Ventas 10Q 2005 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO .

Commission file number: 1-10989

Ventas, Inc.

(Exact name of registrant as specified in its charter)


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

10350 Ormsby Park Place, Suite 300

Louisville, Kentucky

(Address of principal executive offices)

40223

(Zip Code)

(502) 357-9000

(Registrant’s telephone number, including area code)

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class of Common Stock:		Outstanding at July 27, 2005:
Common Stock, $0.25 par value		102,966,809 shares

VENTAS, INC.

FORM 10-Q

INDEX


		Page
PART I—FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004	3
	Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2005 and 2004	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2005 and 2004	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49

PART II—OTHER INFORMATION		50
Item 1.	Legal Proceedings	50
Item 4.	Submission of Matters to a Vote of Security Holders	50
Item 6.	Exhibits	51

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VENTAS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	June 30, 2005			December 31, 2004
	(Unaudited)			(Audited)
Assets
Real estate investments:
Land	$	277,668		$	147,327
Building and improvements		2,582,567			1,364,884

		2,860,235			1,512,211
Accumulated depreciation		(485,476	)		(454,110	)

Net real estate property		2,374,759			1,058,101
Loans receivable, net		57,540			13,031

Net real estate investments		2,432,299			1,071,132

Cash and cash equivalents		802			3,365
Escrow deposits and restricted cash		51,951			25,710
Deferred financing costs, net		18,314			13,550
Subscriptions receivable		97,020			—
Other		25,069			13,178

Total assets	$	2,625,455		$	1,126,935

Liabilities and stockholders’ equity
Liabilities:
Senior notes payable and other debt	$	1,832,684		$	843,178
Deferred revenue		11,713			12,887
Interest rate swap agreement		11,155			16,550
Accrued dividend		—			27,498
Accrued interest		13,639			8,743
Accounts payable and other accrued liabilities		70,710			27,461
Deferred income taxes		30,394			30,394

Total liabilities		1,970,295			966,711

Commitments and contingencies

Stockholders’ equity:
Preferred stock, 10,000 shares authorized, unissued		—			—
Common stock, $0.25 par value; authorized 180,000 shares; 99,960 and 85,131 shares issued at June 30, 2005 and December 31, 2004, respectively		25,888			21,283
Capital in excess of par value		696,811			208,903
Unearned compensation on restricted stock		(1,301	)		(633	)
Accumulated other comprehensive loss		(5,343	)		(9,114	)
Retained earnings (deficit)		(51,746	)		(45,297	)

		664,309			175,142

Treasury stock, 326 and 532 shares at June 30, 2005 and December 31, 2004, respectively		(9,149	)		(14,918	)

Total stockholders’ equity		655,160			160,224

Total liabilities and stockholders’ equity	$	2,625,455		$	1,126,935

See notes to condensed consolidated financial statements.

VENTAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2005			2004		2005			2004
Revenues:
Rental income	$	72,542		$	58,368	$	135,281		$	111,274
Interest income from loans receivable		1,492			755		2,144			1,511
Interest and other income		1,120			302		1,732			583

Total revenues		75,154			59,425		139,157			113,368

Expenses:
Property-level operating expenses		641			290		1,193			497
General, administrative and professional fees		5,553			4,302		10,573			8,526
Restricted stock amortization		506			393		926			778
Depreciation		18,285			12,085		31,551			22,892
Interest		22,926			16,891		40,098			32,120

Total expenses		47,911			33,961		84,341			64,813

Income before net loss on real estate disposals and discontinued operations		27,243			25,464		54,816			48,555
Net loss on real estate disposals		(175	)		—		(175	)		—

Income before discontinued operations		27,068			25,464		54,641			48,555
Discontinued operations		—			190		—			374

Net income	$	27,068		$	25,654	$	54,641		$	48,929

Earnings per common share:
Basic:
Income before discontinued operations	$	0.31		$	0.30	$	0.63		$	0.59
Net income	$	0.31		$	0.31	$	0.63		$	0.59

Diluted:								��
Income before discontinued operations	$	0.30		$	0.30	$	0.63		$	0.58
Net income	$	0.30		$	0.30	$	0.63		$	0.58

Shares used in computing earnings per common share:
Basic		88,574			83,820		86,626			82,762
Diluted		89,350			84,565		87,386			83,662

Dividend declared per common share	$	0.36		$	0.325	$	0.72		$	0.65

See notes to condensed consolidated financial statements.

VENTAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2005			2004		2005		2004
Net income	$	27,068		$	25,654	$	54,641	$	48,929

Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swap		(3,421	)		10,212		1,077		2,471
Reclassification adjustment for realized loss on interest rate swap included in net income during the period		1,405			3,000		2,694		5,694

		(2,016	)		13,212		3,771		8,165

Net comprehensive income	$	25,052		$	38,866	$	58,412	$	57,094

See notes to condensed consolidated financial statements.

VENTAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Six Months Ended June 30,
	2005			2004
Cash flows from operating activities:
Net income	$	54,641		$	48,929
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation (including discontinued operations)		31,551			22,994
Amortization of deferred financing costs		1,835			2,042
Amortization of restricted stock		926			550
Straight-lining of rental income		(2,834	)		(1,150	)
Amortization of deferred revenue		(1,320	)		(1,255	)
Other		(1,448	)		(1,360	)
Changes in operating assets and liabilities:
Decrease (increase) in escrow deposit and restricted cash		6,211			(1,753	)
Increase in other assets		(9,263	)		(1,428	)
Increase in accrued interest		4,457			897
Increase in accounts payable and accrued and other liabilities		15,426			2,059

Net cash provided by operating activities		100,182			70,525
Cash flows from investing activities:
Net investment in real estate property		(481,780	)		(246,385	)
Investment in loans receivable		(47,333	)		—
Proceeds from loans receivable		1,759			107
Other		2,510			515

Net cash used in investing activities		(524,844	)		(245,763	)
Cash flows from financing activities:
Net change in borrowings under revolving credit facility		117,400			114,000
Proceeds from debt		400,000			—
Repayment of debt		(6,844	)		(5,895	)
Issuance of common stock		4,694			54,533
Proceeds from stock option exercises		2,036			15,506
Cash distribution to stockholders		(88,588	)		(76,130	)
Other		(6,599	)		—

Net cash provided by financing activities		422,099			102,014

Net decrease in cash and cash equivalents		(2,563	)		(73,224	)
Cash and cash equivalents at beginning of period		3,365			82,104

Cash and cash equivalents at end of period	$	802		$	8,880

Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments	$	866,244		$	99,728
Escrow deposits and restricted cash		32,452			9,030
Other assets acquired		1,506			204
Debt		478,950			103,008
Other liabilities		28,426			5,954
Issuance of common stock		392,826			—

See notes to condensed consolidated financial statements.

NOTE 1—DESCRIPTION OF BUSINESS

Ventas, Inc. (together with its subsidiaries, except where the context otherwise requires, “we,” “us” or “our”) is a healthcare real estate investment trust (“REIT”) with a geographically diverse portfolio of healthcare and seniors housing facilities. As of June 30, 2005, this portfolio consisted of 200 skilled nursing facilities, 41 hospitals, and 128 seniors housing and other facilities in 41 states. Except with respect to our medical office buildings, we lease these facilities to healthcare operating companies under “triple-net” or “absolute net” leases. Kindred Healthcare, Inc. and its subsidiaries (collectively, “Kindred”) leased 225 of our facilities as of June 30, 2005. We also have real estate loan investments relating to 37 healthcare and seniors housing facilities as of June 30, 2005.

