NATIONWIDE HEALTH PROPERTIES INC, 10-K, 1995-02-08

NATIONWIDE HEALTH PROPERTIES INC
10-K, 1995-02-08
REAL ESTATE INVESTMENT TRUSTS

Previous: NOBLE DRILLING CORP, SC 13D/A, 1995-02-08

Next: DEFINED ASSET FUNDS MUNICIPAL INVT TR FD MULTISTATE SER 2G, 485BPOS, 1995-02-08

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ____________________ to _____________________
Commission file number 1-9028

NATIONWIDE HEALTH PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND 95-3997619
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

4675 MACARTHUR COURT, SUITE 1170 92660
NEWPORT BEACH, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)

Registrant's telephone number, including area code: (714) 251-1211

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

<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
Common Stock, $.10 Par Value New York Stock Exchange
8.9% Senior Subordinated Convertible Debentures Due
2001 New York Stock Exchange
6.25% Convertible Debentures Due 1999 New York Stock Exchange
</TABLE>

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
- --

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ ]

The aggregate market value of the voting stock held by non-affiliates of the
Company is approximately $694,801,000 as of January 31, 1995.

18,254,389
(NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF JANUARY 31, 1995)

Part III is incorporated by reference from the registrant's definitive proxy
statement for the Annual Meeting of Stockholders to be held on April 21, 1995.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART I

ITEM 1. BUSINESS.

Nationwide Health Properties, Inc., a Maryland corporation organized in
October 1985 (the "Company"), is a real estate investment trust ("REIT") which
invests primarily in health care related facilities and provides financing to
health care providers. As of December 31, 1994, the Company had investments in
180 facilities located in 29 states. The facilities include 174 long-term
health care facilities, four assisted living facilities and two rehabilitation
hospitals.

As of December 31, 1994, the Company had direct ownership of 139 long-term
health care facilities, three assisted living facilities and two rehabilitation
hospitals (the "Properties"). All of the Company's owned facilities are leased
under "net" leases (the "Leases"), which are accounted for as operating leases,
to 32 health care providers (the "Lessees") including Beverly Enterprises, Inc.
("Beverly"), Sun Healthcare Group, Horizon Healthcare, Living Centers of
America, GranCare, Continental Medical Systems, Integrated Health Services and
NovaCare, Inc. Of the Lessees, only Beverly is expected to account for more
than 10% of the Company's revenue.

The Leases have initial terms ranging from 10 to 14 years, and most of the
Leases have eight five-year renewal options. The Company earns fixed monthly
minimum rents and may earn periodic additional rents. The additional rent
payments are generally computed as a percentage of facility net patient
revenues in excess of base amounts. The base amounts, in most cases, are net
patient revenues for the first year of the lease. Most Leases contain cross
collateralization and cross default provisions tied to other Leases with the
same Lessee, as well as grouped lease renewals and grouped purchase options.
Obligations under the Leases have corporate guarantees, and leases covering 73
facilities are backed by irrevocable letters of credit or security deposits
which cover from 1 to 13 months of monthly minimum rents. Under the terms of
the Leases, the Lessee is responsible for all maintenance, repairs, taxes and
insurance on the leased properties.

As of December 31, 1994, the Company held 22 mortgage loans secured by 35
long-term health care facilities and one assisted living facility. Such loans
had a net book value of approximately $105,824,000 at December 31, 1994. The
mortgage loans have individual outstanding principal balances ranging from
approximately $953,000 to $13,199,000 and have maturities ranging from 1995 to
2024.

During 1994, the Company acquired 12 long-term health care facilities and
three assisted living facilities for an aggregate purchase price of
approximately $58,990,000. Additionally, the Company provided four mortgage
loans, secured by eight long-term health care facilities and one assisted
living facility in an aggregate amount of approximately $27,456,000.

The Company anticipates providing lease or mortgage financing for health care
facilities to qualified operators and acquiring additional health care related
facilities, including long-term health care facilities, acute care and
rehabilitation hospitals. Financing for such future investments may be provided
by borrowings under the Company's bank line of credit, private placements or
public offerings of debt or equity, and the assumption of secured indebtedness.

TAXATION OF THE COMPANY

The Company believes that it has operated in such a manner as to qualify for
taxation as a "real estate investment trust" under Sections 856 through 860 of
the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its
taxable year ending December 31, 1985, and the Company intends to continue to
operate in such a manner. If the Company qualifies for taxation as a real
estate investment trust, it will generally not be subject to federal corporate
income taxes on its net income that is currently distributed to stockholders.
This treatment substantially eliminates the "double taxation" (e.g. at the
corporate and stockholder levels) that generally results from investment in
stock of a corporation.

1
<PAGE>

PROPERTIES

Of the 180 facilities in which the Company has investments, the Company has
direct ownership of 139 long-term health care facilities, three assisted living
facilities and two rehabilitation hospitals. The properties are leased to other
parties under terms which require the lessee, in addition to paying rent, to
pay all additional charges, taxes, assessments, levies and fees incurred in the
operation of the leased properties.

Long-Term Health Care Facilities

Long-term health care facilities provide rehabilitative, restorative, skilled
nursing and medical treatment for patients and residents who do not require the
high-technology, care-intensive, high-cost setting of an acute-care or
rehabilitative hospital. Treatment programs include physical, occupational,
speech, respiratory and other therapeutic programs, including sub-acute
clinical protocols such as wound care and intravenous drug treatment.

Assisted Living Facilities

Assisted living facilities provide services to aid in everyday living, such
as bathing, routine or special meals, security, transportation, recreation,
medication supervision and limited therapeutic programs. More intensive medical
needs of the residents are often met within the Company's assisted living
facilities by home health providers, close coordination with the individual's
physician and skilled nursing facilities. Assisted living facilities are
increasingly successful as lower cost, less institutional alternatives to the
health problems of the elderly or medically frail.

Rehabilitation Hospitals

Rehabilitation hospitals provide inpatient and outpatient medical care to
patients requiring high intensity physical, respiratory, neurological,
orthopedic and other treatment protocols and for intermediate periods in their
recovery. These programs are often the most effective in treating severe
skeletal or neurological injuries and traumatic diseases such as stroke or
acute arthritis.

2
<PAGE>

The following table sets forth certain information regarding the Company's
owned facilities as of December 31, 1994.

<TABLE>
<CAPTION>
NUMBER NUMBER ANNUAL 1994
OF OF MINIMUM ADDITIONAL
FACILITY LOCATION FACILITIES BEDS INVESTMENT RENT(1) RENT(1)
----------------- ---------- ------ ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
LONG-TERM HEALTH CARE FACILI-
TIES:
Arizona...................... 3 512 $ 14,463 $ 1,718 $ 279
Arkansas..................... 2 397 5,982 666 353
California................... 10 1,207 34,203 3,940 431
Colorado..................... 1 109 3,114 307 --
Connecticut.................. 5 668 14,726 1,486 482
Florida...................... 7 1,057 22,926 2,494 1,048
Georgia...................... 1 106 7,173 850 --
Idaho........................ 1 64 792 81 4
Illinois..................... 2 222 5,549 701 143
Indiana...................... 7 1,027 27,085 3,136 688
Kansas....................... 8 644 11,812 1,183 149
Maryland..................... 4 740 22,055 2,634 753
Massachusetts................ 8 859 29,589 3,238 268
Minnesota.................... 9 1,196 29,629 3,621 948
Missouri..................... 1 108 2,740 337 73
Nevada....................... 1 140 4,034 480 52
New Jersey................... 1 180 6,809 749 128
North Carolina............... 1 150 2,360 294 146
Ohio......................... 6 811 29,537 2,740 426
Oklahoma..................... 3 253 3,939 404 112
Oregon....................... 4 356 6,760 833 236
South Dakota................. 1 107 1,840 227 215
Tennessee.................... 8 851 23,142 2,420 --
Texas........................ 26 3,029 55,607 6,101 997
Virginia..................... 4 613 18,568 2,291 504
Washington................... 5 506 18,522 1,903 202
Wisconsin.................... 10 1,077 22,410 2,439 912
--- ------ -------- ------- ------
Subtotal................... 139 16,989 $425,366 $47,273 $9,549
--- ------ -------- ------- ------
ASSISTED LIVING FACILITIES:
California................... 1 180 7,830 734 --
Oklahoma..................... 1 113 4,289 407 --
Texas........................ 1 100 3,807 360 --
--- ------ -------- ------- ------
Subtotal................... 3 393 15,926 1,501 --
--- ------ -------- ------- ------
REHABILITATION HOSPITALS:
Arizona...................... 2 116 16,826 1,770 163
--- ------ -------- ------- ------
Subtotal................... 2 116 16,826 1,770 163
=== ====== ======== ======= ======
TOTAL OWNED FACILITIES 144 17,498 $458,118 $50,544 $9,712
=== ====== ======== ======= ======
</TABLE>
- --------
(1) Annual Minimum Rent (as defined in the Leases) for each of the Company's
owned properties. Additional rent, generally contingent upon increases in
the facility net patient revenues in excess of a base amount, may also be
paid. The 1994 additional rent amounts reflect additional rent accrued in
1994.

