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<SEC-DOCUMENT>0001104659-06-002487.txt : 20060118
<SEC-HEADER>0001104659-06-002487.hdr.sgml : 20060118
<ACCEPTANCE-DATETIME>20060117175650
ACCESSION NUMBER:		0001104659-06-002487
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20060118
DATE AS OF CHANGE:		20060117

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:	333-130834
		FILM NUMBER:		06533998

	BUSINESS ADDRESS:	
		STREET 1:		31365 OAK CREST DRIVE
		STREET 2:		SUITE 200
		CITY:			WESTLAKE VILLIAGE
		STATE:			CA
		ZIP:			91361
		BUSINESS PHONE:		805-981-8655

	MAIL ADDRESS:	
		STREET 1:		31365 OAK CREST DRIVE
		STREET 2:		SUITE 200
		CITY:			WESTLAKE VILLIAGE
		STATE:			CA
		ZIP:			91361
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>a05-22570_1424b3.htm
<DESCRIPTION>PROSPECTUS FILED PURSUANT TO RULE 424(B)(3)
<TEXT>
<html>

<head>





</head>

<body bgcolor="white" lang="EN-US">

<div>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Filed
pursuant to Rule 424(b)(3)<br>
Registration File No. 333-130834</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman">&nbsp;</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">LTC
PROPERTIES, INC.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">SHARES OF
COMMON STOCK</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This prospectus covers the sale of up to 500,000 shares of our Common Stock
by Andre C. Dimitriadis, our Chairman and Chief Executive Officer (the Selling Stockholder).&#160; See &#147;Selling Stockholder.&#148;&#160; The Selling Stockholder may offer and sell
these shares of Common Stock from time to time through public or private
transactions, on or off the NYSE, at prevailing market prices, or at privately
negotiated prices.&#160; There is no
underwriter with respect to this offering and the Selling Stockholder will
determine the time of sale of shares made pursuant to this prospectus.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We will not receive any of the proceeds from the sale of these
shares.&#160; We will pay the costs relating
to the registration of our Common Stock offered by this prospectus.&#160; The Selling Stockholder will receive all of
the proceeds from any sale of the Common Stock offered by this prospectus and will
be responsible for any brokerage, discounts or other expenses relating to the
sale of such shares.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Investing in our Common Stock involves risks
that are described under &#147;Risk Factors&#148; beginning on page&nbsp;4 of this
prospectus.</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Our Common Stock is traded on the New York
Stock Exchange (or NYSE) under the symbol &#147;LTC.&#148;&#160; On December&nbsp;29, 2005, the last reported
sale price of our Common Stock was $21.15 per share.&#160; Our executive offices are located at 31365
Oak Crest Drive, Suite&nbsp;200, Westlake Village, California 91361, telephone
number (805)&nbsp;981-8655, facsimile number (805) 981-8663 and web site:
www.ltcproperties.com.</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">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.&#160; Any representation to the contrary is a
criminal offense.</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">The date
of this prospectus is January&nbsp;17, 2006</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">TABLE OF
CONTENTS</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="93%" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Prospectus</font></b></p>
  </td>
  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#ProspectusSummary_025033">PROSPECTUS
  SUMMARY</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#ForwardlookingStatements_025038">FORWARD-LOOKING
  STATEMENTS</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#AboutOurCompany_025040">ABOUT
  OUR COMPANY</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#RiskFactors_025058">RISK
  FACTORS</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#UseOfProceeds_025108">USE OF
  PROCEEDS</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#DeterminationOfOfferingPrice_025110">DETERMINATION OF OFFERING PRICE</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#SellingStockholder_025120">SELLING STOCKHOLDER</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#DescriptionOfOurCommonStock_025124">DESCRIPTION OF OUR COMMON STOCK</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#RestrictionsOnOwnershipAndTransfe_025210">RESTRICTIONS ON OWNERSHIP AND TRANSFER</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#CertainProvisionsOfMarylandLawAnd_025213">CERTAIN PROVISIONS OF MARYLAND LAW AND OF
  OUR CHARTER AND BYLAWS</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#CertainUsFederalIncomeTaxConsider_025217">CERTAIN US FEDERAL INCOME TAX
  CONSIDERATIONS</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#PlanOfDistribution_025231">PLAN OF DISTRIBUTION</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#LegalMatters_025238">LEGAL MATTERS</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#Experts_025240">EXPERTS</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#WhereYouCanFindAdditionalInformat_025240">WHERE YOU CAN FIND ADDITIONAL INFORMATION</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="93%" valign="top" style="padding:0in 0in 0in 0in;width:93.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="a05-22570_1424b3.htm#DocumentsIncorporatedByReference_025244">DOCUMENTS INCORPORATED BY REFERENCE</a></font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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,&nbsp;Inc.,
or by the Selling Stockholder. 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 if any time subsequent to the date hereof.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In this
prospectus, unless otherwise indicated, the &#147;company,&#148; &#147;we,&#148; &#147;us&#148; and &#147;our&#148;
refer to LTC Properties,&nbsp;Inc.&#160; and
our consolidated subsidiaries.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="ProspectusSummary_025033"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">PROSPECTUS SUMMARY</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160;
Investing in our Common Stock involves risks.&#160; Therefore, carefully consider the information
provided under the heading &#147;Risk Factors&#148; beginning on page&nbsp;8.&#160; Andre
C. Dimitriadis, our Chairman and Chief Executive Officer, may sell from time to
time, in one or more offerings, our Common Stock described in this prospectus
up to an aggregate of 500,000 shares.&#160;
This prospectus does not contain all of the information included in the
registration statement. For a complete understanding of the offering of
securities, you should refer to the registration statement relating to this
prospectus, including its exhibits.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; If anyone
provides you with different or inconsistent information, you should not rely on
it.&#160; 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.&#160; Our
business, financial condition, results of operations and prospects may have
changed since those dates.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="ForwardlookingStatements_025038"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">FORWARD-LOOKING
STATEMENTS</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This
prospectus contains or incorporates by reference forward-looking statements
within the meaning of Section&nbsp;27A of the Securities Act of 1933, as
amended, and Section&nbsp;21E of the Securities Exchange Act of 1934, as
amended. 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.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>