NOTE 2—BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results for the six-month period ended June 30, 2005 are not necessarily an indication of the results that may be expected for the year ending December 31, 2005. The Condensed Consolidated Balance Sheet as of December 31, 2004 has been derived from our audited consolidated financial statements for the year ended December 31, 2004. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2004. Certain prior year amounts have been reclassified to conform to current year presentation.

We have one primary reportable segment, which consists of investment in real estate. Our primary business is financing, owning and leasing healthcare-related and seniors housing facilities and leasing or subleasing such facilities to third parties. Substantially all of our leases are triple-net leases, which require the tenants to pay all property-related expenses. With the exception of our medical office buildings, we do not operate our facilities nor do we allocate capital to maintain our properties. Substantially all depreciation and interest expense reflected in the Condensed Consolidated Statements of Income relates to the ownership of our investment in real estate.

Recently Issued Accounting Standards

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment” (“SFAS No. 123(R)”), which is a revision to SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”). SFAS No. 123(R) supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB Opinion No. 25”). Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123, except that SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative under SFAS No. 123(R).

As required under Securities and Exchange Commission (the “Commission”) Release No. 33-8568, we expect to adopt the provisions of this accounting standard on January 1, 2006. We expect to apply the modified prospective method of adoption in which compensation cost is recognized beginning on the date we adopt the accounting standard for all share-based payments granted after the adoption date and for all awards granted to

employees prior to the adoption date that remain unvested on the adoption date. As permitted by SFAS No. 123(R), we currently account for share-based payments to employees using the intrinsic value method under APB Opinion No. 25 and, as such, generally recognize no compensation cost for employee stock options. The adoption of SFAS No. 123(R) is expected to result in an immaterial increase in expense during 2006 based on unvested options outstanding as of June 30, 2005 and current compensation plans. While the effect of adoption depends on the level of share-based payments granted in the future and unvested grants on the date we adopt SFAS No. 123(R), the effect of this accounting standard on our prior operating results would approximate the effect of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share. See “Note 8—Stockholders’ Equity and Stock Options.”

NOTE 3—CONCENTRATION OF CREDIT RISK

As of June 30, 2005, approximately 35.6% and 37.3% of our properties, based on their original cost, were operated by Kindred and Brookdale Living Communities, Inc. (together with its subsidiaries, “Brookdale”), respectively, and approximately 57.2% and 29.1% of our properties, based on their original cost, were seniors housing facilities and skilled nursing facilities, respectively. Our remaining properties consist of hospitals and other facilities. Our facilities are located in 41 states, with facilities in only one state accounting for more than 10% of total revenues during the six months ended June 30, 2005 and 2004.

Approximately 70.7% and 83.9% of our total revenues for the six months ended June 30, 2005 and 2004, respectively, were derived from our master lease agreements with Kindred (the “Kindred Master Leases”). Each Kindred Master Lease is a “triple-net lease” pursuant to which Kindred is required to pay all insurance, taxes, utilities, maintenance and repairs related to the properties. There are several renewal bundles of properties under each Kindred Master Lease, with each bundle containing a varying number of properties. All properties within a bundle have primary terms ranging from 10 to 15 years from May 1, 1998, subject to certain exceptions, and are subject to three five-year renewal terms.

On June 7, 2005, we completed the acquisition of Provident Senior Living Trust (“Provident”) (see “Note 4—Acquisitions”), which leased all of its properties to affiliates of Brookdale and Alterra Healthcare Corporation (together with its subsidiaries, “Alterra”). As a result of this acquisition, Brookdale is expected to be a significant source of our total revenues. Approximately 12.4% of our total revenues for the three months ended June 30, 2005 was derived from our lease agreements with Brookdale, which includes the three months ended June 30, 2005 for our prior lease agreements with Brookdale and the lease agreements acquired from Provident for the twenty-four day period following the acquisition.