3
<PAGE>

As of December 31, 1994, 48 of the Company's 144 owned facilities were being
leased to and operated by subsidiaries of Beverly Enterprises, Inc.
("Beverly"). Beverly has guaranteed certain obligations of its subsidiaries and
of certain parties unaffiliated with Beverly in connection with 23 properties
operated by such parties. The Company expects that as new facilities are
acquired, an increasing percentage of its facilities will be leased to
operators unaffiliated with Beverly. For additional financial information
regarding Beverly, see Appendix 1 attached as part of this Annual Report on
Form 10-K.

COMPETITION

The Company generally competes with other REITs, real estate partnerships,
health care providers and other investors, including, but not limited to, banks
and insurance companies, in the acquisition, leasing and financing of health
care facilities. The operators of the health care facilities compete on a local
and regional basis with operators of facilities that provide comparable
services. Operators compete for patients based on quality of care, reputation,
physical appearance of facilities, services offered, family preferences,
physicians, staff and price.

REGULATION

Payments for health care services provided by the operators of the Company's
facilities are received principally from four sources: Medicaid, a medical
assistance program for the indigent, operated by individual states with the
financial participation of the federal government; private funds; Medicare, a
federal health insurance program for the aged and certain chronically disabled
individuals; and health and other insurance plans. Government revenue sources,
particularly Medicaid programs, are subject to statutory and regulatory
changes, administrative rulings, and government funding restrictions, all of
which may materially increase or decrease the rates of payment to nursing
facilities and the amount of additional rents payable to the Company under the
Leases. There is no assurance that payments under such programs will remain at
levels comparable to the present levels or be sufficient to cover all the
operating and fixed costs allocable to Medicaid and Medicare patients.

Health care facilities in which the Company invests are also generally
subject to state licensure statutes and regulations and statutes which may
require regulatory approval, in the form of a certificate of need ("CON"),
prior to the addition or construction of new beds, the addition of services or
certain capital expenditures. CON requirements are not uniform throughout the
United States and are subject to change. The Company cannot predict the impact
of regulatory changes with respect to licensure and CON's on the operations of
the Company's lessees and mortgagees. CON requirements generally do not apply
to assisted living facilities.

EXECUTIVE OFFICERS OF THE COMPANY

The table below sets forth the name, position and age of each executive
officer of the Company. Each executive officer of the Company is appointed by
its Board of Directors, serves at the pleasure of the Board and holds office
until a successor is elected, or until the earliest of death, resignation or
removal. There is no "family relationship" between any of the named executive
officers or any director of the Company. All information is given as of January
31, 1995.

<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<C> <S> <C>
Milton J. Brock, Jr... Chairman of the Board......................... 79
R. Bruce Andrews...... President and Chief Executive Officer......... 54
T. Andrew Stokes...... Vice President of Development................. 46
Gary E. Stark......... Vice President and General Counsel............ 39
Mark L. Desmond....... Vice President and Treasurer.................. 36
</TABLE>

4
<PAGE>

MILTON J. BROCK, JR.--Chairman of the Board of the Company since September
1989 and a director of the Company since its inception. Mr. Brock served as
President and Chief Executive Officer of the Company from June 1988 to
September 1989. Mr. Brock began his career with M. J. Brock & Sons, Inc., a
real estate contractor and developer, in 1940 and he was elected President in
1959, Chairman and Chief Executive Officer in 1973 and Chairman Emeritus upon
his retirement in 1985. Mr. Brock was a director of Bank of America REIT (now
BRE Properties) from its inception until his retirement in 1985, and had served
for 26 years as a director of Hollywood Presbyterian Medical Center.

R. BRUCE ANDREWS--President and Chief Executive Officer of the Company since
September 1989 and a director of the Company since October 1989. Mr. Andrews
had previously served as a director of American Medical International, Inc., a
hospital management company, and served as its Chief Financial Officer from
1970 to 1985 and its Chief Operating Officer in 1985 and 1986. From 1986
through 1989, Mr. Andrews was engaged in various private investments. Mr.
Andrews is also a director of ReadiCare, Inc. and Alexander Haagen Properties,
Inc.

T. ANDREW STOKES--Vice President of Development of the Company since August
1992. From 1984 to 1988, Mr. Stokes served as Vice President, Corporate
Development for American Medical International, Inc., a hospital management
company. From 1989 until joining the Company, Mr. Stokes was Healthcare Group
Director of Houlihan, Lokey, Howard & Zukin, a national financial advisory
firm.

GARY E. STARK--Vice President and General Counsel of the Company since
January 1993. From January 1988 to December 1989, Mr. Stark held the position
of General Counsel with Care Enterprises, Inc., an operator of nursing
facilities, pharmacies and other ancillary health care services, and served as
its Corporate Counsel from April 1985 through December 1987. From January 1990
through August 1991, Mr. Stark was engaged in the private practice of law. Mr.
Stark served as Vice President of Legal Services of Life Care Centers of
America, Inc., an operator and manager of nursing facilities and retirement
centers from July 1992 to December 1992 and served as General Counsel from
September 1991 to July 1992.

MARK L. DESMOND--Vice President and Treasurer of the Company since May 1990.
Mr. Desmond joined Beverly, an operator of nursing facilities, pharmacies and
pharmacy related outlets, in 1986 as Supervisory Senior Accountant, became
Manager of Regulatory Reporting in 1987 and Senior Analyst in 1988. In June
1988, Mr. Desmond was elected Controller, Chief Accounting Officer and
Assistant Treasurer of the Company.

EMPLOYEES

As of January 31, 1995, the Company employed nine full-time employees.

ITEM 2. PROPERTIES.

See Item 1 for details.

ITEM 3. LEGAL PROCEEDINGS.

There are various legal proceedings pending to which the Company is a party
or to which some of its properties are subject arising in the normal course of
business. The Company does not believe that the ultimate resolution of these
proceedings will have a material adverse effect on the Company's consolidated
financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

5
<PAGE>

PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

The Company's common stock is listed on the New York Stock Exchange. It has
been the Company's policy to declare quarterly dividends to holders of the
Company's common stock so as to comply with applicable sections of the
Internal Revenue Code governing real estate investment trusts. Set forth below
are the high and low sales prices of the Company's stock from January 1, 1993
to December 31, 1994 as reported by the New York Stock Exchange and the cash
dividends per share paid with respect to such periods.

<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
---- ---- --------
<S> <C> <C> <C>
1994
First quarter................................... $42 3/4 $35 1/4 $.6375
Second quarter.................................. 41 3/4 38 1/4 .6500
Third quarter................................... 39 35 3/8 .6625
Fourth quarter.................................. 38 5/8 31 5/8 .6750
1993
First quarter................................... $39 $31 3/8 $.5875
Second quarter.................................. 40 35 1/4 .6000
Third quarter................................... 41 5/8 37 1/8 .6125
Fourth quarter.................................. 42 1/2 34 1/2 .6250
</TABLE>

As of January 31, 1995 there were approximately 1,300 holders of record of
the Company's common stock.

ITEM 6. SELECTED FINANCIAL DATA.

The following table presents selected financial data with respect to the
Company. Certain of this financial data has been derived from the Company's
audited financial statements included elsewhere in this Annual Report on Form
10-K and should be read in conjunction with those financial statements and
accompanying notes and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations". Reference is made to Note 3 of Notes to
Consolidated Financial Statements for information regarding extraordinary
items and to Note 4 of Notes to Consolidated Financial Statements for
information regarding the Company's acquisitions.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenues.................... $ 69,985 $ 60,385 $ 49,945 $ 36,378 $ 31,538
Income before extraordinary items. 44,813 40,996 29,681 21,541 17,108
Net income........................ 44,813 38,992 29,681 18,081 17,108
Dividends paid.................... 47,751 42,883 33,349 26,245 23,319
PER SHARE DATA:
Income before extraordinary items. $ 2.47 $ 2.33 $ 2.00 $ 1.68 $ 1.56
Net income........................ 2.47 2.22 2.00 1.41 1.56
Dividends paid.................... 2.625 2.425 2.2275 2.06 1.90
BALANCE SHEET DATA:
Investments in real estate, net... $501,862 $428,473 $380,539 $289,761 $222,573
Total assets...................... 513,809 440,165 396,664 305,837 229,947
Bank borrowings................... 80,200 3,800 9,950 -- --
Convertible debentures............ 65,000 65,000 -- -- --
Senior subordinated convertible
debentures....................... 2,690 8,609 44,455 50,000 --
Notes and bonds payable........... 20,520 23,047 32,116 33,124 39,352
Stockholders' equity.............. 336,106 332,927 301,895 218,772 189,140
OTHER DATA:
Funds from operations (1)......... $ 57,642 $ 51,395 $ 39,097 $ 29,303 $ 23,700
Weighted average shares outstand-
ing.............................. 18,178 17,594 14,867 12,837 10,956
</TABLE>
- --------
(1) Industry analysts generally consider funds from operations to be an
alternative measure of the performance of an equity REIT. Funds from
operations is generally defined as income before extraordinary items plus
certain non-cash items, primarily depreciation and amortization, less
gains on sales of facilities. Funds from operations does not represent
cash generated from operating activities as defined by generally accepted
accounting principles (funds from operations does not include changes in
operating assets and liabilities) and, therefore, should not be considered
as an alternative to net income as the primary indicator of operating
performance or to cash flow as a measure of liquidity.