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</font></div>

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<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="AboutOurCompany_025040"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">ABOUT OUR COMPANY</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; As of September&nbsp;30, 2005, long-term care
properties, which include skilled nursing and assisted living properties,
comprised approximately 98% of our investment portfolio.&#160; We have been operating since August&nbsp;1992.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Skilled
nursing facilities provide restorative, rehabilitative and nursing care for
people not requiring the more extensive and sophisticated treatment available
at acute care hospitals.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; Services are usually
available 24-hours a day and include personal supervision and assistance with
eating, bathing, grooming and administering medication.&#160; The facilities provide a combination of
housing, supportive services, personalized assistance and health care designed
to respond to individual needs.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">At September&nbsp;30,
2005, our real estate investment portfolio (before accumulated depreciation and
amortization) consisted of $500.4 million invested primarily in owned long-term
care properties and mortgage loans of approximately $152.5 million (net of a
$1.3 million reserve).&#160; Our portfolio
consists of direct investments (properties that we either own or on which we
hold promissory notes secured by first mortgages) in 128 skilled nursing
properties, 101 assisted living properties and two schools in 33 states.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Owned
Properties</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">At September&nbsp;30,
2005, we owned 59 skilled nursing properties with a total of 6,954 beds, 88
assisted living properties with 4,175 units and one school located in 23
states.&#160; The properties are leased
pursuant to non-cancelable leases generally with an initial term of 10 to 30
years.&#160; The leases provide for a fixed
minimum base rent during the initial and renewal periods.&#160; Most of the leases provide for annual fixed
rent increases or increases based on consumer price indices over the term of
the lease.&#160; 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.&#160; 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.&#160; Many of the leases contain renewal options
and one contains a limited period option that permits the operator to purchase
the property.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Mortgage
Loans</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">At September&nbsp;30,
2005, we had 72 mortgage loans secured by first mortgages on 69 skilled nursing
properties with a total of 8,199 beds and 13 assisted living properties with a
total of 933 units and one school located in 23 states.&#160; These mortgage loans had interest rates
ranging from 5.5% to 12.8% and maturities ranging from 2005 to 2019.&#160; In addition, the loans may contain
guarantees, provide for facility fees and generally have 25-year amortization
schedules.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160;
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.&#160; On certain loans, such prepayment
amount is based upon a percentage of the then outstanding balance of the loan,
usually declining ratably each year.&#160; For
other loans, the prepayment premium is based on a yield maintenance
formula.&#160; 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.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">OUR
STRATEGY</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>For
investments in skilled nursing properties, we favor low cost per bed
opportunities, whether in fee simple properties or in mortgages.&#160; Thus, as of September&nbsp;30, 2005, the
average per bed cost of our owned skilled nursing properties was approximately
$30,000 per bed while that of our mortgages was approximately $14,200 per bed.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>For
assisted living investments we have attempted to diversify our portfolio both
geographically and across product levels.&#160;
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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Recent Developments</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On November&nbsp;7, 2005, we signed a $90.0
million, three year Unsecured Credit Agreement which replaced the existing
$65.0 million Unsecured Credit Agreement that was due to expire on December&nbsp;26,
2006.&#160; This new Unsecured Credit
Agreement increased our line of credit, extended its maturity and provides for
lower interest rates than applicable under the $65.0 million Unsecured Credit
Agreement.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our principal
executive offices are located at 31365 Oak Crest Drive, Suite&nbsp;200,
Westlake Village, California 91361, and our telephone number is (805) 981-8655.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>