Because we lease a substantial portion of our properties to Kindred and Brookdale (collectively, the “Significant Tenants”) and the Significant Tenants are the primary source of our total revenues, the Significant Tenants’ financial condition and ability and willingness to satisfy their obligations under their respective leases and certain other agreements with us will significantly impact our revenues and our ability to service our indebtedness and to make distributions to our stockholders. We cannot assure you that the Significant Tenants will have sufficient assets, income and access to financing to enable them to satisfy their obligations under their respective leases and other agreements. The inability or unwillingness of the Significant Tenants to satisfy their obligations under the leases and other agreements would have a material adverse effect on our business, financial condition, results of operation and liquidity, on our ability to service our indebtedness and on our ability to make distributions to our stockholders as required to maintain our status as a REIT.

Kindred is subject to the reporting requirements of the Commission and is required to file with the Commission annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Kindred provided in this Quarterly Report on Form 10-Q is derived from filings made with the Commission or other publicly available information, or has been provided to us by Kindred. Kindred’s filings with the Commission can be found at the Commission’s website at www.sec.gov. Brookdale is neither subject to the reporting requirements of the Commission nor required to file with the Commission reports containing any financial or other information. The information related to Brookdale

contained in this Quarterly Report on Form 10-Q has been provided to us by Brookdale. We have not verified the information related to the Significant Tenants either through an independent investigation or otherwise. We have no reason to believe that such information is inaccurate in any material respect, but we cannot assure you that all such information is accurate. We are providing this data for informational purposes only, and you are encouraged to obtain Kindred’s publicly available filings from the Commission.

NOTE 4—ACQUISITIONS

During the six months ended June 30, 2005, we completed the acquisitions described below. The primary reason for these acquisitions was to invest in healthcare and seniors housing properties with an expected yield on investment, as well as to diversify our properties and revenue base and reduce our dependence on Kindred for rental revenue.

Provident

On June 7, 2005, we completed the acquisition of Provident (the “Provident Acquisition”) in a transaction valued at approximately $1.2 billion. Provident was formed as a Maryland real estate investment trust in March 2004 and owned senior living properties located in the United States. Pursuant to the Provident Acquisition, we acquired 68 independent or assisted living facilities in 19 states comprised of approximately 6,819 residential living units, all of which are leased to affiliates of Brookdale and Alterra pursuant to triple-net leases with renewal options. As of June 30, 2005, the aggregate 2005 contractual cash rent expected from the Provident properties was approximately $83.2 million.

We funded the cash portion of the purchase price for the Provident Acquisition, which was approximately $231.0 million, and repaid all outstanding borrowings under Provident’s credit facility at closing from a combination of net proceeds from the sale of $350 million aggregate principal amount of senior notes, comprised of $175 million aggregate principal amount of 6³/4% Senior Notes due 2010 (the “2010 Senior Notes) and $175 million aggregate principal amount of 7¹/8% Senior Notes due 2015 (the “2015 Senior Notes”), issued by Ventas Realty and a wholly owned subsidiary, Ventas Capital Corporation (“Ventas Capital” and, together with Ventas Realty, the “Issuers”), and borrowings under our revolving credit facility. Additionally, we issued approximately 15.0 million shares of our common stock and share equivalents to Provident equity holders as part of the purchase price for the Provident Acquisition. We also assumed approximately $459.4 million of property-level mortgage debt.

Other Acquisitions

We acquired 11 seniors housing facilities and one hospital for an aggregate purchase price of $104.4 million in five separate transactions. The facilities are leased under triple-net leases, each having initial terms ranging from 10 to 15 years and initially providing aggregate, annual cash base rent of approximately $9.6 million, subject to escalation as provided in the leases. We also acquired a parcel of land that is adjacent to one of our healthcare facilities for $0.7 million.

We acquired three medical office buildings for an aggregate purchase price of $13.0 million in two separate transactions. These buildings are leased to various tenants under leases having various remaining terms and initially providing aggregate, annual cash base rent of approximately $1.7 million, subject to escalation as provided in the leases. We have engaged managers to manage the operations at the medical office buildings.