6
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES

During 1994, the Company acquired 12 long-term health care facilities and
three assisted living facilities in nine separate transactions for an aggregate
purchase price of $58,990,000. The facilities were concurrently leased under
terms generally similar to the Company's existing leases. Additionally, the
Company provided mortgages on eight long-term health care facilities and one
assisted living facility in an aggregate amount of approximately $27,456,000.
The acquisitions and mortgage financing were funded by bank borrowings on the
Company's bank line of credit and by cash on hand.

In addition to the acquisitions, the Company provided capital improvement
funding in the aggregate amount of approximately $3,064,000 in accordance with
certain existing lease provisions. Such capital improvements will result in an
increase in the minimum rents earned by the Company.

Proceeds of approximately $5,960,000 were received in connection with the
repayment of three mortgage loans secured by nine long-term health care
facilities. Additionally, three mortgage loans were refinanced thereby
extending the maturity dates and increasing the loan amounts in an aggregate of
approximately $2,633,000.

During April 1994, the Company amended the terms of its bank line of credit
to increase the amount of the line of credit from $70,000,000 to $100,000,000
and to extend its maturity an additional year to March 31, 1997. At December
31, 1994, the Company had $19,800,000 available under such bank line of credit.
Additionally, the Company has effective shelf registrations on file with the
Securities and Exchange Commission under which the Company may issue (a) up to
$100,000,000 in aggregate principal amount of medium term notes and (b) up to
$135,000,000 of securities including debt, convertible debt, common and
preferred stock.

The Company anticipates making additional investments in health care related
facilities. Financing for such future investments may be provided by borrowings
under the Company's bank line of credit, private placements or public offerings
of debt or equity, and the assumption of secured indebtedness. The Company
believes it has sufficient liquidity and financing capability to finance future
investments as well as repay borrowings at or prior to their maturity.

OPERATING RESULTS

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

Revenues increased $9,600,000, or 16% in 1994 as compared to 1993. The
increase was primarily due to increased minimum rent as a result of the
addition of 15 facilities in 1994, combined with a full year's minimum rent on
facilities acquired in 1993. The increase was also attributable to increased
additional rent resulting from increased facility patient revenues and
increased interest income due to additional investments in mortgage loans.

Total expenses increased $5,783,000, or 30% in 1994 as compared to 1993. The
increase was primarily due to an increase in interest expense due to the
issuance of $65,000,000 of convertible debentures in November 1993 and to
increased levels of bank borrowings and higher short-term interest rates in
1994. The increase was partially offset by a decrease in interest expense in
connection with the conversion of a portion of the Company's senior
subordinated convertible debentures during 1994. Increased expenses were also
attributable to increased depreciation as a result of acquisitions during 1994
and 1993.

7
<PAGE>

The Company expects increased rental revenues due to the addition of
facilities to its property base during 1994 and due to increased additional
rents under its leases. The Company also expects increased interest income
resulting from additional investments in mortgage loans during 1994. Additional
investments in health care facilities would also increase rental and/or
interest income. As additional investments in facilities are made, depreciation
and/or interest expense could also increase. Any such increases, however, are
expected to be more than offset by rents or interest income associated with the
investments.

Year Ended December 31, 1993 Compared to Year Ended December 31, 1992

Revenues increased $10,440,000, or 21% in 1993 as compared to 1992. The
increase was primarily due to increased minimum rent and interest income as a
result of the addition of 19 facilities and five mortgage loans to the
Company's portfolio in 1993, combined with a full year's minimum rent and
interest income on facilities and mortgage loans acquired in 1992. Revenues
also increased due to increased additional rent resulting from increased
facility patient revenues and an increase in the number of facilities from
which the Company earns additional rent.

Total expenses decreased $875,000, or 4% in 1993 as compared to 1992. The
decrease was primarily due to a decrease in interest expense in connection with
the conversion of a substantial portion of the Company's senior subordinated
convertible debentures. Of the original issuance of $50,000,000 in aggregate
principal amount of debentures in October 1991, $35,846,000 and $5,545,000 of
such debentures were converted into shares of the Company common stock in 1993
and 1992, respectively. This decrease was partially offset by increased
interest expense due to the issuance of $65,000,000 of convertible debentures
in November 1993, increased depreciation as a result of acquisitions during
1993 and 1992 and increased general and administrative expenses.

The Company recorded an extraordinary charge of $2,004,000 in 1993,
representing the write-off of unamortized deferred financing costs and fees
associated with the prepayment of a mortgage bond due in the year 2000 secured
by 19 of the Company's facilities.

Year Ended December 31, 1992 Compared to Year Ended December 31, 1991

Revenues increased $13,567,000, or 37% in 1992 as compared to 1991. The
increase was primarily due to increased minimum rent as a result of the
acquisition of five facilities during 1992 and 18 facilities during 1991 and
increased interest income as a result of the acquisition of 25 mortgage loans
during 1992. Revenues also increased due to additional rent resulting from
increased facility patient revenues and an increase in the number of facilities
from which the Company earns additional rent.

Total expenses increased $5,427,000, or 37% in 1992 as compared to 1991. The
increase was primarily due to increased depreciation as a result of the
acquisition of five facilities during 1992 and 18 facilities during 1991 and
due to increased interest expense resulting from the issuance of $50,000,000 of
senior subordinated convertible debentures in October 1991.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants............................. 9
Consolidated Balance Sheets.......................................... 10
Consolidated Statements of Operations................................ 11
Consolidated Statements of Stockholders' Equity...................... 12
Consolidated Statements of Cash Flows................................ 13
Notes to Consolidated Financial Statements........................... 14
</TABLE>

8
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Directors,
Nationwide Health Properties, Inc.

We have audited the accompanying consolidated balance sheets of Nationwide
Health Properties, Inc. (a Maryland corporation) and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nationwide Health Properties,
Inc. and subsidiaries as of December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Orange County, California
January 20, 1995

9
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Investments in real estate
Real estate properties:
Land.................................................... $ 39,981 $ 33,441
Buildings and improvements.............................. 418,137 361,909
-------- --------
458,118 395,350
Less accumulated depreciation........................... (62,080) (50,180)
-------- --------
396,038 345,170
Mortgage loans receivable, net............................ 105,824 83,303
-------- --------
501,862 428,473
Cash and cash equivalents................................... 3,742 3,627
Receivables................................................. 2,936 2,854
Other assets................................................ 5,269 5,211
-------- --------
$513,809 $440,165
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Bank borrowings............................................. $ 80,200 $ 3,800
Convertible debentures...................................... 65,000 65,000
Notes and bonds payable..................................... 20,520 23,047
Senior subordinated convertible debentures.................. 2,690 8,609
Accounts payable and accrued liabilities.................... 9,293 6,782
Commitments and contingencies
Stockholders' equity:
Preferred stock $1.00 par value; 5,000,000 shares
authorized; none issued or outstanding...................
Common stock $.10 par value; 100,000,000 and 25,000,000
shares authorized as of December 31, 1994 and 1993,
respectively; issued and outstanding: 18,238,193 and
17,979,516 as of December 31, 1994 and 1993,
respectively............................................. 1,824 1,797
Capital in excess of par value............................ 364,959 358,869
Cumulative net income..................................... 194,764 149,951
Cumulative dividends...................................... (225,441) (177,690)
-------- --------
Total stockholders' equity.............................. 336,106 332,927
-------- --------
$513,809 $440,165
======== ========
</TABLE>

See accompanying notes.