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</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="RiskFactors_025058"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">RISK FACTORS</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Before
purchasing the shares offered by this prospectus, you should carefully consider
the risks described below , in addition to the other information presented in
this prospectus before making an investment decision in our Common Stock.&#160; 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.&#160; If any of the following risks actually occur,
they could seriously harm our business, financial condition, results of
operations or cash flows.&#160; This could
cause the trading of our Common Stock to decline and you could lose all or part
of your investment.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Such risks and uncertainties include, among
other things, the following risks including those described in more detail
below:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>the
status of the economy;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>the
status of capital markets, including prevailing interest rates;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>compliance
with and changes to regulations and payment policies within the health care
industry;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>changes
in financing terms;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>competition
within the health care and senior housing industries; and</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>changes
in federal, state and local legislation.</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Recently Enacted Tax Legislation Could have
an Adverse Effect on the Market Price of our Equity Securities.&#160; </font></i>On May&nbsp;28,
2003, President Bush signed into law legislation that, for individual
taxpayers, will generally reduce the tax rate on corporate dividends to a
maximum of 15% for tax years 2003 to 2008.&#160;
REIT dividends generally will not qualify for this reduced tax rate
because a REIT&#146;s income generally is not subject to corporate level tax.&#160; This new law could cause stock in non-REIT
corporations to be a more attractive investment to individual investors than
stock in REITs and could have an adverse effect on the market price or our
equity securities.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">A Failure to Maintain or Increase our
Dividend Could Reduce the Market Price of Our Stock.&#160; </font></i>On December&nbsp;8,
2005, we announced that we would pay a monthly common dividend of $.12 per
month for the first quarter of 2006.&#160; During
calendar 2005, we paid $.30 dividend in the first quarter and paid a $.11
dividend each month starting in April&nbsp;and through December&nbsp;2005.&#160; During calendar 2004, we paid a $.25 dividend
in the first quarter, a $.275 dividend in the second quarter and a $.30
dividend in each of the third and fourth quarters on our Common Stock.&#160; During calendar 2003, we paid a $.10 dividend
in the first quarter, a $.15 dividend in each of the second and third quarters
and a $.25 dividend in the fourth quarter on our Common Stock.&#160; The ability to maintain or raise our common
dividend is dependent, to a large part, on growth of funds from
operations.&#160; This growth in turn depends
upon increased revenues from additional investments and loans, rental increases
and mortgage rate increases.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">At Times, We May&nbsp;Have Limited Access to
Capital Which Will Slow Our Growth.</font></i>&#160; A REIT is required to make dividend
distributions and retains little capital for growth.&#160; As a result, growth for a REIT is generally
through the steady investment of new capital in real estate assets.&#160; Presently, we believe capital is readily
available to us.&#160; However, there will be
times when we will have limited access to capital from the equity and/or debt
markets.&#160; During such periods, virtually
all of our available capital will be required to meet existing commitments and
to reduce existing debt.&#160; We may not be
able to obtain additional equity or debt capital or dispose of assets on
favorable terms, if at all, at the time we require additional capital to
acquire health care properties on a competitive basis or meet our obligations.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Income and Returns from Health Care
Facilities Can be Volatile</font></i>.&#160; The possibility that the health care
properties in which we invest will not generate income sufficient to meet
operating expenses, will generate income and capital appreciation, if any, at
rates lower than those anticipated or will yield returns lower than those
available through investments in comparable real estate or other investments
are additional risks of investing in health care related real estate.&#160; Income from properties and yields from
investments in such properties may be affected by many factors, including
changes in governmental regulation (such as zoning laws and government
payment), general or local economic conditions (such as fluctuations in
interest rates and employment conditions), the available local supply of and
demand for improved real estate, a reduction in rental income as the result of
an inability to maintain occupancy levels, natural disasters (such as
earthquakes and floods) or similar factors.</p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">We<b><font style="font-weight:bold;"> </font></b>Depend on
Lease Income and Mortgage Payments from Real Property</font></i>.&#160; Since a substantial portion of our income is
derived from mortgage payments and lease income from real property, our income
would be adversely affected if a significant number of our borrowers or lessees
were unable to meet their obligations to us or if we were unable to lease our
properties or make mortgage loans on economically favorable terms.&#160; There can be no assurance that any lessee
will exercise its option to renew its lease upon the expiration of the initial
term or that if such failure to renew were to occur, we could lease the
property to others on favorable terms.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">We Rely on a Few Major Operators.</font></i></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have two operators, based on properties
subject to lease agreements and secured by mortgage loans that each represent
between 10% and 20% of our total assets and four operators from each of which
we derive over 10% of our rental revenue.&#160;
Extendicare Health Services,&nbsp;Inc. (or EHSI), one of our major
operators, is the wholly owned subsidiary of a publicly traded company,
Extendicare Inc.&#160; In addition, EHSI,
although not publicly traded, files quarterly financial information with the
Securities and Exchange Commission.&#160; Alterra
Healthcare Corporation (or Alterra), another of our major operators, is the
wholly owned subsidiary of Brookdale Senior Living Inc. (or Brookdale).&#160; Brookdale became a publicly traded company in
the fourth quarter of 2005.&#160; The proforma
information presented below is from Brookdale&#146;s, Form&nbsp;424B1 filed November&nbsp;23,
2005. Our other major operators are privately owned and thus no public
financial information is available.&#160; The
following table summarizes EHSI&#146;s and Brookdale&#146;s, respectively, assets, liabilities,
stockholders&#146; equity, revenue and net income (loss) from continuing operations
(in thousands) as of or for the nine months ended September&nbsp;30, 2005, as
reported in the lessee&#146;s public filings:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="90%" style="border-collapse:collapse;margin-left:.5in;width:90.0%;">
 <tr>
  <td width="59%" valign="bottom" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">EHSI</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Brookdale</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">&nbsp;</font></i></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">&nbsp;</font></i></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">&nbsp;</font></i></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">&nbsp;</font></i></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">&nbsp;</font></i></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">&nbsp;</font></i></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current
  assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="16%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:16.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">194,446</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="16%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:16.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">92,043</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Non-current
  assets</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">860,074</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,432,890</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current
  liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">187,939</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,451</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Non-current
  liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">570,866</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">606,788</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Stockholders&#146;
  equity</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">295,715</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">628,736</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gross
  revenue</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">890,985</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">619,601</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Operating
  expenses</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">707,875</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">394,430</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income