Estimated Fair Value

The 2005 transactions were accounted for under the purchase method. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands). Such estimates are subject to refinement as additional valuation information is received.


	Provident		Other		Total
Land	$	116,250	$	14,091	$	130,341
Buildings and improvements		1,113,641		104,033		1,217,674
Escrow deposits and restricted cash		31,996		456		32,452
Other assets		1,506		—		1,506

Total assets acquired		1,263,393		118,580		1,381,973

Notes payable and other debt		459,437		19,513		478,950
Other liabilities		28,362		64		28,426

Total liabilities assumed		487,799		19,577		507,376

Net assets acquired		775,594		99,003		874,597

Total equity issued		392,826		—		392,826

Total cash used	$	382,768	$	99,003	$	481,771

The buildings are being depreciated over their estimated useful lives, which were determined to be 35 years.

Pro Forma

The following table illustrates the effect on our operations as if we had consummated the Provident Acquisition, our 2004 and 2005 transactions, and our 2004 equity offering as of the beginning of each of the three-and six-month periods ended June 30, 2005 and 2004:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2005		2004		2005		2004
	(in thousands, except per share amounts)
Revenues	$	94,311	$	90,761	$	186,129	$	180,796
Expenses		67,221		65,850		132,636		130,737
Net income from continuing operations		26,915		24,911		53,318		50,059
Net income		26,915		25,101		53,318		50,433

Earnings per common share:
Basic:
Net income from continuing operations	$	0.27	$	0.30	$	0.53	$	0.60
Net income	$	0.27	$	0.30	$	0.53	$	0.60
Diluted:
Net income from continuing operations	$	0.27	$	0.29	$	0.53	$	0.59
Net income	$	0.27	$	0.30	$	0.53	$	0.60

Shares used in computing earnings per common share:
Basic		99,782		83,820		99,719		83,595
Diluted		100,558		84,565		100,479		84,495

NOTE 5—DISPOSITIONS

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“SFAS No. 144”), the results of operations and gain/(loss) on real estate properties sold or held for sale are reflected in the Condensed Consolidated Statements of Income as “discontinued operations” for all periods presented. Interest expense allocated to discontinued operations has been estimated based on a proportional allocation of rental income among all of our facilities.

During the six months ended June 30, 2005, we did not dispose of any operating assets or have any operating assets classified as held for sale, and therefore no amounts were reported in discontinued operations. Set forth below is a summary of the results of operations of the facilities that were sold and held for sale during the year ended December 31, 2004 (in thousands):


	For the Three Months Ended June 30, 2004		For the Six Months Ended June 30, 2004
Rental income	$	342	$	676

Interest		101		200
Depreciation		51		102

		152		302

Discontinued operations	$	190	$	374

NOTE 6—LOANS RECEIVABLE, NET

During the six months ended June 30, 2005, we extended three first mortgage loans in the aggregate principal amount of $25.9 million. The loans accrue interest at a rate of 9.0% per annum and provide for monthly amortization of principal with balloon payment maturity dates ranging from February 2010 to April 2010. We also invested in a portfolio of eight distressed mortgage loans for an aggregate purchase price of $21.4 million. The mortgage loans are secured by eight seniors housing facilities. A third party and its two principals issued for our benefit a support agreement relating to these mortgage loans. Under the support agreement, the third party and its two principals agreed, among other things, to pay a 9.0% annual rate of return on the outstanding balance of our investment in the mortgage loans and, if not sooner paid, to repay to us the outstanding principal balance of our investment in the mortgage loans on March 31, 2010. The third party and its two principals have certain rights and obligations to buy the mortgage loans and their obligations under the support agreement are guaranteed by their affiliated senior living operator.

