tax-exempt organization that would compute unrelated business taxable income,
if any, in accordance with Code Section&nbsp;512(a)(1). However, if we are a
pension-held REIT and a qualified plan owns more than 10% of the value of all
of our stock, such stockholder will be required to recognize as unrelated
business taxable income that percentage of the dividends that it receives from
us as is equal to the percentage of our gross income that would be unrelated
business taxable income to us if we were a tax-exempt entity required to
recognize unrelated business taxable income. A REIT is a pension-held REIT if
at least one qualified trust holds more than 25% of the value of all of our
stock or one or more qualified trusts, each of whom own more than 10% of the
value of all of our stock, hold more than 50% of the value of all of our stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For social clubs, voluntary employee benefit associations, supplemental
unemployment benefit trusts and qualified group legal services plans exempt
from federal income taxation under Code Sections&nbsp;501(c)(7), (c)(9), (c)(17) and
(c)(20), respectively, income from an investment in us will constitute
unrelated business taxable income unless the organization is able to deduct
amounts set aside or placed in reserve for certain purposes so as to offset the
unrelated business taxable income generated by its investment in us. Such
prospective stockholders should consult their own tax advisors concerning these
&#147;set aside&#148; and reserve requirements.


<P align="left" style="font-size: 10pt">TAXATION OF FOREIGN STOCKHOLDERS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rules governing US federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships and other foreign
stockholders are complex. We have not attempted to provide more than a summary
of these rules. Prospective non-US stockholders should consult with their own
tax advisors to determine the impact of federal, state and local income tax
laws with regard to an investment in stock, including any reporting
requirements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions that are not attributable to gain from our sales or
exchanges of US real property interests and not designated by us as capital
gains dividends will be treated as dividends of ordinary income to the extent
that they are made out of our current or accumulated earnings and profits.
Such distributions will ordinarily be subject to a withholding tax equal to 30%
of the gross amount of the distribution unless an applicable tax treaty reduces
or eliminates that tax. However, if income from the investment in the stock is
treated as effectively connected with the non-US stockholder&#146;s conduct of a US
trade or business, the non-US stockholder generally will be subject to a tax at
graduated rates, in the same manner as US stockholders are taxed with respect
to such distributions and may also be subject to the 30% branch profits tax in
the case of a stockholder that is a foreign corporation. We expect to withhold
US income tax at the rate of 30% on the gross amount of any such distributions
made to a non-US stockholder unless (i)&nbsp;a lower treaty rate applies and the
holder provides us with a properly executed IRS Form W-8BEN (or successor form)
or (ii)&nbsp;the non-US stockholder provides us with a properly executed IRS Form
W-8ECI (or successor form) claiming that the distribution is effectively
connected income.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions in excess of our current and accumulated earnings and
profits will not be taxable to a stockholder to the extent that such
distributions do not exceed the adjusted basis of the stockholder&#146;s stock, but
rather will reduce the adjusted basis of such stock. To the extent that
distributions in excess of current accumulated earnings and profits exceed the
adjusted basis of a non-US stockholder&#146;s stock, such distributions will give
rise to tax liability if the non-US stockholder would otherwise be subject to
tax on any gain from the sale or disposition of our stock, as described below.
If it cannot be determined at the time a distribution is made whether or not
distributions will be in excess of current and accumulated earnings and profit,
the distributions will be subject to withholding at the same rate as dividends.
However, amounts thus withheld are refundable if it is subsequently determined
that such distribution was, in fact, in excess of our current and accumulated
earnings and profits.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For any year in which we qualify as a REIT, distributions that are
attributable to gain from our sales or exchanges of US real property interests
will be taxed to a non-US stockholder under the provisions of the Foreign
Investment in Real Property Tax Act of 1980 or FIRPTA. Under FIRPTA,
distributions attributable to gain from sales of US real property interests are
taxed to a non-US stockholder as if such gain were effectively connected with a
US business. Non-US stockholders would thus be taxed at the normal capital
gain rates applicable to US stockholders (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals). Also, distributions subject to FIRPTA may be subject to a
30% branch profits tax if a foreign corporate stockholder is not entitled to
treaty exemption. We are required by applicable Treasury Regulations to
withhold 35% for foreign individuals and 35% for foreign corporations of any
distribution that we could designate as a capital gains dividend. This amount
is creditable against the non-US stockholder FIRPTA tax liability. If we
designate prior distributions as capital gains dividends, then subsequent
distributions up to the amount of such prior distributions will be treated as
capital gains dividends for purposes of withholding.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain recognized by a non-US stockholder upon a sale of our equity
securities generally will not be taxed under FIRPTA if we are a &#147;domestically
controlled real estate investment trust,&#148; defined generally as a real estate
investment trust in which at all times during a specified testing period less
than 50% in value of the stock were held directly or indirectly by foreign
persons. We currently anticipate that we will be a &#147;domestically controlled
real estate investment trust,&#148; and therefore the sale of equity securities will
not be subject to taxation under FIRPTA. Additionally, the sale of our equity
securities will not be taxed under FIRPTA if the class of stock is regularly
traded on an established securities market and the selling non-US stockholder
has not held more than 5% of the class of stock at any time during the
preceding five-year period. However, gain not subject to FIRPTA will be
taxable to a non-US stockholder if the investment in the stock is effectively
connected with the non-US stockholder&#146;s US trade or business, in which case the
non-US stockholder will be subject to the same treatment as US stockholders
with respect to such gain. Also, if the non-US stockholder is a nonresident
alien individual who was present in the United States for 183&nbsp;days or more
during the taxable year and has a &#147;tax home&#148; in the United States, the
nonresident alien individual will be subject to a 30% tax (unless reduced by
treaty) on the individual&#146;s capital gains. A non-resident alien individual
could, however, elect to treat such gain as effectively connected income and
pay tax as a US stockholder would. If the gain on the sale of stock were to be
subject to taxation under FIRPTA, the non-US stockholder will be subject to the
same treatment as US stockholders with respect to such gain.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the proceeds of a disposition of our equity securities are paid by or
through a US office of a broker, the payment is subject to information
reporting and to backup withholding unless the disposing non-US stockholder
certifies as to his name, address and non-US status or otherwise establishes an
exemption. Generally, US information reporting and backup withholding will not
apply to a payment of disposition proceeds if the payment is made outside the
United States through a non-US office of a non-US broker. US information
reporting requirements (but not backup withholding) will apply, however, to a
payment of disposition proceeds outside the United States if (i)&nbsp;the payment is
made through an office outside the United States of a broker that is either (a)
a US person, (b)&nbsp;a foreign person that derives 50% or more of its gross income
for certain periods from the conduct of a trade or business in the United
States, (c)&nbsp;a controlled foreign corporation for US federal income tax
purposes, or (d)&nbsp;a foreign partnership more than 50% of the capital or profits
of which is owned by one or more US persons or which engages in a US trade or
business and (ii)&nbsp;the broker fails to initiate documentary evidence that the
stockholder is a non-US stockholder and that certain conditions are met or that
the non-US stockholder otherwise is entitled to an exemption.