  (loss) from continuing operations</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">50,888</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(79,578</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net income
  (loss)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">45,557</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(79,578</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash
  provided by operations</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">75,678</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">18,271</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash used in
  investing activities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(166,752</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(9,169</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="59%" valign="top" style="padding:0in 0in 0in 0in;width:59.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash
  provided by (used in) financing activities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">85,343</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="18%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:18.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(24,266</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="397" style="border:none;"></td>
  <td width="13" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="111" style="border:none;"></td>
  <td width="13" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="111" style="border:none;"></td>
  <td width="7" style="border:none;"></td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">EHSI leased 37 assisted living properties
with a total of 1,427 units owned by us representing approximately 11.9%, or
$68,657,000, of our total assets at September&nbsp;30, 2005 and 19.3 % of
rental income recognized in 2005 excluding the effects of straight-line rent
and certain note payoff amounts.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Alterra leased 35 assisted living properties
with a total of 1,416 units we own representing approximately 11.7%, or
$67,682,000, of our total assets at September&nbsp;30, 2005 and 19.3% of rental
revenue recognized in 2005 excluding the effects of straight-line rent and certain
note payoff amounts.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Center Healthcare,&nbsp;Inc. (or CHC) leased
26 skilled nursing properties with a total of 3,114 beds owned by us
representing approximately 9.9%, or $57,060,000, of our total assets at September&nbsp;30,
2005 and 12.8% of rental revenue recognized in 2005 excluding the effects of
straight-line rent and certain note payoff amounts.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Sunwest Management,&nbsp;Inc. (or Sunwest)
operates eight assisted living properties with a total of 958 units that we own
or on which we hold mortgages secured by first trust deeds.&#160; This represents approximately 9.7%, or
$55,993,000 of our total assets at September&nbsp;30, 2005, and 13.2% of rental
revenue and 4.8% of interest income from mortgage loans recognized in 2005
excluding the effects of straight-line rent and certain note payoff amounts.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our financial position and our ability to
make distributions may&nbsp;be adversely affected by financial difficulties
experienced by Alterra, CHC, EHSI, Sunwest or any of our other lessees and
borrowers, including bankruptcies, inability to emerge from bankruptcy,
insolvency or general downturn in business of any such operator, or in the
event any such operator does not renew and/or extend its relationship with us
or our borrowers when it expires.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Our Borrowers and Lessees Face Competition in
the Health Care Industry</font></i>. The long-term care industry
is highly competitive and we expect that it may become more competitive in the
future. Our borrowers and lessees are competing with numerous other companies
providing similar long-term care services or alternatives such as home health
agencies, hospices, life care at home, community-based service programs,
retirement communities and convalescent centers. There can be no assurance that
our borrowers and lessees will not encounter increased competition in the
future which could limit their ability to attract residents or expand their
businesses and therefore affect their ability to make their debt or lease
payments to us.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">The Health Care Industry is Heavily Regulated
by the Government</font></i>. Our borrowers and lessees who
operate health care facilities are subject to extensive regulation by federal,
state and local governments. These laws and regulations are subject to frequent
and substantial changes resulting from legislation, adoption of rules&nbsp;and
regulations, and administrative and judicial interpretations of existing law.
These changes may have a dramatic effect on the definition of permissible or
impermissible activities, the relative costs associated with doing business and
the amount of reimbursement by both government and other third-party payors.
These changes may be applied retroactively. The ultimate timing or effect of
these changes cannot be predicted. The failure of any borrower of funds from us
or lessee of any of our properties to comply with such laws, requirements and
regulations could affect its ability to operate its facility or facilities and
could adversely affect such borrower&#146;s or lessee&#146;s ability to make debt or
lease payments to us.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Our Borrowers and Lessees Rely on Government
and Third Party Reimbursement</font></i>. The ability of our
borrowers and lessees to generate revenue and profit determines the underlying
value of that property to us. Revenues of our borrowers and lessees are
generally derived from payments for patient care. Sources of such payments
include the federal Medicare program, state Medicaid programs, private
insurance carriers, health care service plans, health maintenance
organizations, preferred provider arrangements, self-insured employers, as well
as the patients themselves.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A significant portion of the revenue of our
borrowers and lessees is derived from governmentally-funded reimbursement
programs, such as Medicare and Medicaid. Because of substantial health care
costs paid by such government programs, both federal and state governments have
adopted and continue to consider various health care reform proposals to
control health care costs. In recent years, there have been fundamental changes
in the Medicare program that resulted in reduced levels of payment for a
substantial portion of health care services. In many instances, revenues from
Medicaid programs are already insufficient to cover the actual costs incurred
in providing care to those patients.&#160; According
to a report issued by the Kaiser Commission on Medicaid and the Uninsured in October&nbsp;2005,
nursing home rates were cut or frozen in 10 states in fiscal year 2005 and in
15 states in fiscal year 2006 (although nursing homes were the provider group
most likely to be granted a rate increase in both years, with increases in 41
states in fiscal year 2005 and in 36 states in fiscal year 2006). Moreover,
health care facilities have experienced increasing pressures from private
payors attempting to control health care costs, and reimbursement from private
payors has in many cases effectively been reduced to levels approaching those
of government payors.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Governmental and public concern regarding
health care costs may result in significant reductions in payment to health
care facilities, and there can be no assurance that future payment rates for
either governmental or private payors will be sufficient to cover cost
increases in providing services to patients. Any changes in reimbursement
policies which reduce reimbursement to levels that are insufficient to cover
the cost of providing patient care could adversely affect revenues of our
borrowers and lessees and thereby adversely affect those borrowers&#146; and lessees&#146;
abilities to make their debt or lease payments to us. Failure of the borrowers
or lessees to make their debt or lease payments would have a direct and
material adverse impact on us.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On August&nbsp;4, 2005, the Centers for
Medicare&nbsp;&amp; Medicaid Services, commonly known as CMS, published a
notice updating skilled nursing facility prospective payment rates for fiscal
year 2006, which began October&nbsp;1, 2005.&#160;
This update implements refinements to the patient classification
system and triggers the expiration of a temporary payment add-on for certain
high-acuity patients, effective January&nbsp;1, 2006.&#160; The final rule&nbsp;also adopts a 3.1 percent
market basket increase for fiscal year 2006.&#160;
CMS estimates that the final rule&nbsp;will have no net financial impact
on skilled nursing facilities in fiscal year 2006 because the $1.02 billion
reduction due to the expiration of temporary add-on payments will be more than
offset by a $510 million increase from the refined classification system and a
$530 million increase from the payment rate update.&#160; While the fiscal year 2006 skilled nursing
facility rates will not decrease payments to skilled nursing facilities, the
loss of revenues associated with future changes in skilled nursing facility
payment rates could, in the future, have an adverse effect </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">on the financial condition of our borrowers
and lessees which could, in turn, adversely impact the timing or level of their
payments to us.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Congress and the States Have Enacted Health
Care Reform Measures</font></i>. The health care industry is
facing various challenges, including increased government and private payor
pressure on health care providers to control costs. For instance, the Balanced
Budget Act of 1997 enacted significant changes to the Medicare and Medicaid