10
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Revenues:
Minimum rent........................................ $47,805 $40,758 $38,062
Additional rent..................................... 9,712 8,417 6,241
Interest and other income........................... 12,468 11,210 5,504
Gain on sale of facilities.......................... -- -- 138
------- ------- -------
69,985 60,385 49,945
Expenses:
Depreciation and amortization....................... 11,952 9,937 9,142
Interest............................................ 9,921 6,186 8,162
General and administrative.......................... 3,299 3,266 2,960
------- ------- -------
25,172 19,389 20,264
------- ------- -------
Income before extraordinary items..................... 44,813 40,996 29,681
Extraordinary charge.................................. -- (2,004) --
------- ------- -------
Net income............................................ $44,813 $38,992 $29,681
======= ======= =======
Per share amounts:
Income before extraordinary items................... $ 2.47 $ 2.33 $ 2.00
======= ======= =======
Net income.......................................... $ 2.47 $ 2.22 $ 2.00
======= ======= =======
Weighted average shares outstanding................... 18,178 17,594 14,867
======= ======= =======
</TABLE>

See accompanying notes.

11
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN TOTAL
------------- EXCESS OF CUMULATIVE CUMULATIVE STOCKHOLDERS'
SHARES AMOUNT PAR VALUE NET INCOME DIVIDENDS EQUITY
------ ------ ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1991................... 13,238 $1,324 $237,628 $ 81,278 $(101,458) $218,772
Issuance of stock..... 3,014 301 80,388 -- -- 80,689
Exercise of stock op-
tions................ 68 7 775 -- -- 782
Conversion of deben-
tures................ 217 22 5,298 -- -- 5,320
Net income............ -- -- -- 29,681 -- 29,681
Dividends............. -- -- -- -- (33,349) (33,349)
------ ------ -------- -------- --------- --------
Balances at December 31,
1992................... 16,537 1,654 324,089 110,959 (134,807) 301,895
Issuance of stock..... 13 -- 178 -- -- 178
Exercise of stock op-
tions................ 24 2 289 -- -- 291
Conversion of deben-
tures................ 1,406 141 34,313 -- -- 34,454
Net income............ -- -- -- 38,992 -- 38,992
Dividends............. -- -- -- -- (42,883) (42,883)
------ ------ -------- -------- --------- --------
Balances at December 31,
1993................... 17,980 1,797 358,869 149,951 (177,690) 332,927
Issuance of stock..... 13 3 255 -- -- 258
Exercise of stock op-
tions................ 13 1 149 -- -- 150
Conversion of deben-
tures................ 232 23 5,686 -- -- 5,709
Net income............ -- -- -- 44,813 -- 44,813
Dividends............. -- -- -- -- (47,751) (47,751)
====== ====== ======== ======== ========= ========
Balances at December 31,
1994................... 18,238 $1,824 $364,959 $194,764 $(225,441) $336,106
====== ====== ======== ======== ========= ========
</TABLE>

See accompanying notes.

12
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 44,813 $ 38,992 $ 29,681
Extraordinary charge........................... -- 2,004 --
Depreciation, amortization and non-cash
charges....................................... 12,829 10,399 9,554
Gain on sale of facilities..................... -- -- (138)
-------- -------- --------
Funds from operations........................ 57,642 51,395 39,097
Net increase in other assets and liabilities... (886) (1,670) (890)
-------- -------- --------
Net cash provided by operating activities.... 56,756 49,725 38,207
Cash flows from investing activities:
Acquisition of real estate properties.......... (62,768) (58,353) (27,858)
Secured acquisition financing.................. -- 1,060 --
Disposition of real estate properties.......... -- 2,650 2,308
Investment in mortgage loans receivable........ (30,289) (27,450) (86,982)
Principal payments on mortgage loans
receivable.................................... 9,872 25,832 15,813
-------- -------- --------
Net cash used in investing activities........ (83,185) (56,261) (96,719)
Cash flows from financing activities:
Bank borrowings................................ 126,700 82,000 23,850
Repayment of bank borrowings................... (50,300) (88,150) (13,900)
Issuance of common stock....................... 117 291 81,394
Issuance of convertible debentures............. -- 65,000 --
Principal payments on notes and bonds payable.. (2,074) (12,733) (1,008)
Dividends paid................................. (47,751) (42,883) (33,349)
Deferred financing costs....................... (148) (2,679) (150)
Refund of debt service reserve................. -- 1,036 --
-------- -------- --------
Net cash provided by financing activities.... 26,544 1,882 56,837
-------- -------- --------
Increase (decrease) in cash and cash equivalents. 115 (4,654) (1,675)
Cash and cash equivalents, beginning of period... 3,627 8,281 9,956
-------- -------- --------
Cash and cash equivalents, end of period......... $ 3,742 $ 3,627 $ 8,281
======== ======== ========
Supplemental schedule of cash flow information:
Cash paid for interest......................... $ 9,102 $ 6,025 $ 8,563
======== ======== ========
</TABLE>

See accompanying notes.

13
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

1. ORGANIZATION

Nationwide Health Properties, Inc. (the "Company") was incorporated on
October 14, 1985 in the State of Maryland. The Company operates as a real
estate investment trust specializing in investments in health care related
properties and as of December 31, 1994 had investments in 180 health care
facilities, consisting of 174 long-term health care facilities, four assisted
living facilities and two rehabilitation hospitals. At December 31, 1994, the
Company owned 139 long-term health care facilities, three assisted living
facilities and two rehabilitation hospitals and held 22 mortgage loans secured
by 35 long-term health care facilities and one assisted living facility.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries and its investment in its majority owned and
controlled joint venture. All material intercompany accounts and transactions
have been eliminated.

Land, Buildings and Improvements

The Company records properties at cost and uses the straight-line method of
depreciation for buildings and improvements over their estimated remaining
useful lives of up to 40 years. The Company provides accelerated depreciation
on certain of its investments based primarily on an estimation of net
realizable value of such investments at the end of the primary lease terms.

Cash and Cash Equivalents

Cash in excess of daily requirements is invested in money market mutual
funds, commercial paper and repurchase agreements with maturities of three
months or less. Such investments are deemed to be cash equivalents for
purposes of presentation in the financial statements.

Federal Income Taxes

The Company qualifies as a real estate investment trust under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended. The Company
intends to continue to qualify as such and therefore to distribute at least
95% of its real estate investment trust taxable income to its stockholders.
Accordingly, the Company will not be subject to Federal income taxes on its
income which is distributed to stockholders. Therefore, no provisions for
Federal income taxes has been made in the Company's financial statements. The
net difference in the tax basis and the reported amounts of the Company's
assets and liabilities as ofDecember 31, 1994 is approximately ($7,857,000).

Revenue Recognition

Rental income from operating leases is accrued as earned over the life of
the lease agreements. Interest income on real estate mortgages is recognized
using the effective interest method based upon the expected payments over the
lives of the mortgages.

Net Income Per Share

Net income per share is calculated by dividing net income by the weighted
average number of common shares outstanding during the period. The effect of
common stock options and senior subordinated convertible debentures is
immaterial, and the effect of convertible debentures is anti-dilutive.

14
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

Funds From Operations

Industry analysts generally consider funds from operations to be an
alternative measure of the performance of an equity REIT. Funds from operations
is generally defined as net income plus certain non-cash items, primarily
depreciation and amortization, less gains on sales of facilities. Funds from
operations does not represent cash generated from operating activities as
defined by generally accepted accounting principles (funds from operation does
not include changes in operating assets and liabilities) and, therefore, should
not be considered as an alternative to net income as the primary indicator of
operating performance or to cash flow as a measure of liquidity.

Depreciation and non-cash charges added to net income to arrive at funds from
operations is comprised as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(IN THOUSANDS )
<S> <C> <C> <C>
Depreciation and amortization...................... $11,952 $ 9,937 $9,142
Amortization of deferred financing costs........... 585 284 335
Restricted stock expense........................... 292 178 77
------- ------- ------
$12,829 $10,399 $9,554
======= ======= ======
</TABLE>

3. EXTRAORDINARY ITEMS

The prepayment of a portion of the Company's secured debt during 1993
resulted in an extraordinary charge of $2,004,000, representing the write-off
of unamortized deferred financing costs and fees associated with such
prepayment.

4. REAL ESTATE PROPERTIES

All of the Company's owned facilities are leased under "net" leases which are
accounted for as operating leases. The leases have initial terms ranging from
10 to 14 years, and most of the leases have eight five-year renewal options.
The Company earns fixed monthly minimum rents and may earn periodic additional
rents. The additional rent payments are generally computed as a percentage of
facility net patient revenues in excess of base amounts. The base amounts, in
most cases, are net patient revenues for the first year of the lease. Certain
of the leases contain provisions such that the percentage of further revenue
increases due to the Company as additional rent is limited to 1% at such time
as additional rent exceeds 41% of minimum rent. Under the terms of the leases,
the lessee is responsible for all maintenance, repairs, taxes and insurance on
the leased properties.