<P align="left" style="font-size: 10pt">OTHER TAX CONSEQUENCES



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You 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 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and you may be subject to state or local taxation in various state or
local jurisdictions, including those in which we or you transact business or
reside. Our state and local tax treatment and your state and local tax
treatment may not conform to the federal income tax consequences discussed
above. Consequently, you should consult your own tax advisors regarding the
effect of state and local tax laws on an investment in us.


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<A name="111"></A>
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<P align="center" style="font-size: 10pt"><B>PLAN OF DISTRIBUTION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Exchange Rights Agreements with the Selling Stockholders, we
are registering shares of our Common Stock issued or issuable to the Selling
Stockholders upon exercise of the Exchange Rights in exchange for limited
partnership units of the partnerships. The limited partnership units were
previously issued in private transactions exempt from registration under the
Securities Act of 1933. We will issue up to 865,387 shares of Common Stock to
the Selling Stockholders in exchange for their limited partnership units upon
exercise of Exchange Rights.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registration of such Common Stock does not necessarily mean that any
of those shares will be issued by us or offered or sold by the Selling
Stockholders. There can be no assurance that any Selling Stockholder will sell
any or all of the Common Stock registered under the registration statement of
which this prospectus forms a part. We will not receive any proceeds from the
offering by the Selling Stockholders of such Common Stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Selling Stockholders may, from time to time, sell any or all of such
shares of Common Stock issued to them on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The Selling Stockholders may use any one
or more of the following methods when selling shares:


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    <TD width="1%">&nbsp;</TD>
    <TD>ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;</TD>
</TR>

</TABLE>


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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;</TD>
</TR>

</TABLE>


<P>
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    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>purchases by a broker-dealer as principal and resale by the broker-dealer for its account;</TD>
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    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an exchange distribution in accordance with the rules of the applicable exchange;</TD>
</TR>

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>privately negotiated transactions;</TD>
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    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>short sales;</TD>
</TR>

</TABLE>


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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>broker-dealers may agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per share;</TD>
</TR>

</TABLE>


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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a combination of any such methods of sale; and</TD>
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</TABLE>


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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any other method permitted pursuant to applicable law.</TD>
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Selling Stockholders may also sell shares under Rule&nbsp;144 under the
Securities Act, if available, rather than under this prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Selling Stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Any profits on the resale of shares of Common Stock by a
broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. Discounts, concessions, commissions
and similar selling expenses, if any, attributable to the sale of shares will
be borne by a Selling Stockholder. The Selling Stockholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the shares if liabilities are imposed on that person under
the Securities Act.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares of Common Stock may be deemed to be
&#147;underwriters&#148; within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares of Common Stock purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act. If the Selling Stockholders were deemed to be underwriters, the selling
stockholders may be subject to certain statutory liabilities under, but not
limited to, Sections&nbsp;11, 12 and 17 of the Securities Act and Rule&nbsp;10b-5 under
the Securities Exchange Act of 1934. If