programs designed to modernize payment and health care delivery systems while
achieving substantial budgetary savings. In seeking to limit Medicare
reimbursement for long-term care services, Congress established the prospective
payment system for skilled nursing facility services to replace the cost-based
reimbursement system. Skilled nursing facilities needed to restructure their
operations to accommodate the new Medicare prospective payment system
reimbursement. Since the skilled nursing facility prospective payment system
was enacted, several then publicly held operators of long-term care facilities
and at least two then publicly held operators of assisted living facilities
have filed for reorganization under Chapter 11 of the federal bankruptcy laws.
While certain long-term care operators and both assisted living operators have
emerged from bankruptcy, during their reorganizations and in some instances
subsequent thereto, they reduced their operations by rejecting leases and/or
defaulting on loans resulting in properties being returned to lessors or
lenders. There can be no assurances given that there will not be additional
bankruptcies of skilled nursing and assisted living operators in the future.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In recent years, Congress has adopted
legislation to somewhat mitigate the impact of the Balanced Budget Act on
providers, including skilled nursing facilities.&#160; Most recently, on December&nbsp;8, 2003,
President Bush signed into law the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (P.L. 108-173).&#160;
In addition to providing expanded Medicare prescription drug coverage,
the new act modifies Medicare payments to a variety of health care
providers.&#160; With respect to skilled
nursing facilities, the act provides a temporary 128% increase in the Medicare
payment for skilled nursing facility residents with acquired immune deficiency
syndrome, applicable to services furnished on or after October&nbsp;1,
2004.&#160; Moreover, in late 2005 the House
and Senate approved different versions of budget reconciliation legislation
that would, among other things, reduce Medicare payments for skilled nursing
facility bad debt and modify financial eligibility requirements for Medicaid
long-term care coverage.&#160; Although
Congress did not complete action on this legislation in 2005, it is expected to
give final consideration to the measure early in 2006.&#160; Likewise,&#160;
Congress could consider additional Medicare and/or Medicaid cost savings
proposals in the future. No assurances can be given that any additional
Medicare or Medicaid legislation enacted by Congress would not reduce Medicare
or Medicaid reimbursement to skilled nursing facilities or result in additional
costs for operators of skilled nursing facilities.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In addition, comprehensive reforms affecting
the payment for and availability of health care services have been proposed at
the federal and state levels and major reform proposals have been adopted by
certain states. Congress and state legislatures can be expected to continue to
review and assess alternative health care delivery systems and payment
methodologies. Changes in the law, new interpretations of existing laws, or
changes in payment methodology may have a dramatic effect on the definition of
permissible or impermissible activities, the relative costs associated with
doing business and the amount of reimbursement by the government and other
third party payors.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Moreover, many states are facing significant
budget shortfalls, and all states have taken steps in recent years to implement
cost controls within their Medicaid programs, including freezes or reductions
in skilled nursing home reimbursement in some states. According to a report
issued by the Kaiser Commission on Medicaid and the Uninsured in October&nbsp;2005,
nursing home rates were cut or frozen in 10 states in fiscal year 2005 and in
15 states in fiscal year 2006 (although nursing homes were the provider group
most likely to be granted a rate increase in both years, with increases in 41
states in fiscal year 2005 and in 36 states in fiscal year 2006).&#160; In light of continuing state Medicaid program
reforms, budget cuts, and regulatory initiatives, no assurance can be given
that the implementation of such regulations and reforms will not have a
material adverse effect on our financial condition or results of operations.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">We Could Incur More Debt.&#160; </font></i>We operate with a policy of incurring
debt when, in the opinion of our directors, it is advisable.&#160; We may incur additional debt by issuing debt
securities in a public offering or in a private transaction.&#160; Accordingly, we could become more highly leveraged.&#160; The degree of leverage could have important
consequences to stockholders, including affecting our ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, development or other general corporate purposes and making us
more vulnerable to a downturn in business or the economy generally.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Our Assets May&nbsp;be Subject to Impairment Charges.</font></i>&#160; We
periodically but not less than quarterly evaluate our real estate investments
and other assets for impairment indicators.&#160;
The judgment regarding the existence of impairment indicators is based
on factors such as market conditions, operator performance and legal
structure.&#160; If we determine that a
significant impairment has
occurred, we would be required to make an adjustment to the net carrying value
of the asset, which could have a material adverse affect on our results of
operations and funds from operations in the period in which the write-off
occurs.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">A Failure to Reinvest Cash Available to Us Could Adversely Affect Our
Future Revenues and Our Ability to Increase Dividends to Stockholders; There is
Considerable Competition in Our Market for Attractive Investments.</font></i>&#160; From
time to time, we will have cash available from (1)&nbsp;proceeds of sales of
shares of securities, (2)&nbsp;proceeds from new debt issuances, (3)&nbsp;principal
payments on our mortgages and other investments, (4)&nbsp;sale of properties,
and (5)&nbsp;funds from operations.&#160; We may reinvest this cash in health care
investments in accordance with our investment policies, repay outstanding debt
or invest in qualified short-term investments.&#160;
We compete for real estate investments with a broad variety of potential
investors.&#160; The competition for
attractive investments negatively affects our ability to make timely
investments on acceptable terms.&#160; Delays
in acquiring properties or making loans will negatively impact revenues and
perhaps our ability to increase distributions to our stockholders.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Our Failure to Qualify as a REIT Would Have Serious Adverse Consequences
to Our Stockholders.&#160; </font></i>We intend to operate so as to qualify as a
REIT under the Internal Revenue Code (the Code).&#160; We believe that we have been organized and
have operated in a manner which would allow us to qualify as a REIT under the
Code beginning with our taxable year ended December&nbsp;31, 1992.&#160; However, it is possible that we have been
organized or have operated in a manner which would not allow us to qualify as a
REIT, or that our future operations could cause us to fail to qualify.&#160; Qualification as a REIT requires us to
satisfy numerous requirements (some on an annual and quarterly basis)
established under highly technical and complex Code provisions for which there
are only limited judicial and administrative interpretations, and involves the
determination of various factual matters and circumstances not entirely within
our control.&#160; For example, in order to
qualify as a REIT, at least 95% of our gross income in any year must be derived
from qualifying sources, and we must pay dividends to stockholders aggregating
annually at least 90% (95% for taxable years ending prior to January&nbsp;1,
2001) of our REIT taxable income (determined without regard to the dividends
paid deduction and by excluding capital gains).&#160;
Legislation, new regulations, administrative interpretations or court
decisions could significantly change the tax laws with respect to qualification
as a REIT or the federal income tax consequences of such qualification.&#160; However, we are not aware of any pending tax
legislation that would adversely affect our ability to operate as a REIT.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If we fail to qualify as a REIT in any taxable year,
we will be subject to federal income tax (including any applicable alternative
minimum tax) on our taxable income at regular corporate rates.&#160; Unless we are entitled to relief under
statutory provisions, we would be disqualified from treatment as a REIT for the
four taxable years following the year during which we lost qualification.&#160; If we lose our REIT status, our net earnings
available for investment or distribution to stockholders would be significantly
reduced for each of the years involved.&#160;
In addition, we would no longer be required to make distributions to
stockholders.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Our real estate investments are relatively
illiquid</font></i>.&#160; Real
estate investments are relatively illiquid and, therefore, tend to limit our
ability to vary our portfolio promptly in response to changes in economic or
other conditions. All of our properties are &#147;special purpose&#148; properties that
cannot be readily converted to general residential, retail or office use.
Health care facilities that participate in Medicare or Medicaid must meet
extensive program requirements, including physical plant and operational
requirements, which are revised from time to time. Such requirements may
include a duty to admit Medicare and Medicaid patients, limiting the ability of
the facility to increase its private pay census beyond certain limits. Medicare