Minimum future rentals on non-cancelable leases as of December 31, 1994 are
as follows:

<TABLE>
<CAPTION>
MINIMUM
YEAR RENTALS
---- --------------
(IN THOUSANDS)
<S> <C>
1995.......................... 50,544
1996.......................... 50,544
1997.......................... 50,215
1998.......................... 47,877
1999.......................... 44,065
2000.......................... 30,037
2001.......................... 21,949
2002.......................... 16,261
2003.......................... 13,660
2004.......................... 9,521
Thereafter.................... 5,661
</TABLE>

15
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

The following table lists the Company's real estate properties as of December
31, 1994:

<TABLE>
<CAPTION>
NOTES
BUILDINGS AND
NUMBER OF AND TOTAL ACCUMULATED BONDS
FACILITY LOCATION FACILITIES LAND IMPROVEMENTS INVESTMENT(1) DEPRECIATION PAYABLE
- ----------------- ---------- ------ ------------ ------------- ------------ -------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM CARE FACILI-
TIES:
Arizona............... 3 $1,634 $12,829 $14,463 $1,735 $6,121
Arkansas.............. 2 209 5,773 5,982 1,388 --
California............ 10 7,753 26,450 34,203 1,974 --
Colorado.............. 1 400 2,714 3,114 68 --
Connecticut........... 5 1,465 13,261 14,726 2,111 941
Florida............... 7 2,185 20,741 22,926 3,560 --
Georgia............... 1 801 6,372 7,173 331 --
Idaho................. 1 15 777 792 155 --
Illinois.............. 2 157 5,392 5,549 614 3,667
Indiana............... 7 751 26,334 27,085 3,370 9,021
Kansas................ 8 517 11,295 11,812 989 770
Maryland.............. 4 845 21,210 22,055 5,128 --
Massachusetts......... 8 3,893 25,696 29,589 2,976 --
Minnesota............. 9 1,545 28,084 29,629 8,336 --
Missouri.............. 1 51 2,689 2,740 692 --
Nevada................ 1 740 3,294 4,034 268 --
New Jersey............ 1 360 6,449 6,809 1,914 --
North Carolina........ 1 116 2,244 2,360 577 --
Ohio.................. 6 1,316 28,221 29,537 4,111 --
Oklahoma.............. 3 98 3,841 3,939 763 --
Oregon................ 4 435 6,325 6,760 1,627 --
South Dakota.......... 1 200 1,640 1,840 422 --
Tennessee............. 8 1,040 22,102 23,142 835 --
Texas................. 26 4,805 50,802 55,607 5,893 --
Virginia.............. 4 1,036 17,532 18,568 4,511 --
Washington............ 5 2,350 16,172 18,522 885 --
Wisconsin............. 10 1,647 20,763 22,410 4,999 --
--- ------ ------- ------- ------ ------
Subtotals........... 139 36,364 389,002 425,366 60,232 20,520
--- ------ ------- ------- ------ ------
</TABLE>

16
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
NOTES
BUILDINGS AND
NUMBER OF AND TOTAL ACCUMULATED BONDS
FACILITY LOCATION FACILITIES LAND IMPROVEMENTS INVESTMENT(1) DEPRECIATION PAYABLE
- ----------------- ---------- ------- ------------ ------------- ------------ -------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSISTED LIVING FACILI-
TIES:
California............ 1 1,400 6,430 7,830 107 --
Oklahoma.............. 1 392 3,897 4,289 87 --
Texas................. 1 308 3,499 3,807 78 --
--- ------- -------- -------- ------- -------
Subtotals........... 3 2,100 13,826 15,926 272 --
--- ------- -------- -------- ------- -------
REHABILITATION HOSPI-
TALS:
Arizona............... 2 1,517 15,309 16,826 1,576 --
--- ------- -------- -------- ------- -------
Subtotals............. 2 1,517 15,309 16,826 1,576 --
--- ------- -------- -------- ------- -------
TOTAL OWNED FACILITIES 144 $39,981 $418,137 $458,118 $62,080 $20,520
=== ======= ======== ======== ======= =======
</TABLE>
- --------
(1) Also represents the approximate aggregate cost for Federal income tax
purposes.

The following table summarizes the changes in real estate properties and
accumulated depreciation during 1994, 1993 and 1992:

<TABLE>
<CAPTION>
REAL ESTATE ACCUMULATED
PROPERTIES DEPRECIATION
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
Balances at December 31, 1991.................... $323,428 $33,667
Additions...................................... 29,782 9,100
Sales.......................................... (9,148) (1,321)
-------- -------
Balance at December 31, 1992..................... 344,062 41,446
Additions...................................... 58,353 9,904
Sales.......................................... (7,065) (1,170)
-------- -------
Balance at December 31, 1993..................... 395,350 50,180
Additions...................................... 62,768 11,900
Sales.......................................... -- --
-------- -------
Balance at December 31, 1994..................... $458,118 $62,080
======== =======
</TABLE>

The average age of the Company's facilities is approximately 25 years. The
Company acquired 28 of its facilities on December 30, 1985, 32 facilities
during 1986, 10 facilities during 1987, 5 facilities during 1988, 12 facilities
during 1990, 18 facilities during 1991, 5 facilities during 1992, 19 facilities
during 1993 and 15 facilities during 1994.

5. MORTGAGE LOANS RECEIVABLE

At December 31, 1994, the Company had 22 mortgage loans receivable secured by
35 long-term health care facilities and one assisted living facility. The loans
have an aggregate principal balance of approximately $114,974,000 and are
reflected in the Company's financial statements net of an aggregate discount of
approximately $9,150,000. The principal balances of mortgage loans receivable
as of December 31, 1994 mature approximately as follows: $14,674,000 in 1995,
$4,212,000 in 1996, $2,847,000 in 1997, $6,908,000 in 1998, $1,586,000 in 1999,
and $84,747,000 thereafter.

During 1994, the Company provided four mortgage loans, secured by eight long-
term health care facilities and one assisted living facility in an aggregate
amount of approximately $27,456,000. The estimated

17
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

fair market value of the Company's mortgage loans receivable at December 31,
1994 is approximately $109,516,000. Fair market values are based on the
estimates of management and on rates currently prevailing for comparable loans.

The following table lists the Company's mortgage loans receivable at December
31, 1994:

<TABLE>
<CAPTION>
ORIGINAL
FINAL ESTIMATED FACE CARRYING
NUMBER OF INTEREST MATURITY BALLOON AMOUNT OF AMOUNT OF
LOCATION OF FACILITIES FACILITIES RATE DATE PAYMENT(1) MORTGAGES MORTGAGES(2)
- ---------------------- ---------- -------- -------- ---------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM HEALTH CARE
FACILITIES:
Arkansas.............. 3 10.00% 12/06 $ 4,946 $ 5,500 $ 4,982
California............ 1 6.79% 05/98 3,180 3,600 2,784
California............ 1 6.79% 05/98 2,164 2,425 1,888
California............ 3 9.50% 03/09 7,600 12,000 11,124
Florida............... 1 9.95% 07/03 -- 4,400 1,808
Illinois.............. 1 9.00% 01/24 -- 9,500 7,449
Indiana............... 1 9.95% 07/03 -- 785 1,016
Kansas................ 1 8.23% 05/97 1,299 1,550 1,201
Maryland.............. 1 10.90% 06/03 5,147 6,900 6,568
Massachusetts......... 1 8.75% 02/24 -- 9,000 6,818
Michigan.............. 3 11.40% 12/06 6,794 7,817 7,202
Michigan.............. 2 10.40% 06/03 2,504 3,000 2,890
Michigan.............. 1 10.00% 01/05 1,501 1,800 1,800
New Mexico............ 1 6.79% 02/96 2,717 2,880 2,583
Texas................. 1 9.88% 01/04 624 1,460 986
Texas................. 2 11.34% 01/95 2,297 2,519 2,297
Texas................. 3 10.75% 06/03 4,121 4,700 4,098
Texas................. 1 8.43% 08/95 954 2,825 953
Virginia.............. 1 10.50% 04/13 10,176 13,250 13,199
Washington............ 4 11.00% 10/19 112 6,000 5,993
Wisconsin............. 2 9.22% 03/95 9,860 12,000 9,801
--- ------- -------- --------
Subtotals........... 35 $65,996 $113,911 $ 97,440
--- ------- -------- --------
ASSISTED LIVING FACILI-
TIES:
Oklahoma.............. 1 9.55% 03/24 -- 8,250 8,384
--- ------- -------- --------
Subtotals........... 1 -- 8,250 8,384
--- ------- -------- --------
Total............. 36 $65,996 $122,161 $105,824
=== ======= ======== ========
</TABLE>
- --------
(1) Most loans require monthly principal and interest payments at level amounts
over life to maturity. Some loans are adjustable rate mortgages with
varying principal and interest payments over life to maturity, in which
case the balloon payments reflected are an estimate. Two of the loans have
decreasing principal and interest payments over the life of the loans. Most
loans require a prepayment penalty based on a percentage of principal
outstanding or a penalty based upon a calculation maintaining the yield the
Company would have been earned if prepayment had not occurred. One loan has
a provision that no prepayments are acceptable.