In November 2002, we made a $17.0 million mezzanine loan to Trans Healthcare, Inc. (“THI”). As of June 30, 2005, the balance of the mezzanine loan receivable was approximately $11.5 million. The THI mezzanine loan bears interest, inclusive of upfront fees, at 18% per annum and is secured by equity pledges in entities that own and operate 17 healthcare facilities, plus liens on four other healthcare properties, and interests in three additional properties and a physical therapy business. Contemporaneously with the making of the THI mezzanine loan, we purchased five healthcare facilities and leased them back to THI under a triple-net master lease providing for initial annual base rent of $5.9 million. THI remains current on all lease payments under its lease and all principal and interest payments under the mezzanine loan. We have entered into a series of forbearance agreements with THI regarding terms in the THI mezzanine loan documents and the THI master lease. The latest forbearance agreement with THI expires September 23, 2005. There can be no assurances that we will enter into an additional forbearance agreements with THI or that THI will continue to make all lease, principal and interest payments to us when and as required under the THI mezzanine loan and the THI master lease.

NOTE 7—BORROWING ARRANGEMENTS

The following is a summary of our long-term debt and certain interest rate and maturity information as of June 30, 2005 and December 31, 2004.


	June 30, 2005		December 31, 2004
	(in thousands)
Revolving credit facility	$	156,400	$	39,000
8.75% Senior Notes due 2009		174,217		174,217
6.75% Senior Notes due 2010		175,000		—
9.00% Senior Notes due 2012		191,821		191,821
6.625% Senior Notes due 2014		175,000		125,000
7.125% Senior Notes due 2015		175,000		—
CMBS Loan		211,104		212,612
Other mortgage loans		574,142		100,528

	$	1,832,684	$	843,178

Scheduled Maturities of Borrowing Arrangements

As of June 30, 2005, our indebtedness had the following maturities (in thousands):


2005	$	6,255
2006		224,163
2007		195,108
2008		35,601
2009		313,753
Thereafter		1,057,804

	$	1,832,684

Senior Notes

On June 7, 2005, we completed the offering of $175 million aggregate principal amount of the 2010 Senior Notes and $175 million aggregate principal amount of the 2015 Senior Notes of the Issuers. The 2010 Senior Notes and the 2015 Senior Notes were issued under separate indentures, and mature on June 7, 2010 and June 7, 2015, respectively.

The senior notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by us and by certain of our current and future subsidiaries as described in the indentures (collectively, the “Guarantors”). The notes are part of our general unsecured obligations, rank equal in right of payment with all of our existing and future senior obligations and rank senior to all of our existing and future subordinated indebtedness. However, the notes are effectively subordinated to all borrowings under our revolving credit facility with respect to the assets securing obligations under the facility. In addition, the notes are structurally subordinated to our commercial mortgage-backed securitization loan (the “CMBS Loan”).

The Issuers may redeem some or all of the 2015 Senior Notes and some or all of the 2010 Senior Notes at any time prior to June 1, 2010 and maturity, respectively, in each case, at a redemption price equal to 100% of their aggregate principal amount, plus a make-whole premium, plus accrued and unpaid interest, if any, to the date of redemption. The Issuers may also redeem some or all of the 2015 Senior Notes beginning on June 1, 2010, at the redemption prices set forth in the applicable indenture, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to June 1, 2008, the Issuers may redeem up to 35% of the aggregate principal amount of either or both series of notes with the net cash proceeds from certain equity offerings at the redemption prices set forth in the indentures, plus accrued and unpaid interest, if any, to the date of redemption.

The indentures governing the senior notes contain covenants that limit our ability and the ability of certain of our subsidiaries (collectively, the “Restricted Group”) to, among other things: (i) incur debt; (ii) incur secured debt; (iii) make certain dividends, distributions and investments; (iv) enter into certain transactions, including transactions with affiliates; (v) restrict dividends or other payments from subsidiaries; (vi) merge, consolidate or transfer all or substantially all of its assets; and (vii) sell assets. The Restricted Group is also required to maintain total unencumbered assets of at least 150% of its unsecured debt.