and Medicaid facilities are regularly inspected to determine compliance, and
may be excluded from the programs&#151;in some cases without a prior hearing&#151;for
failure to meet program requirements. Transfers of operations of nursing homes
and other healthcare-related facilities are subject to regulatory approvals not
required for transfers of other types of commercial operations and other types
of real estate. Thus, if the operation of any of our properties becomes
unprofitable due to competition, age of improvements or other factors such that
our lessee or mortgagor becomes unable to meet its obligations on the lease or
mortgage loan, the liquidation value of the property may be substantially less,
particularly relative to the amount owing on any related mortgage loan, than
would be the case if the property were readily adaptable to other uses. The
receipt of liquidation proceeds or the replacement of an operator that has
defaulted on its lease or loan could be delayed by the approval process of any
federal, state or local agency necessary for the transfer of the property or
the replacement of the operator with a new operator licensed to manage the
facility. In addition, certain significant expenditures associated with real
estate investment, such as real estate taxes and maintenance costs, are
generally not reduced when circumstances cause a reduction in income from the
investment. Should such events occur, our income and cash flows from operations
would be adversely affected.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Our Remedies May&nbsp;Be Limited When
Mortgage Loans Default.</font></i><b><font style="font-weight:bold;">&#160; </font></b>To the extent we invest in
mortgage loans, such mortgage loans may or may not be recourse obligations of
the borrower and generally will not be insured or guaranteed by governmental
agencies or otherwise.&#160; In the event of a
default under such obligations, we may have to foreclose on the property underlying
the mortgage or protect our interest by acquiring title to a property and
thereafter make substantial improvements or repairs in order to maximize the
property&#146;s investment potential.&#160;
Borrowers may contest enforcement of foreclosure or other remedies, seek
bankruptcy protection against such enforcement and/or bring claims for lender
liability in response to actions to enforce mortgage obligations.&#160; If a borrower seeks bankruptcy protection,
the Bankruptcy Court may impose an automatic stay that would preclude us from
enforcing foreclosure or other remedies against the borrower.&#160; </p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Relatively high &#147;loan to value&#148;
ratios and declines in the value of the property may prevent us from realizing
an amount equal to our mortgage loan upon foreclosure.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">We are Subject to Risks and Liabilities in
Connection with Properties Owned Through Limited Liability Companies and
Partnerships.&#160; </font></i>We
have ownership interests in limited liability companies and/or
partnerships.&#160; We may make additional
investments through these ventures in the future.&#160; Partnership or limited liability company
investments may involve risks such as the following:</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>our
partners or co-members might become bankrupt (in which event we and any other
remaining general partners or members would generally remain liable for the
liabilities of the partnership or limited liability company);</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>our
partners or co-members might at any time have economic or other business
interests or goals which are inconsistent with our business interests or goals;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>our
partners or co-members may be in a position to take action contrary to our
instructions, requests, policies or objectives, including our policy with
respect to maintaining our qualification as a REIT; and</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>agreements
governing limited liability companies and partnerships often contain
restrictions on the transfer of a member&#146;s or partner&#146;s interest or &#147;buy-sell&#148;
or other provisions which may result in a purchase or sale of the interest at a
disadvantageous time or on disadvantageous terms.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We will, however, generally seek to maintain
sufficient control of our partnerships and limited liability companies to
permit us to achieve our business objectives. Our organizational documents do
not limit the amount of available funds that we may invest in partnerships or
limited liability companies.&#160; The
occurrence of one or more of the events described above could have a direct and
adverse impact on us.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="UseOfProceeds_025108"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">USE OF PROCEEDS</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We will not
receive any proceeds from the sale of any shares of our Common Stock by the Selling
Stockholder.&#160; The net proceeds from the
sale of out Common Stock covered by this prospectus will be received by the
Selling Stockholder.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="DeterminationOfOfferingPrice_025110"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">DETERMINATION
OF OFFERING PRICE</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The price of
the shares of our Common Stock offered for sale by the Selling Stockholder
pursuant to the terms of the offering described in this prospectus will be at
prevailing market prices, or at privately negotiated prices.&#160; Factors which are relevant to the
determination of the offering price may include, but are not limited to, the
market price for the shares, consideration of the amount of our Common Stock
offered for sale relative to the total number of shares of our Common Stock
outstanding, the trading history of our outstanding securities, our financial
prospects, and the trading price of other companies similar to us in terms of
size, operating characteristics, industry and other similar factors.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="SellingStockholder_025120"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELLING STOCKHOLDER</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are
registering 500,000 shares of our Common Stock for resale by the Selling
Stockholder identified below.&#160;&#160; The
Selling Stockholder was a founder of the Company in 1992 and since then has
been and is our Chairman and Chief Executive Officer.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following
table, to our knowledge, sets forth information regarding the beneficial
ownership of our Common Stock by the Selling Stockholder as of December&nbsp;23,
2005, and the number of shares being offered hereby by the Selling Stockholder.
Beneficial ownership is determined in accordance with the rules&nbsp;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) days after December&nbsp;23, 2005. The
inclusion of any shares in this table does not constitute an admission of
beneficial ownership for the Selling Stockholder.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following
table assumes that the Selling Stockholder sells all of his shares registered
hereunder; however, we are not able to determine the exact number of shares
that will actually be sold.&#160; The
percentage of shares beneficially owned prior to this offering is based on
23,276,399 shares outstanding at December&nbsp;23, 2005, determined in accordance
with Rule&nbsp;13d-3 promulgated under the Securities Exchange Act of 1934, as
amended, and the information is not necessarily indicative of beneficial
ownership for any other purpose.&#160; Unless
otherwise indicated below, we believe the Selling Stockholder has sole voting
and investment power with respect to his shares of our Common Stock.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="27%" rowspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:27.0%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Selling Stockholder</font></b></p>
  </td>
  <td width="2%" rowspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="16%" rowspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Number of Shares<br>
  Beneficially<br>
  Owned Prior to<br>
  Offering</font></b></p>
  </td>
  <td width="2%" rowspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="16%" rowspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Number of Shares<br>
  Being Offered</font></b></p>
  </td>
  <td width="2%" rowspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="34%" colspan="3" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:34.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Shares Beneficially Owned After<br>
  Offering</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="16%" valign="bottom" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Number</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="16%" valign="bottom" style="border-bottom:solid windowtext 1.0pt;border-left:none;border-right:none;border-top:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Percent</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="27%" valign="top" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:27.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Andre C.
  Dimitriadis</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="16%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,350,797</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="16%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">500,000</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="16%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">850,797</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="16%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:16.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.7</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#CCEEFF" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10</font></p>