(2) The aggregate cost for federal income tax purposes is approximately
$110,803,000.

18
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

The following table summarizes the changes in mortgage loans receivable
during 1994 and 1993:

<TABLE>
<CAPTION>
1994 1993
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Balance at January 1,.................................. $ 83,303 $77,923
New mortgage loans................................... 30,289 30,133
Accretion of discount on loans....................... 2,104 1,079
Collection of principal.............................. (9,872) (25,832)
-------- -------
Balance at December 31,................................ $105,824 $83,303
======== =======
</TABLE>

6. BANK BORROWINGS

The Company has a $100,000,000 unsecured credit agreement with certain banks.
The terms of the bank line of credit were amended in April 1994 to increase the
amount of the line of credit from $70,000,000 and to extend its maturity an
additional year to March 31, 1997. At the option of the Company borrowings
under the agreement bear interest at prime or LIBOR plus 1.25%. The Company
pays a facility fee of one-fourth of 1% per annum on the total commitment under
the agreement.

Under covenants contained in the credit agreement, the Company is required to
maintain (i) a minimum net worth of $302,173,000; (ii) a ratio of cash flow
before interest expense and non-cash expenses to regularly scheduled debt
service payments on all debt of at least 2.0 to 1.0; and (iii) a ratio of total
liabilities to net worth of not more than 0.8 to 1.0.

The weighted average borrowings outstanding under the Company's credit
agreements during 1994, 1993 and 1992 were approximately $40,938,000,
$11,630,000 and $3,282,000, respectively. Maximum amounts outstanding at the
end of the months during 1994, 1993 and 1992 were $80,200,000, $19,100,000 and
$9,950,000, respectively. The weighted average interest rates during 1994, 1993
and 1992 were approximately 6.3%, 4.9% and 5.9%, respectively. The weighted
average interest rates at December 31, 1994, 1993 and 1992 were approximately
7.5%, 6.0% and 5.6%, respectively.

7. NOTES AND BONDS PAYABLE

Notes and bonds payable are due through the year 2006, at interest rates
ranging from 6.8% to 10.5% and are secured by real estate properties with an
aggregate net book value as of December 31, 1994 of approximately $30,762,000.

The principal balances of the notes and bonds payable as of December 31, 1994
mature approximately as follows: $6,310,000 in 1995, $12,417,000 in 1996,
$114,000 in 1997, 1998, and 1999, and $1,451,000 thereafter.

The estimated fair market value of the Company's notes and bonds payable at
December 31, 1994 is approximately $20,291,000. Fair market values are based on
the estimates of management and on rates currently prevailing for comparable
loans.

8. CONVERTIBLE DEBENTURES

During November 1993, the Company issued $65,000,000 of 6.25% convertible
debentures due January 1, 1999. The debentures are convertible at any time
prior to maturity into shares of the Company's common stock at a conversion
price of $44.825 per share. As of December 31, 1994, no debentures have been
converted. The estimated fair market value of the Company's convertible
debentures at December 31, 1994 is approximately $59,800,000. Fair market value
is based on the market price of the convertible debentures at December 31,
1994.

19
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

9. SENIOR SUBORDINATED CONVERTIBLE DEBENTURES

During 1991, the Company issued $50,000,000 of 8.9% senior subordinated
convertible debentures due July 1, 2001. The debentures are convertible into
common stock of the Company at a conversion price of $25.50 per share of common
stock. The debentures are redeemable by the Company in whole or in part at par
plus accrued interest on any date subsequent to October 29, 1992. During 1994,
1993 and 1992, $5,919,000, $35,846,000 and $5,545,000, respectively, of such
debentures converted into 232,106, 1,405,706 and 217,449 shares of common
stock, respectively. The estimated fair market value of the Company's senior
subordinated convertible debentures at December 31, 1994 is approximately
$3,771,000. Fair market value is based on market price at December 31, 1994 of
the number of shares of the Company's common stock into which the debentures
are convertible.

10. STOCK INCENTIVE PLAN

Under the terms of a stock incentive plan (the "Plan"), the Company has
reserved for issuance 400,000 shares of common stock. Directors, officers and
employees of the Company are eligible to participate in the Plan. The following
is a summary of stock options granted, exercised and canceled, and restricted
stock awarded:

<TABLE>
<CAPTION>
RESTRICTED
STOCK
STOCK OPTIONS AWARDS
--------------------- ----------
NUMBER
OF EXERCISE NUMBER OF
SHARES PRICE SHARES
------- ------------- ----------
<S> <C> <C> <C>
Outstanding at December 31, 1991......... 117,000 $11.25-$17.50 --
Granted
1992................................... -- -- 13,700
1993................................... -- -- 13,750
1994................................... -- -- 14,200
Canceled
1992................................... -- -- --
1993................................... 9,000 17.50 800
1994................................... -- -- --
Exercised/Restrictions Lapsed
1992................................... 67,816 11.25-17.50 --
1993................................... 24,184 11.25 200
1994................................... 13,400 11.25 --
Outstanding at December 31, 1994......... 2,600 $11.25 40,650
</TABLE>

Stock options granted under the Plan become exercisable each year following
the date of grant in annual increments of one-third for non-management
directors of the Company and one-fifth for all other grant recipients. Stock
options covering 2,600 shares were exercisable at December 31, 1994.

The restricted stock awards are granted at no cost. Restricted stock awards
vest at the third anniversary of the award date with respect to non-employee
directors and at the fifth anniversary with respect to officers and employees.
The restricted stock awards are amortized over their respective vesting
periods. Expense is determined based upon the market value at the date of award
of the restricted stock and is recognized over the vesting period. Expense
recorded in 1994, 1993 and 1992 related to restricted stock awards was
approximately $292,000, $178,000 and $77,000, respectively.

20
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

11. PENSION PLAN

During 1991, the Company adopted an unfunded benefit pension plan covering
the current non-employee members of its board of directors upon completion of
five years of service on the board. The benefits, limited to the number of
years of service on the board, are based upon the then current annual retainer
in effect.

The following tables set forth the amounts recognized in the Company's
financial statements:

<TABLE>
<CAPTION>
12/31/94 12/31/93
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation....................... $493,000 $460,000
======== ========
Accumulated benefit obligation.................. $504,000 $460,000
======== ========
Projected benefit obligation.................... $561,000 $521,000
Unrecognized prior service cost................. 183,000 211,000
Unrecognized net (gain) or loss................. (20,000) 40,000
-------- --------
Accrued pension cost............................ $398,000 $270,000
======== ========
</TABLE>

Net pension cost for the year included the following components:

<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Current service cost............................ $ 62,000 $ 56,000 $ 52,000
Interest cost................................... 38,000 33,000 27,000
Amortization of prior service cost.............. 27,000 27,000 27,000
-------- -------- --------
Net periodic pension cost....................... $127,000 $116,000 $106,000
======== ======== ========
</TABLE>

Discount rates of 8.5% and 7.25% in 1994 and 1993, respectively and a 5.0%
increase in the annual retainer every other year were used in determining the
actuarial present value of the projected benefit obligation.

12. TRANSACTIONS WITH BEVERLY ENTERPRISES, INC.

As of December 31, 1994, 48 of the owned facilities are leased to and
operated by subsidiaries of Beverly Enterprises, Inc. ("Beverly"). Beverly has
guaranteed certain obligations of its subsidiaries and of certain parties
unaffiliated with Beverly in connection with 23 properties operated by such
parties.

Revenues from Beverly were approximately $22,776,000, $24,323,000, and
$23,229,000 for the years ended December 31, 1994, 1993 and 1992, respectively.

One of the directors of the Company is also an officer and director of
Beverly.

13. DIVIDENDS

Dividend payments by the Company to the stockholders were characterized in
the following manner for tax purposes:

<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Ordinary income................................... $2.5275 $2.2475 $2.1625
Capital gain...................................... .0975 .1775 .0450
Return of capital................................. -- -- .0200
------- ------- -------
Total dividends paid............................ $2.6250 $2.4250 $2.2275
======= ======= =======
</TABLE>

21
<PAGE>

NATIONWIDE HEALTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED,
---------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- -------- ------------- ------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1994:
Revenues.................... $16,500 $17,380 $17,875 $18,230
Net income.................. 10,944 11,208 11,371 11,290
Net income per share........ .60 .62 .62 .62
Dividends per share......... .6375 .65 .6625 .675
1993:
Revenues.................... $14,425 $14,728 $15,236 $15,996
Income before extraordinary
items...................... 9,634 10,065 10,608 10,689
Net income.................. 9,634 10,065 10,608 8,685
Income per share before
extraordinary items........ .56 .58 .59 .60
Net income per share........ .56 .58 .59 .48
Dividends per share......... .5875 .60 .6125 .625
</TABLE>

22
<PAGE>

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held on April 21, 1995,
filed or to be filed pursuant to Regulation 14A.

