Delaware		61-1055020
(State or other jurisdiction)		(I.R.S. Employer Identification No.)

Class of Common Stock:		Outstanding at July 22, 2002:
Common Stock, $.25 par value		69,080,925 Shares

		Page
PART I—FINANCIAL INFORMATION		3
Item 1.    Financial Statements		3
Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001		3
Condensed Consolidated Statements of Income for the Three Months Ended and Six Months Ended June 30, 2002 and June 30, 2001		4
Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2002 and June 30, 2001		5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and June 30, 2001		6
Notes To Condensed Consolidated Financial Statements		7
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3.    Quantitative and Qualitative Disclosures About Market Risk		44
PART II—OTHER INFORMATION		46
Item 1.    Legal Proceedings		46
Item 4.    Submission of Matters to a Vote of Security Holders		46
Item 6.    Exhibits and Reports on Form 8-K		47

		June 30, 2002 (Unaudited)				December 31, 2001 (Audited)
Assets
Real estate investments:
Land		$	116,625			$	119,771
Building and improvements			1,051,781				1,056,067
			1,168,406				1,175,838
Accumulated depreciation			(388,066	)			(369,502	)
Total real estate investments			780,340				806,336
Cash and cash equivalents			3,336				18,596
Restricted cash			19,684				20,773
Deferred financing costs, net			20,732				14,153
Investment in Kindred Healthcare, Inc. common stock			42,727				55,118
Kindred Healthcare, Inc. common stock reserved for distribution			—				17,086
Notes receivable from employees			4,170				3,635
Other			9,880				6,162
Total assets		$	880,869			$	941,859
Liabilities and stockholders’ equity
Liabilities:
Notes payable and other debt		$	807,663			$	848,368
United States Settlement			52,164				54,747
Deferred revenue			19,653				21,027
Interest rate swap agreements			21,810				27,430
Accrued dividend			—				17,910
Accounts payable and other accrued liabilities			30,049				18,154
Other liabilities—disputed federal, state and local tax refunds			14,511				14,903
Deferred income taxes			30,394				30,394
Total liabilities			976,244				1,032,933
Commitments and contingencies
Stockholders’ equity:
Preferred stock, unissued			—				—
Common stock			18,402				18,402
Capital in excess of par value			119,040				122,468
Unearned compensation on restricted stock			(1,348	)			(1,000	)
Accumulated other comprehensive income			23,604				36,174
Retained earnings (deficit)			(127,731	)			(134,088	)
			31,967				41,956
Treasury stock			(127,342	)			(133,030	)
Total stockholders’ equity (deficit)			(95,375	)			(91,074	)
Total liabilities and stockholders’ equity		$	880,869			$	941,859

		Three Months Ended June 30,							Six Months Ended June 30,
		2002				2001			2002				2001
Revenues:
Rental income		$	47,101			$	45,660		$	93,154			$	90,563
Interest and other income			323				1,062			665				2,568
Gain on sale of Kindred Common Stock			3,822				—			3,822				—
			51,246				46,722			97,641				93,131
Expenses:
General and administrative			2,601				2,593			4,912				5,142
Professional fees			936				1,097			1,501				2,896
Amortization of restricted stock grants			715				439			1,137				842
Depreciation			10,390				10,420			20,772				20,832
Net loss on swap breakage			5,407				—			5,407				—
Swap ineffectiveness			180				—			180				—
Interest			19,079				21,957			38,939				43,078
Interest on United States Settlement			1,402				1,448			2,873				1,448
Total expenses			40,710				37,954			75,721				74,238
Income before income taxes, discontinued operations and extraordinary loss			10,536				8,768			21,920				18,893
Provision for income taxes			—				1,184			—				1,804
Income before discontinued operations and extraordinary loss			10,536				7,584			21,920				17,089
Discontinued operations (including gain on sale of assets)			22,851				521			24,168				1,595
Income before extraordinary loss			33,387				8,105			46,088				18,684
Extraordinary loss on extinguishment of debt			(6,919	)			—			(6,919	)			—
Net income		$	26,468			$	8,105		$	39,169			$	18,684
Earnings Per Share:
Basic:
Income before discontinued operations and extraordinary loss		$	0.15			$	0.11		$	0.32			$	0.25
Net income		$	0.38			$	0.12		$	0.57			$	0.27
Diluted:
Income before discontinued operations and extraordinary loss		$	0.15			$	0.11		$	0.31			$	0.25
Net income		$	0.38			$	0.12		$	0.56			$	0.27
Shares used in computing earnings per common share:
Basic			68,850				68,409			68,792				68,316
Diluted			70,002				69,307			69,941				69,090
Dividend declared and paid per common share		$	0.2375			$	0.22		$	0.475			$	0.22

For the Six Months Ended