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</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="DescriptionOfOurCommonStock_025124"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">DESCRIPTION
OF OUR COMMON STOCK</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GENERAL</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><a name="TheFollowingDescriptionOfOurCommo_025129"></a><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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.&#160; Our Common
Stock will, when issued, be fully paid and nonassessable and will not be subject
to preemptive or similar rights.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="RestrictionsOnOwnershipAndTransfe_025210"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">RESTRICTIONS
ON OWNERSHIP AND TRANSFER</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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&nbsp;856(h)&nbsp;of the&#160;
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.&#160; 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.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Any shares of
our capital stock held by a stockholder in excess of the applicable ownership
limit become &#147;Excess Shares.&#148;&#160; 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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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 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.&#160; 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.&#160;
We will rescind the redemption of the Excess Shares in the event that
within 30 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="CertainProvisionsOfMarylandLawAnd_025213"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">CERTAIN
PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following
description of certain provisions of Maryland law and of our Charter and bylaws
is only a summary.&#160; For a complete
description, we refer you to Maryland law, our Charter and our bylaws.&#160; We have incorporated by reference our Charter
and bylaws as exhibits to the registration statement of which this prospectus
is a part.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">BOARD OF
DIRECTORS &#150; NUMBER AND VACANCIES</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; Our Board
of Directors is currently comprised of five directors.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; Our
stockholders may elect a successor to fill a vacancy on our Board of Directors
which results from the removal of a director.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">REMOVAL OF
DIRECTORS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">BUSINESS
COMBINATIONS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160;
An interested stockholder is defined as:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>any
person who beneficially owns ten percent or more of the voting power of the
corporation&#146;s shares; or</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The business
combination statute may discourage others from trying to acquire control of us
and increase the difficulty of consummating any offer.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CONTROL SHARE
ACQUISITIONS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>one-tenth
or more but less than one-third,</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>one-third
or more but less than a majority, or</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>a
majority or more of all voting power.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Control shares
do not include shares the acquiring person is then entitled to vote as a result
of having previously obtained stockholder approval.&#160; A control share acquisition means the
acquisition of control shares, subject to certain exceptions.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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 days of demand to consider the voting rights of the shares.&#160; 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.&#160;
If no request for a meeting is made, the corporation may itself present
the question at any stockholders meeting.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; The right of the corporation to redeem
control shares is subject to certain conditions and limitations.&#160; 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.&#160; 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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AMENDMENT TO
THE CHARTER</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DISSOLUTION OF
LTC PROPERTIES, INC.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">ADVANCE NOTICE
OF DIRECTOR NOMINATIONS AND NEW BUSINESS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160;
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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">ANTI-TAKEOVER
EFFECT OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE CHARTER AND BYLAWS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; See &#147;Risk Factors &#150; Certain
Provisions of Maryland Law and our Charter and Bylaws as well as Stockholders
Rights Plan Could Hinder, Delay Or Prevent Changes in Control&#148;, incorporated by
reference to this prospectus from our Annual Report on Form&nbsp;10-K for the
year ended December&nbsp;31, 2004.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="CertainUsFederalIncomeTaxConsider_025217"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">CERTAIN
US FEDERAL INCOME TAX CONSIDERATIONS</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GENERAL</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following
is a summary of the federal income tax considerations to us which are
anticipated to be material to purchasers of our Common Stock.&#160; This summary does not discuss any state or
local income taxation or foreign income taxation or other tax
consequences.&#160; This summary is based on
current law, is for general information only and is not tax advice.&#160; Your tax treatment will vary depending upon
your particular situation.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
information in this section&nbsp;is based on:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>the
Internal Revenue Code (or the Code);</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>current,
temporary and proposed Treasury regulations promulgated under the Code;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>the
legislative history of the Code;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>current
administrative interpretations and practices of the Internal Revenue Service;
and</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>court
decisions,</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">in each case,
as of the date of this prospectus.&#160;
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.&#160; Any change could apply retroactively to
transactions preceding the date of the change.&#160;
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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">You are
advised to consult your own tax advisor, regarding the tax consequences to you
of the acquisition, ownership and sale of our Common Stock, including the
federal, state, local, foreign and other tax consequences.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CERTAIN INCOME
TAX CONSIDERATIONS RELATING TO OUR REIT ELECTION</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Taxation of a
REIT</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have
elected to be taxed as a REIT under Sections 856 through 860 of the Code.&#160; 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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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 and will assume that the actions
described in this prospectus 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&nbsp;10-K
for the year ended December&nbsp;31, 2004 and this prospectus may be changed,
perhaps retroactively, by legislative or administrative action at any time.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; This treatment
substantially eliminates the &#147;double 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.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">15</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">However, we
will be subject to federal income tax as follows:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">First, we will
be taxed at regular corporate rates on any undistributed taxable income,
including undistributed net capital gains.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Requirements for Qualification.&#160;
The Code defines a REIT as a corporation, trust or association:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; which
is managed by one or more trustees or directors;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>the
beneficial ownership of which is evidenced by transferable shares, or by transferable
certificates of beneficial interest;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; which
would be taxable, but for Sections 856 through 860 of the&#160; Code, as a domestic corporation;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; which
is neither a financial institution; nor, an insurance company subject to
certain provisions of the&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Code;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(5)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; the
beneficial ownership of which is held by 100 or more persons;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(7)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>which
meets certain other tests, described below, regarding the amount of its
distributions and the nature of its income and assets.</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months.&#160; 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).&#160; 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.&#160;
Based on publicly available information, we believe we have satisfied
the share ownership requirements set forth in (5)&nbsp;and (6)&nbsp;above.&#160; In addition, Sections 9.2 and 9.3 of our
Charter provides for restrictions regarding&#160;
transfer and ownership of shares.&#160;
These restrictions are intended to assist us in </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">16</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">continuing to satisfy the share
ownership requirements described in (5)&nbsp;and (6)&nbsp;above.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have complied with, and will continue to
comply with, regulatory rules&nbsp;to send annual letters to certain of our
stockholders requesting information regarding the actual ownership of our
stock.&#160; 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.&#160; If we fail to comply with these regulatory
rules, we will be subject to a monetary penalty.&#160; If our failure to comply was due to intentional
disregard of the requirement, the penalty would be increased.&#160; However, if our failure to comply was due to
reasonable cause and not willful neglect, no penalty would be imposed.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income Tests.&#160; There presently
are two gross income requirements that we must satisfy to qualify as a REIT:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cancellation of indebtedness income generated
by us is not taken into account in applying the 75% and 95% income tests
discussed above.&#160; 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.&#160; Any gain realized from a prohibited
transaction is subject to a 100% penalty tax.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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.&#160;
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.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; These relief provisions will be generally
available if:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Our
failure to meet the tests was due to reasonable cause and not due to willful
neglect,</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>We
attach a schedule&nbsp;of the sources of our income to our return; and</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Any
incorrect information on the schedule&nbsp;was not due to fraud with intent to
evade tax.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">It is not now possible to determine the
circumstances under which we may be entitled to the benefit of these relief
provisions.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Asset Tests.&#160;
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.&#160; 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.&#160;
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;).&#160;
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.&#160; Each of the
10% vote and value test and the 20% and 5% asset tests must be satisfied at the
end of any quarter.&#160; There are special rules&nbsp;which
provide relief if the value related tests are not satisfied due to changes in
the value of the assets of a REIT.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Investments in Taxable REIT
Subsidiaries.&#160; 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.&#160; At this time, we do not have any taxable REIT
subsidiaries.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Ownership of a Partnership Interest or Stock
in a Corporation.&#160; We own interests in
various partnerships.&#160; 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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We also own interests in a number of
subsidiaries which are intended to be treated as qualified real estate
investment trust subsidiaries.&#160; The&#160; 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.&#160;
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.&#160; We
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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Real Estate Mortgage Investment Conduits (or
REMIC).&#160; 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.&#160; 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.&#160; All of our </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">18</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Annual Distribution Requirements.&#160; 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:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; the
sum of:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(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</font></p>