ITEM 11. EXECUTIVE COMPENSATION.

Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held on April 21, 1995,
filed or to be filed pursuant to Regulation 14A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held on April 21, 1995,
filed or to be filed pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Incorporated herein by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held on April 21, 1995,
filed or to be filed pursuant to Regulation 14A.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) Financial Statements.
Report of Independent Public Accountants
Consolidated Balance Sheets at December 31, 1994 and 1993
Consolidated Statements of Operations for the years ended December 31,
1994, 1993 and 1992
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1993 and 1992
Notes to Consolidated Financial Statements

Note: Schedules have been omitted because the required information is
presented in the financial statements and the related notes or because the
schedules are not applicable.

(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the three-month
period ended December 31, 1994

23
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
3. Articles of Incorporation and Bylaws
3.1(a) Restated Articles of Incorporation, filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-11 (No. 33-1128),
effective December 19, 1985, and incorporated herein by this
reference.
3.1(b) Articles of Amendment of Amended and Restated Articles of
Incorporation of the Company, filed as Exhibit 3.1 to the
Company's Form 10-Q for the quarter ended March 31, 1989, and
incorporated herein by this reference.
3.1(c) Articles of Amendment of Amended and Restated Articles of
Incorporation of the Company, filed as Exhibit 3.1(c) to the
Company's Registration Statement on Form S-11 (No. 33-32251),
effective January 23, 1990, and incorporated herein by this
reference.
3.1(d) Articles of Amendment of Amended and Restated Articles of
Incorporation of the Company.
3.2(a) Amended and Restated Bylaws of the Company, filed as Exhibit 3.1
to the Company's Form 10-Q for the quarter ended September 30,
1986, and incorporated herein by this reference.
3.2(b) Amendment to Amended and Restated Bylaws of the Company, filed as
Exhibit 3.2(b) to the Company's Form 10-K for the year ended
December 31, 1990, and incorporated herein by this reference.
3.2(c) Bylaws of the Company as amended and restated October 28, 1994,
filed as Exhibit 3.1 to the Company's Form 10-Q for the quarter
ended September 30, 1994, and incorporated herein by this
reference.
4. Instruments Defining Rights of Security Holders, Including
Indentures
4.1 Indenture dated October 29, 1991 providing for the issuance of
$50,000,000 8.9% Senior Subordinated Convertible Debentures due
2001 by Nationwide Health Properties, Inc. filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-3 (No.33-432265)
effective October 24, 1991, and incorporated herein by this
reference.
4.2 Indenture dated as of November 16, 1992, between Nationwide Health
Properties, Inc., Issuer to The Chase Manhattan Bank (National
Association), Trustee, filed as Exhibit 4.1 to the Company's Form
S-3 (No. 33-54870) dated November 24, 1992, and incorporated
herein by this reference.
4.3 Indenture dated as of June 30, 1993, between the Company and First
Interstate Bank of California, as Trustee, filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-3 (No. 33-64798),
effective July 12, 1993, and incorporated herein by this reference.
4.4 First Supplemental Indenture dated November 15, 1993, between the
Company and First Interstate Bank of California, as Trustee, filed
as Exhibit 4.1 to the Company's Form 8-K dated November 15, 1993,
and incorporated by reference herein.
10.0 Material Contracts
10.1 Master Lease Document--General Terms and Conditions dated December
30, 1985, for Leases between various subsidiaries of Beverly as
Lessees and the Company as Lessor, filed as Exhibit 10.3 to the
Company's Form 10-K for the year ended December 31, 1985, and
incorporated herein by this reference.
10.2 Guaranty by and between the Company and Beverly filed as Exhibit
10.7 to the Company's Registration Statement on Form S-11 (No. 33-
1128), effective December 19, 1985, and incorporated herein by
this reference.
10.3 Corporate Guaranty of Obligations of Subsidiaries pursuant to
Leases and Contract of Acquisition, dated as of August 1, 1986, of
Beverly as Guarantor in favor of the Company filed as Exhibit 10.3
to the Company's Registration Statement on Form S-11 (No. 33-
32251), effective January 23, 1990, and incorporated herein by
this reference.
</TABLE>

24
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.4 Corporate Guaranty of Obligations of Subsidiaries pursuant to
Leases and Contract of Acquisition, dated as of November 1, 1986,
of Beverly as Guarantor in favor of the Company filed as Exhibit
10.4 to the Company's Registration Statement on Form S-11 (No. 33-
32251), effective January 23, 1990, and incorporated herein by
this reference.
10.5 Corporate Guaranty of Obligations of Subsidiaries pursuant to
Leases, dated as of July 31, 1987, of Beverly as Guarantor in favor
of the Company filed as Exhibit 10.5 to the Company's Registration
Statement on Form S-11 (No. 33-32251), effective January 23, 1990,
and incorporated herein by this reference.
10.6 Indemnity Agreements dated August 18, 1989 with directors of the
Company, including directors David Banks, Milton Brock, Jr., Sam
Brooks, Jr., Robert Finch and Charles Miller, and officers Mark L.
Desmond and Don Pearson, and Indemnity Agreement dated
September 18, 1989 with R. Bruce Andrews, President, Chief
Executive Officer and Director, filed as Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended September 30, 1989, and
incorporated herein by this reference.
10.6(a) Indemnity Agreement dated as of January 18, 1993 by and between
Nationwide Health Properties, Inc. and Gary E. Stark, Vice
President, General Counsel and Officer of the Company filed as
Exhibit 10.7(a) to the Company's Form 10-K for the year ended
December 31, 1993, and incorporated herein by this reference.
10.6(b) Indemnity Agreement dated as of July 24, 1992 by and between
Nationwide Health Properties, Inc. and T. Andrew Stokes, Vice
President of Development and Officer of the Company, filed as
Exhibit 10.7(b) to the Company's Form 10-K for the year ended
December 31, 1992, and incorporated herein by this reference.
10.7 1989 Stock Option Plan of the Company as Amended and Restated
January 24, 1992 filed as Exhibit 10.8(a) to the Company's Form
10-K, and incorporated herein by this reference.
10.8 The Company's Retirement Plan for Directors effective July 26,
1991 filed as Exhibit 10.13 to the Company's Form 10-K for the
year ended December 31, 1991, and incorporated herein by this
reference.
10.9 Deferred Compensation Plan of the Company effective September 1,
1991 filed as Exhibit 10.14 to the Company's Form 10-K for the
year ended December 31, 1991, and incorporated herein by this
reference.
10.10 Commercial and Multi-family Mortgage Loan Sale Agreement dated as
of June 5, 1992 by and between Resolution Trust Corporation, as
Receiver, and Nationwide Health Properties, Inc. filed as Exhibit
A to the Company's Form 8-K dated May 29, 1992, and incorporated
herein by this reference.
10.11 Credit Agreement dated as of May 20, 1993 between the Company and
Wells Fargo Bank National Association, National Westminster Bank
USA, The Daiwa Bank Limited and Sanwa Bank of California filed as
Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June
30, 1993, and incorporated herein by this reference.
10.12 Amendment Number One to Credit Agreement dated as of May 20, 1993
between the Company and Wells Fargo Bank, National Association,
National Westminster Bank USA, The Daiwa Bank, Limited, and Sanwa
Bank California filed as Exhibit 10.1 to the Company's Form 10-Q
for the quarter ended March 31, 1994, and incorporated herein by
this reference.
21. Subsidiaries of the Registrant
23. Consents of Experts and Counsel
23.1 Consent of Arthur Andersen LLP
</TABLE>

25
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE COMPANY HAS DULY CAUSED THIS ANNUAL REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

NATIONWIDE HEALTH PROPERTIES, INC.

By: /s/ R. Bruce Andrews
---------------------------------
R. Bruce Andrews
President and Chief Executive
Officer
Dated: February 7, 1995

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE COMPANY
AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Milton J. Brock, Jr. Chairman and Director February 7, 1995
- ------------------------------------
Milton J. Brock, Jr.

/s/ R. Bruce Andrews President, Chief Executive February 7, 1995
- ------------------------------------ Officer and Director
R. Bruce Andrews (Principal Executive
Officer)

/s/ Mark L. Desmond Vice President and Treasurer February 7, 1995
- ------------------------------------ (Principal Financial and
Mark L. Desmond Accounting Officer)

/s/ David R. Banks Director February 7, 1995
- ------------------------------------
David R. Banks

Director February , 1995
- ------------------------------------
Sam A. Brooks

/s/ Robert H. Finch Director February 7, 1995
- ------------------------------------
Robert H. Finch

/s/ Charles D. Miller Director February 7, 1995
- ------------------------------------
Charles D. Miller

/s/ Jack D. Samuelson Director February 7, 1995
- ------------------------------------
Jack D. Samuelson
</TABLE>

26
<PAGE>

APPENDIX 1

BEVERLY ENTERPRISES, INC.

