Maryland (State or other jurisdiction of incorporation or organization)

71-0720518 (I.R.S. Employer Identification No.)

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PART I—Financial Information
Item 1.		Financial Statements
		Consolidated Balance Sheets		3
		Consolidated Statements of Operations		4
		Consolidated Statements of Cash Flows		5
		Notes to Consolidated Financial Statements		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Part II—Other Information
Item 4.		Submission of Matters to a Vote of Security Holders		19
Item 6.		Exhibits and Reports on Form 8-K		19

		June 30, 2002				December 31, 2001
		(Unaudited)
ASSETS
Real Estate Investments:
Buildings and improvements, net of accumulated depreciation and amortization: 2002—$62,551; 2001—$58,583		$	394,327			$	410,202
Land			27,803				27,339
Mortgage loans receivable, net of allowance for doubtful accounts: 2002—$1,280; 2001—$1,250			84,841				93,611
REMIC Certificates			69,066				73,154
Real estate investments, net			576,037				604,306
Other Assets:
Cash and cash equivalents			14,701				6,322
Debt issue costs, net			3,043				3,578
Interest receivable			3,645				3,258
Prepaid expenses and other assets			2,908				2,423
Notes receivable (includes $3,095 due from CLC Healthcare, Inc. in 2002 and 2001)			15,108				14,584
Marketable debt securities			8,781				8,755
Line of credit due from CLC Healthcare, Inc.			5,478				5,342
			53,664				44,262
Total Assets		$	629,701			$	648,568
LIABILITIES AND STOCKHOLDERS’ EQUITY
Convertible subordinated debentures		$	—			$	2,408
Bank borrowings			96,000				104,000
Mortgage loans and notes payable			146,283				162,232
Bonds payable and capital lease obligations			15,528				15,994
Accrued interest			1,336				1,210
Accrued expenses and other liabilities			6,158				7,138
Distributions payable			981				1,803
Total Liabilities			266,286				294,785
Minority interest			13,404				13,404
Stockholders’ equity:
Preferred stock $0.01 par value: 10,000 shares authorized; shares issued and outstanding: 2002—7,062; 2001—7,062			165,183				165,183
Common stock: $0.01 par value; 40,000 shares authorized; shares issued and outstanding: 2002 —18,393; 2001—18,393			185				185
Capital in excess of par value			254,976				254,930
Cumulative net income			239,369				218,826
Notes receivable from stockholders			(7,822	)			(8,042	)
Accumulated comprehensive income			2,465				2,437
Cumulative distributions			(304,345	)			(293,140	)
Total Stockholders’ Equity			350,011				340,379
Total Liabilities and Stockholders’ Equity		$	629,701			$	648,568

		Three Months Ended June 30,							Six Months Ended June 30,
		2002			2001				2002			2001
Revenues:
Rental income		$	10,730		$	10,139			$	21,598		$	20,313
Interest income from mortgage loans and notes receivable			2,525			3,174				5,118			6,608
Interest income from REMIC Certificates			3,219			4,010				6,486			8,036
Interest and other income			766			758				1,511			1,402
Total revenues			17,240			18,081				34,713			36,359
Expenses:
Interest expense			5,310			5,582				10,736			11,636
Depreciation and amortization			3,671			3,376				7,384			7,115
Minority interest			335			235				656			470
Impairment charge			4,882			18,366				4,882			22,866
Operating and other expenses			1,872			2,054				3,632			3,682
Total expenses			16,070			29,613				27,290			45,769
Operating income (loss)			1,170			(11,532	)			7,423			(9,410	)
Gain (loss) on sale of assets, net			13,192			(100	)			13,120			1,844
Net income (loss)			14,362			(11,632	)			20,543			(7,566	)
Less: Preferred dividends			3,761			3,771				7,519			7,543
Net income (loss) available to common stockholders		$	10,601		$	(15,403	)		$	13,024		$	(15,109	)
Net Income (Loss) per Common Share:
Basic		$	0.58		$	(0.61	)		$	0.71		$	(0.59	)
Diluted		$	0.55		$	(0.61	)		$	0.70		$	(0.59	)
Comprehensive Income (Loss)
Net income (loss) available to common stockholders		$	10,601		$	(15,403	)		$	13,024		$	(15,109	)
Unrealized gain (loss) on available-for-sale securities			—			74				28			(332	)
Reclassification adjustment			—			—				—			366
Total comprehensive income (loss)		$	10,601		$	(15,329	)		$	13,052		$	(15,075	)

		Six Months Ended June 30,
		2002				2001
OPERATING ACTIVITIES:
Net income (loss)		$	20,543			$	(7,566	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			7,384				7,115
Impairment charge			4,882				22,866
Other non-cash charges			2,278				2,422
Loss on the sale of other assets			—				456
Gain on sale of real estate investments, net			(13,120	)			(2,300	)
Increase in accrued interest			162				31
Net change in other assets and liabilities			(1,743	)			(1,898	)
Net cash provided by operating activities			20,386				21,126
INVESTING ACTIVITIES:
Investment in real estate properties and capital improvements, net			(1,091	)			(1,084	)
Proceeds from sale of real estate investments and other assets, net			9,520				12,671
Principal payments on mortgage loans receivable			5,356