<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(B)&nbsp;90%
of the net income, if any (after tax), from foreclosure property; minus</font></p>

<p style="margin:0in 0in .0001pt .5in;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; the
excess of certain items of non-cash income over 5% of our real estate
investment trust taxable income.</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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&nbsp;to stockholders of record in either October, November, or December&nbsp;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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 85%
of our real estate investment trust ordinary income for such year;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 95%
of our real estate investment trust capital gain net income for such year; and</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; any
undistributed taxable income from prior periods;</font></p>

<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">we would be subject to a 4% excise tax on the excess of such required
distributions over the amounts actually distributed.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We intend to make timely distributions
sufficient to satisfy these annual distribution requirements.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Failure to Qualify.&#160; 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.&#160;
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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">State and local taxation.&#160; We may be subject to state or local taxation
in various state or local jurisdictions, including those in which we transact
business or reside.&#160; The state and local
tax treatment of our Company may not conform to the federal income tax
consequences discussed above.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">TAXATION OF
TAXABLE DOMESTIC STOCKHOLDERS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following
summary applies to you only if you are a &#147;US stockholder.&#148;&#160; A US stockholder is a stockholder of our
shares of stock who, for United State federal income tax purposes, is:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>a
citizen or resident alien of the United States;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>an
estate the income of which is subject to United States federal income taxation
regardless of its source; or</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; However, corporate
stockholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On May&nbsp;28,
2003, President Bush signed into law the Jobs and Growth Tax Relief
Reconciliation Act of 2003.&#160; 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%.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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%).</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; Without future legislative changes, the
maximum long-term capital gains and dividend rates discussed above will
increase in 2009.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; In addition, any distribution declared in
October, November&nbsp;or December&nbsp;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&nbsp;of the
following calendar year.&#160; Stockholders
may not include in their individual income tax returns any of our net operating
losses or capital losses.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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 </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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%.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Backup
withholding</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; The amount of
such withholding will be equal to the product of the fourth lowest rate applicable
to single filers and the amount of the distribution.&#160; This rate is currently 28% for tax years
beginning after 2002.&#160; Any amount paid to
the IRS as backup withholding will be creditable against the stockholder&#146;s
income tax liability.&#160; 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.&#160; See &#147;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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">TAXATION OF
TAX-EXEMPT STOCKHOLDERS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; In Revenue Ruling 66-106, 1966-1 C.B.&#160; 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.&#160; Based </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">21</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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)&nbsp;we are not a pension-held
REIT.&#160; 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).&#160; 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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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 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.&#160; Such prospective stockholders should consult
their own tax advisors concerning these &#147;set aside&#148; and reserve requirements.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">TAXATION OF
FOREIGN STOCKHOLDERS</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The rules&nbsp;governing
US federal income taxation of nonresident alien individuals, foreign
corporations, foreign partnerships and other foreign stockholders are
complex.&#160; We have not attempted to
provide more than a summary of these rules.&#160;
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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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.&#160; 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&nbsp;W-8BEN (or successor form) or (ii)&nbsp;the
non-US stockholder provides us with a properly executed IRS Form&nbsp;W-8ECI
(or successor form) claiming that the distribution is effectively connected
income.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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).&#160; 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.&#160; 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.&#160;
This amount is creditable against the non-US stockholder FIRPTA tax
liability.&#160; If we designate prior
distributions as capital gains dividends, then </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">subsequent distributions up to the amount of such prior distributions
will be treated as capital gains dividends for purposes of withholding.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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.&#160; 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.&#160; Also, if the non-US stockholder is a
nonresident alien individual who was present in the United States for 183 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.&#160;
A non-resident alien individual could, however, elect to treat such gain
as effectively connected income and pay tax as a US stockholder would.&#160; 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; 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.&#160; 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)&nbsp;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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OTHER TAX
CONSEQUENCES</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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&nbsp;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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.&#160; Our state and local tax treatment and your
state and local tax treatment may not conform to the federal income tax
consequences discussed above.&#160;
Consequently, you should consult your own tax advisors regarding the
effect of state and local tax laws on an investment in us.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="PlanOfDistribution_025231"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">PLAN OF DISTRIBUTION</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are
registering the shares of our Common Stock covered by this prospectus for the
Selling Stockholder, who may include pledges, donees, transferees or others who
may later hold the Selling Stockholder&#146;s interests.&#160; We will pay the costs and fees of registering
the shares, which we estimate to be approximately $19,152.00 but the Selling
Stockholder will pay any brokerage commissions, discounts or other expenses
relating to the sale of the shares.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Selling
Stockholder may sell the shares of our Common Stock through public or private
transactions, through the NYSE or otherwise at prevailing market prices or at
privately negotiated prices.&#160; In
addition, the Selling Stockholder may sell some or all of his shares of our
Common Stock covered by this registration statement through:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>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;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>an
exchange distribution in accordance with the rules&nbsp;of the applicable
exchange;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>privately
negotiated transactions;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>short
sales;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>broker-dealers
may agree with the Selling Stockholder to sell a specified number of such
shares at a stipulated price per share;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>a
combination of any such methods of sale; and</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>any
other method permitted pursuant to applicable law.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Selling
Stockholder may also sell shares under Rule&nbsp;144 under the Securities Act
of 1933, as amended (the Securities Act), if available, rather than under this
prospectus.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Selling Stockholder
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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Broker-dealers
engaged by the Selling Stockholder may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholder (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 the
Selling Stockholder. The Selling Stockholder 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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Selling
Stockholder 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 Stockholder
was deemed to be an underwriter, the Selling Stockholder may be subject to
certain statutory liabilities under, but not limited to, Sections 11, 12 and 17
of the Securities Act and Rule&nbsp;10b-5 under the Securities Exchange Act of
1934, as amended. If the Selling Stockholder uses this prospectus for any sale
of the shares of Common Stock, he will be subject to the prospectus delivery
requirements of the Securities Act.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Selling
Stockholder and other persons participating in the sale or distribution of the
securities will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules&nbsp;and regulations thereunder,
including Regulation M. Subject to certain exceptions, Rule&nbsp;102 of
Regulation 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 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 M.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Because it
is possible that a significant number of shares of our Common Stock could be
sold at the same time under this prospectus, such sale(s), or the possibility
of sale(s), may have a significant effect on the market price of our Common
Stock.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">24</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="LegalMatters_025238"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">LEGAL MATTERS</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The validity
of the securities offered will be passed upon by Ballard Spahr Andrews&nbsp;&amp;
Ingersoll, LLP, Baltimore, Maryland.&#160;
Certain tax matters will be passed upon for us by Reed Smith LLP,
Pittsburgh, Pennsylvania. Reed Smith LLP will rely upon the opinion of the
Ballard Spahr Andrews&nbsp;&amp; Ingersoll, LLP as to matters of Maryland law.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="Experts_025240"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">EXPERTS</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
consolidated financial statements of LTC Properties,&nbsp;Inc. appearing in LTC
Properties,&nbsp;Inc.&#146;s Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31,
2004 including schedules appearing therein, and LTC Properties,&nbsp;Inc.
management&#146;s assessment of the effectiveness of internal control over financial
reporting as of December&nbsp;31, 2004 included therein, have been audited by
Ernst&nbsp;&amp; Young LLP, independent registered public accounting firm, as
set forth in their reports thereon included therein, and incorporated herein by
reference. Such financial statements and management&#146;s assessment are, and
audited financial statements and LTC Properties,&nbsp;Inc. management&#146;s
assessments of the effectiveness of internal control over financial reporting
to be included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst&nbsp;&amp; Young LLP pertaining to such
financial statements and management&#146;s assessments (to the extent covered by
consents filed with the Securities and Exchange Commission) given on the
authority of such firm as experts in accounting and auditing.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="WhereYouCanFindAdditionalInformat_025240"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHERE
YOU CAN FIND ADDITIONAL INFORMATION</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This
prospectus is part of a registration statement on Form&nbsp;S-3 we have filed
with the SEC covering the securities that may be offered under this
prospectus.&#160; The registration statement,
including the attached exhibits and schedules, contains additional relevant
information about the securities.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We file
annual, quarterly and current reports, proxy statements and other information
with the SEC.&#160; 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 100 F Street, NE, Washington, D.C.&#160; 20549.&#160;
You can request copies of those documents upon payment of a duplicating
fee to the SEC.&#160; 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.&#160; Please
call the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference rooms.&#160; You can review
our SEC filings and the registration statement by accessing the SEC&#146;s Internet
site at http://www.sec.gov, as well as on our website at
http://www.ltcproperties.com.&#160;
Information on our website is not incorporated by reference herein and
our web address is included as an inactive textual reference only.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">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.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><a name="DocumentsIncorporatedByReference_025244"></a><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">DOCUMENTS
INCORPORATED BY REFERENCE</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The SEC allows
us to &#147;incorporate by reference&#148; the information we file with the SEC, which
means:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>we
consider incorporated documents to be part of the prospectus;</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>we
may disclose important information to you by referring you to those documents;
and</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>information
we subsequently file with the SEC will automatically update and supersede the
information in this prospectus.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This
prospectus incorporates by reference the following documents:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Annual
report on Form&nbsp;10-K for the year ended December&nbsp;31, 2004.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Quarterly
reports on Forms 10-Q for the quarters ended March&nbsp;31, 2005, June&nbsp;30,
2005 and September&nbsp;30, 2005.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Current
reports on Form&nbsp;8-K filed with the SEC on February&nbsp;1, 2005, February&nbsp;2,
2005, February&nbsp;2, 2005, February&nbsp;2, 2005, April&nbsp;18, 2005, May&nbsp;6,
2005, July&nbsp;15, 2005, August&nbsp;2, 2005, September&nbsp;7, 2005, September&nbsp;8,
2005, November&nbsp;1, 2005 and November&nbsp;8, 2005.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Definitive
proxy statement for the annual meeting of stockholders held on May&nbsp;17,
2005.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">25</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The
description of our Common Stock contained in our registration statement on Form&nbsp;8-A
(SEC File No.&nbsp;001-11314), including any amendment or report filed for the
purpose of updating such description.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>All
documents subsequently filed by us under Sections 13(a), 13(c), 14 or 15(d)&nbsp;of
the Exchange Act of 1934, as amended, after the date of this prospectus and
before the termination of the offering.</p>

<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This
prospectus and the documents incorporated by reference summarize certain
material provisions of contracts and other documents to which we refer.&#160; Since this prospectus may not contain all the
information that you may find important, you should review the full text of
those documents.&#160; Upon written or oral
request, we will provide each person, including any beneficial owner, 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:</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pamela Shelley-Kessler</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Vice President and Corporate Secretary</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">LTC Properties,&nbsp;Inc.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">31365 Oak Crest Drive</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Suite&nbsp;200</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Westlake Village, California&#160;
91361</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telephone Number: (805) 981-8655</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">26</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

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