SET FORTH BELOW IS CERTAIN CONDENSED FINANCIAL DATA OF BEVERLY ENTERPRISES,
INC. ("BEVERLY") WHICH IS TAKEN FROM BEVERLY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1993 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT"), AND THE BEVERLY QUARTERLY REPORT ON FORM 10-Q FOR
THE QUARTER ENDED SEPTEMBER 30, 1994 AS FILED WITH THE COMMISSION.

The information and financial data contained herein concerning Beverly was
obtained and has been condensed from Beverly's public filings under the
Exchange Act. The Beverly financial data presented includes only the most
recent interim and fiscal year end reporting periods. The Company can make no
representation as to the accuracy and completeness of Beverly's public filings
but has no reason not to believe the accuracy and completeness of such filings.
It should be noted that Beverly has no duty, contractual or otherwise, to
advise the Company of any events subsequent to such dates which might affect
the significance or accuracy of such information.

Beverly is subject to the information filing requirements of the Exchange
Act, and in accordance therewith, is obligated to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information may be inspected at the offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and should also be available at the
following Regional Offices of the Commission: 7 World Trade Center, New York,
N.Y. 10048, and 500 West Madison Street, Suite 1400, Chicago, IL 60661. Such
reports and other information concerning Beverly can also be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, Room 1102, New
York, New York 10005.

I-1
<PAGE>

BEVERLY ENTERPRISES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, 1993
1994 (RESTATED)
------------- ------------
<S> <C> <C>
Total current assets................................. $ 608,151 $ 554,248
Property and equipment, net.......................... 1,169,140 1,154,478
Total other assets................................... 287,803 292,078
---------- ----------
Total assets......................................... $2,065,094 $2,000,804
========== ==========
Total current liabilities............................ $ 379,390 $ 399,829
Long-term obligations................................ 724,181 706,917
Other liabilities and deferred items................. 150,936 151,196
Total stockholders' equity........................... 810,587 742,862
---------- ----------
Total liabilities and stockholders' equity........... $2,065,094 $2,000,804
========== ==========
</TABLE>

I-2
<PAGE>

BEVERLY ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
----------------- ----------------------
1994 1993 1992
----------------- ---------- ----------
<S> <C> <C> <C>
Revenues............................. $2,215,236 $2,885,881 $2,611,206
Costs and expenses:
Operating and Administrative....... 2,016,869 2,647,388 2,395,239
Interest........................... 43,974 62,413 62,582
Depreciation and amortization...... 68,359 86,127 88,001
Restructuring costs................ -- -- 57,000
---------- ---------- ----------
2,129,202 2,795,928 2,602,822
========== ========== ==========
Income before provision for income
taxes, extraordinary charge and
cumulative effect of change in
accounting for income taxes......... 86,034 89,953 8,384
Provision for income taxes........... 28,391 29,684 4,203
---------- ---------- ----------
Income before extraordinary charge
and cumulative effect of change in
accounting for income taxes......... 57,643 60,269 4,181
Extraordinary charge, net of income
taxes............................... -- (2,345) (8,835)
Cumulative effect of change in
accounting for income taxes......... -- -- (5,454)
---------- ---------- ----------
Net Income (loss).................... $ 57,643 $ 57,924 $ (10,108)
========== ========== ==========
Earnings (loss) per share of common
stock:
Primary:
Before redemption premium on series
A preferred stock, extraordinary
charge and cumulative effect of
change in accounting for income
taxes............................. $ .59 $ .71 $ .04
Redemption premium on Series A
preferred stock................... -- (.26) --
Extraordinary charge............... -- (.03) (.12)
Cumulative effect of change in
accounting for income taxes....... -- -- (.07)
---------- ---------- ----------
Net income (loss) per share.......... $ .59 $ .42 $ (.15)
========== ========== ==========
Shares used to compute per share
amounts......................... 98,481 78,807 75,285
========== ========== ==========
</TABLE>

I-3
<PAGE>

BEVERLY ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED
NINE MONTHS ENDED DECEMBER 31,
SEPTEMBER 30 --------------------
1994 1993 1992
----------------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................... $ 57,643 $ 57,924 $ (10,108)
Adjustments to reconcile net income to
net cash provided by operating
activities............................ 29,090 72,953 108,674
-------- --------- ---------
Net cash provided by operating
activities............................ 86,733 130,877 98,566
Net cash used for investing activities. (98,567) (145,573) (123,503)
Net cash provided by financing
activities............................ 4,120 38,872 37,661
-------- --------- ---------
Net increase (decrease) in cash and
cash equivalents...................... (7,714) 24,176 12,724
Cash and cash equivalents at beginning
of period............................. 77,058 49,597 36,873
-------- --------- ---------
Cash and cash equivalents at end of
period................................ $ 69,344 $ 73,773 $ 49,597
======== ========= =========
</TABLE>

I-4

<PAGE>

EXHIBIT 3.1

ARTICLES OF AMENDMENT
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
NATIONWIDE HEALTH PROPERTIES, INC.

NATIONWIDE HEALTH PROPERTIES, INC., a Maryland corporation having its
principal office in Baltimore, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:

FIRST: The charter of the Corporation is hereby amended by striking out
Section 1 of Article IV in its entirety and inserting in lieu thereof the
following:

"Section 1: The total number of shares of capital stock which the
---------
corporation shall have authority to issue is One Hundred Five Million
(105,000,000), of which One Hundred Million (100,000,000) shall be shares
of Common Stock having a par value of $.10 per share and Five Million
(5,000,000) shall be shares of Preferred Stock having a par value of $1.00
per share. The aggregate par value of all of said shares shall be Fifteen
Million Dollars ($15,000,000)."

SECOND: This charter amendment has been advised by the Board of Directors
of the Corporation and approved by the stockholders.

THIRD: (a) The total number of shares of all classes of stock of the
Corporation heretofore authorized and the number and par value of the shares of
each class were as follows:

Total number of shares authorized: 30,000,000

Total number of shares of Common Stock: 25,000,000

Total number of shares of Preferred Stock: 5,000,000

Par value per share of Common Stock: $.10

Par value per share of Preferred Stock: $1.00

<PAGE>

(b) The total number of shares of all classes of stock of the
Corporation as increased and the number and par value of the shares of each
class are as follows:

Total number of shares authorized: 105,000,000

Total number of shares of Common Stock: 100,000,000

Total number of shares of Preferred Stock: 5,000,000

Par value per share of Common Stock: $.10

Par value per share of Preferred Stock: $1.00

(c) The aggregate par value of all shares of all classes of stock of
the Corporation heretofore authorized was $7,500,000. The aggregate par value
of all shares of all classes of stock as increased by this amendment is
$15,000,000. This amendment has the effect of increasing the aggregate par
value of all shares of all classes of stock of the Corporation by $7,500,000.

FOURTH: This charter amendment did not change the information required by
subsection (b)(2)(i) of Section 2-607 of the Maryland General Corporation Law.

2
<PAGE>

IN WITNESS WHEREOF, NATIONWIDE HEALTH PROPERTIES, INC. has caused these
presents to be signed in its name and on its behalf by its Vice President and
its corporate seal to be hereunto affixed and attested by its Assistant
Secretary.

The undersigned acknowledges these Articles of Amendment to be the
corporate act of the Corporation and states that to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects and
that this statement is made under the penalties of perjury.

Attest: NATIONWIDE HEALTH PROPERTIES, INC.

BY: /s/ GARY E. STARK By: /s/ MARK L. DESMOND
------------------------- -------------------------------
Gary E. Stark Mark L. Desmond
Assistant Secretary Vice President

[Affix corporate seal]

<PAGE>

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT
AS OF JANUARY 31, 1995

<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
---- -------------
<S> <C>
Nationwide Health Properties Finance Corporation............... Delaware
BIP SUB 1, Inc................................................. Delaware
Nationwide Health Properties-Kansas, Inc....................... Kansas
MLD Financial Capital Corporation.............................. Delaware
MLD Texas Trust................................................ Delaware
</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Company's previously filed
Registration Statement No. 33-35276, Registration Statement No. 33-39156,
Registration Statement No. 33-54870, and Registration Statement No. 33-64798.

ARTHUR ANDERSEN LLP

Orange County, California
February 7, 1995

<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,742
<SECURITIES> 0
<RECEIVABLES> 2,936
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 458,118
<DEPRECIATION> 62,080
<TOTAL-ASSETS> 513,809
<CURRENT-LIABILITIES> 0
<BONDS> 168,410
<COMMON> 1,824
0
0
<OTHER-SE> 334,282
<TOTAL-LIABILITY-AND-EQUITY> 513,809
<SALES> 0
<TOTAL-REVENUES> 69,985
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,921
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,813
<EPS-PRIMARY> 2.47
<EPS-DILUTED> 0

</TABLE>