<P align="center" style="font-size: 10pt">24
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">the Selling Stockholders use this prospectus for any sale of the shares of
Common Stock, they will be subject to the prospectus delivery requirements of
the Securities Act.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any time a particular offer of the Common Stock is made, a revised
prospectus or prospectus supplement, if required, will be distributed. The
revised prospectus or prospectus supplement will include the aggregate number
of shares of Common Stock being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, commissions, concessions and other items constituting compensation
from the selling stockholders and any discounts, commissions or concessions
allowed or reallowed or paid to dealers. The prospectus supplement and, if
necessary, a post-effective amendment to the registration statement of which
this prospectus is a part, will be filed with the SEC to reflect the disclosure
of additional information with respect to the distribution of the Common Stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Selling Stockholders and other persons participating in the sale or
distribution of the securities will be subject to applicable provisions of the
Exchange Act, and the rules and regulations thereunder, including Regulation&nbsp;M.
Subject to certain exceptions, Rule&nbsp;102 of Regulation&nbsp;M restricts a selling
stockholder engaged in the distribution of an issuer&#146;s securities from
simultaneously buying those securities during a &#147;restricted period.&#148; In
determining whether a selling stockholder is engaged in a distribution for
purposes of Regulation&nbsp;M, each takedown of a shelf registration is individually
examined to determine whether such offering constitutes a distribution (i.e.,
whether it satisfies the &#147;magnitude&#148; of the offering and &#147;special selling
efforts and selling methods&#148; criteria of a distribution). Accordingly, to the
extent that a Selling Stockholder sells securities covered by the registration
statement, and such sales constitute a distribution, then short selling,
covering shorts and failing to cover shorts after the registration statement&#146;s
effective date may be constrained by the provisions of Regulation&nbsp;M.

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<P align="center" style="font-size: 10pt"><B>LEGAL MATTERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the securities offered will be passed upon by Ballard
Spahr Andrews &#038; Ingersoll, LLP, Baltimore, Maryland. Certain tax matters will
be passed upon for us by Reed Smith LLP, New York, New York. Reed Smith LLP
will rely upon the opinion of the Ballard Spahr Andrews &#038; Ingersoll, LLP as to
matters of Maryland law.

<DIV align="left">
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</DIV>

<P align="center" style="font-size: 10pt"><B>EXPERTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements and schedules of LTC Properties,
Inc. appearing in our annual report on Form 10-K for the year ended December
31, 2003 have been audited by Ernst &#038; Young LLP, independent auditors, as set
forth in their report thereon included therein and which is incorporated herein
by reference. Such consolidated financial statements and schedules are
incorporated herein by reference in reliance on such report given on the
authority of such firm as experts in accounting and auditing.

<DIV align="left">
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</DIV>

<P align="center" style="font-size: 10pt"><B>WHERE YOU CAN FIND ADDITIONAL INFORMATION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus is part of a registration statement on Form S-3 we have
filed with the SEC covering the securities that may be offered under this
prospectus. The registration statement, including the attached exhibits and
schedules, contains additional relevant information about the securities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy the registration statement and
any reports, statements or other information on file at the SEC&#146;s public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of those documents upon payment of a duplicating fee to the SEC.
You may also review a copy of the registration statement at the SEC&#146;s regional
offices in Chicago, Illinois and New York, New York. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. You can review our SEC filings and the registration statement by
accessing the SEC&#146;s Internet site at http://www.sec.gov.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You can also inspect our reports, proxy statements and other information
about us at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.

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<P align="center" style="font-size: 10pt"><B>DOCUMENTS INCORPORATED BY REFERENCE</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEC allows us to &#147;incorporate by reference&#148; the information we file
with the SEC, which means:


<P>
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    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we consider incorporated documents to be part of the prospectus;</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we may disclose important information to you by referring you to those documents; and</TD>
</TR>

</TABLE>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>information we subsequently file with the SEC will
automatically update and supersede the information in this
prospectus.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus incorporates by reference the following documents:


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Annual report on Form 10-K for the year ended December&nbsp;31, 2003.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Definitive proxy statement for the annual meeting of stockholders held on May&nbsp;18, 2004.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Quarterly report on Form 10-Q for the quarter ended March&nbsp;31, 2004.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of our Common Stock contained in our
registration statement on Form 8-A, including any amendment or report
for the purpose of updating such description.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All subsequent documents filed by us under Sections&nbsp;13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934 after the date of this
prospectus and before the termination of the offering.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus and the documents incorporated by reference summarize
certain material provisions of contracts and other documents to which we refer.
Since this prospectus may not contain all the information that you may find
important, you should review the full text of those documents. Upon request,
we will provide each person receiving this prospectus a free copy of any or all
documents incorporated by reference into this prospectus. The copies of filings
will not include exhibits unless those exhibits are specifically incorporated
by reference into the filing. You may direct such requests to:


<P align="center" style="font-size: 10pt">Alex J. Chavez<BR>
Senior Vice President and Corporate Secretary<BR>
LTC Properties, Inc.<BR>
22917 Pacific Coast Hwy, Suite&nbsp;350<BR>
Malibu, California 90265<BR>
Telephone Number: (310)&nbsp;455-6010



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