On June 14, 2005, we completed the offering of $50 million aggregate principal amount of 6⁵/8% Senior Notes due 2014 (the “2014 Senior Notes”) of the Issuers, which were in addition to the $125 million aggregate principal amount of 2014 Senior Notes originally issued in October 2004. The $50 million principal amount of the 2014 Senior Notes was issued at a one percent discount to par value. The $50 million aggregate principal amount and the $125 million aggregate principal amount of the 2014 Senior Notes are governed by the same indenture.

NOTE 8—STOCKHOLDERS’ EQUITY AND STOCK OPTIONS

Stock Options

As of June 30, 2005, we had five plans under which options to purchase common stock have been, or may be, granted to officers, employees and non-employee directors, one plan under which executive officers may receive common stock in lieu of compensation and two plans under which certain directors may receive common stock in lieu of director fees. We account for our stock-based employee compensation plans under the recognition and measurement principles of APB Opinion No. 25 and related interpretations. No stock-based employee compensation cost for stock options is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. However, as required under Commission Release No. 33-8568, we expect to adopt the provisions of SFAS No. 123(R) on January 1, 2006, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair value. See “Note 2—Basis of Presentation—Recently Issued Accounting Standards.” The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of SFAS No. 123 to all stock-based employee compensation (in thousands, except per share amounts):


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2005			2004			2005			2004
Net income, as reported	$	27,068		$	25,654		$	54,641		$	48,929
Add: Stock-based employee compensation expense included in reported net income		506			393			926			778
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards		(627	)		(523	)		(1,204	)		(1,023	)

Pro forma net income	$	26,947		$	25,524		$	54,363		$	48,684

Earnings per share:
Basic—as reported	$	0.31		$	0.31		$	0.63		$	0.59
Basic—pro forma	$	0.30		$	0.30		$	0.63		$	0.59
Diluted—as reported	$	0.30		$	0.30		$	0.63		$	0.58
Diluted—pro forma	$	0.30		$	0.30		$	0.62		$	0.58

In determining the estimated fair value of our stock options as of the date of grant, we used the Black-Scholes option pricing model with the following assumptions:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2005		2004		2005		2004
Risk-free interest rate	4.50	%	4.47	%	4.50	%	4.47	%
Dividend yield	6.61	%	6.50	%	6.61	%	6.50	%
Volatility factors of the expected market price for our common stock	20.29	%	29.50	%	20.29	%	29.50	%
Weighted average expected life of options	10 years		8 years		10 years		8 years

The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

Dividends

We declared our second quarterly dividend for 2005 of $0.36 per share on May 24, 2005, which was paid in cash on June 29, 2005 to stockholders of record on June 6, 2005. In order to qualify as a REIT, we must make annual distributions to our stockholders of at least 90% of REIT taxable income (excluding net capital gain). Although we currently intend to distribute 100% or more of our taxable income for 2005 in quarterly installments, there can be no assurance that we will do so or as to when the remaining distributions will be made.

Equity Offering

On June 29, 2005, we agreed to sell 3.2 million shares of our common stock in an underwritten public offering under our universal shelf registration statement. At June 30, 2005, we recorded this transaction as subscriptions receivable on our consolidated balance sheet. We received $97.0 million in net proceeds from the sale on July 6, 2005, which we used to repay indebtedness under our revolving credit agreement. Following completion of the offering approximately $500.0 million of securities remains available for offering under the universal shelf registration statement.

