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

Class of Common Stock:		Outstanding at October 25, 2002:
Common Stock, $.25 par value		69,664,028 Shares

				Page
PART I—FINANCIAL INFORMATION				3
Item 1.		Financial Statements		3
		Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001		3
		Condensed Consolidated Statements of Operations for the Three Months Ended and Nine Months Ended September 30, 2002 and September 30, 2001		4
		Condensed Consolidated Statements of Comprehensive Income for the Nine Months Ended September 30, 2002 and September 30, 2001		5
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and September 30, 2001		6
		Notes to Condensed Consolidated Financial Statements		7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		47
Item 4.		Controls and Procedures		48
PART II—OTHER INFORMATION				49
Item 1.		Legal Proceedings		49
Item 6.		Exhibits and Reports on Form 8-K		49

		September 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			(398,425	)			(369,502	)
Total real estate investments			769,981				806,336
Cash and cash equivalents			4,121				18,596
Restricted cash			19,656				20,773
Deferred financing costs, net			19,678				14,153
Investment in Kindred Healthcare, Inc. common stock			34,098				55,118
Kindred Healthcare, Inc. common stock reserved for distribution			—				17,086
Notes receivable from employees			4,186				3,635
Other			5,523				6,162
Total assets		$	857,243			$	941,859
Liabilities and stockholders’ equity
Liabilities:
Notes payable and other debt		$	785,924			$	848,368
United States Settlement			46,789				54,747
Deferred revenue			19,029				21,027
Interest rate swap agreements			47,620				27,430
Accrued dividend			—				17,910
Accrued interest			17,817				591
Accounts payable and other accrued liabilities			20,873				17,563
Other liabilities—disputed federal, state and local tax refunds			14,422				14,903
Deferred income taxes			30,394				30,394
Total liabilities			982,868				1,032,933
Commitments and contingencies
Stockholders’ equity:
Preferred stock, unissued			—				—
Common stock			18,402				18,402
Capital in excess of par value			105,315				122,468
Unearned compensation on restricted stock			(1,155	)			(1,000	)
Accumulated other comprehensive income (loss)			(10,232	)			36,174
Retained earnings (deficit)			(127,126	)			(134,088	)
			(14,796	)			41,956
Treasury stock			(110,829	)			(133,030	)
Total stockholders’ equity (deficit)			(125,625	)			(91,074	)
Total liabilities and stockholders’ equity		$	857,243			$	941,859

		Three Months Ended September 30,							Nine Months Ended September 30,
		2002				2001			2002				2001
Revenues:
Rental income		$	47,650			$	46,063		$	140,903			$	137,242
Interest and other income			237				939			952				3,507
Gain on sale of Kindred Common Stock			1,192				—			5,014				—
			49,079				47,002			146,869				140,749
Expenses:
General and administrative			2,410				2,598			7,322				7,740
Professional fees			900				699			2,401				3,595
Amortization of restricted stock grants			354				444			1,491				1,286
Depreciation			10,414				10,447			31,233				31,326
Net loss on swap breakage			—				—			5,407				—
Swap ineffectiveness			118				—			298				—
Interest			18,659				21,886			57,363				64,540
Interest on United States Settlement			1,331				1,605			4,204				3,053
Total expenses			34,186				37,679			109,719				111,540
Income before income taxes, discontinued operations and extraordinary loss			14,893				9,323			37,150				29,209
Provision (benefit) for income taxes			(2,200	)			469			(2,200	)			2,322
Income before discontinued operations and extraordinary loss			17,093				8,854			39,350				26,887
Discontinued operations (including gain on sale of assets)			—				303			23,831				954
Income before extraordinary loss			17,093				9,157			63,181				27,841
Extraordinary loss on extinguishment of debt			—				—			(6,919	)			—
Net income		$	17,093			$	9,157		$	56,262			$	27,841
Earnings Per Share:
Basic:
Income before discontinued operations and extraordinary loss		$	0.25			$	0.13		$	0.57			$	0.40
Net income		$	0.25			$	0.13		$	0.82			$	0.41
Diluted:
Income before discontinued operations and extraordinary loss		$	0.24			$	0.13		$	0.56			$	0.39
Net income		$	0.24			$	0.13		$	0.80			$	0.40
Shares used in computing earnings per common share:
Basic			69,098				68,491			68,895				68,375
Diluted			70,047				69,584