NOTE 9—LITIGATION

Legal Proceedings Presently Defended and Indemnified by Kindred Under the Spin Agreements

The following litigation and other matters arose from our operations prior to the time of our spin off of Kindred on May 1, 1998 (the “1998 Spin Off”) or relate to assets or liabilities transferred to Kindred in connection with the 1998 Spin Off. Under the agreements we entered into with Kindred at the time of the 1998 Spin Off (the “Spin Agreements”), Kindred agreed to assume the defense, on our behalf, of any claims that (i) were pending at the time of the 1998 Spin Off and which arose out of the ownership or operation of the healthcare operations or any of the assets or liabilities transferred to Kindred in connection with the 1998 Spin Off, or (ii) were asserted after the 1998 Spin Off and which arose out of the ownership and operation of the healthcare operations or any of the assets or liabilities transferred to Kindred in connection with the 1998 Spin Off, and to indemnify us for any fees, costs, expenses and liabilities arising out of such operations (the “Indemnification”). Kindred is presently defending us in the matters described below, among others. Under Kindred’s plan of reorganization, Kindred assumed and agreed to abide by the Indemnification and to defend us in these and other matters as required under the Spin Agreements. However, there can be no assurance that Kindred will continue to defend us in such matters or that Kindred will have sufficient assets, income and access

to financing to enable it to satisfy such obligations or its other obligations incurred in connection with the 1998 Spin Off. In addition, the following descriptions are based primarily on information included in Kindred’s public filings and information provided to us by Kindred. There can be no assurance that Kindred has included in its public filings and provided us complete and accurate information in all instances.

A stockholder derivative suit entitledThomas G. White on behalf of Ventas, Inc. v. W. Bruce Lunsford, et al., Case No. 98 C103669, was filed in June 1998 in the Jefferson County, Kentucky, Circuit Court. The complaint alleges, among other things, that certain former officers and directors damaged our company by engaging in breaches of fiduciary duty, insider trading, fraud and securities fraud and damaging our reputation. The suit seeks unspecified damages, interest, punitive damages, reasonable attorneys’ fees, other costs, and any extraordinary equitable and/or injunctive relief permitted by law or equity to assure the plaintiff has an effective remedy. We believe the allegations in the complaint are without merit. On October 4, 2002, Kindred filed with the Court a motion to dismiss this action as to all defendants, including us, for lack of prosecution by the plaintiffs. On October 14, 2002, the Court granted Kindred’s motion to dismiss with prejudice. On October 17, 2002, the plaintiffs filed with the Court a motion to vacate that order of dismissal in order to allow further briefing. In response to the plaintiffs’ October 17, 2002 motion to vacate the order of dismissal, on August 13, 2003, the Court issued an order declining to dismiss the suit. In September 2003, Kindred filed a motion to dismiss this action as to all defendants, including us, based on plaintiff’s failure to make demand for remedy upon the appropriate Board of Directors. On March 18, 2004, the presiding judge recused himself and this action was reassigned. In July 2004, the Court ruled that it would consider the motion to dismiss this action based upon plaintiffs’ failure to make demand for remedy upon the appropriate Board of Directors. The briefing is now complete on this motion to dismiss but the Court has not yet ruled. Kindred has indicated that it intends to continue to defend this action vigorously on our behalf. There were no material developments in this action during the six-month period ended June 30, 2005. We are unable at this time to estimate the possible loss or range of loss for this action and, therefore, no provision for liability, if any, resulting from this litigation has been made in our Condensed Consolidated Financial Statements as of June 30, 2005.

Kindred is a party to certain legal actions and regulatory investigations arising in the normal course of its business. We are a party to certain legal actions and regulatory investigations that arise from the normal course of our prior healthcare operations, which legal actions and regulatory investigations are being defended by Kindred under the Indemnification. Neither we nor Kindred are able to predict the ultimate outcome of pending litigation and regulatory investigations. In addition, there can be no assurance that the Centers for Medicare and Medicaid Services or other regulatory agencies will not initiate additional investigations related to Kindred’s business or our prior healthcare business in the future, nor can there be any assurance that the resolution of any litigation or investigations, either individually or in the aggregate, would not have a material adverse effect on Kindred’s liquidity, financial position or results of operations, which in turn could have a material adverse effect on us.

Other Litigation

We are a plaintiff in an action seeking a declaratory judgment and damages entitledVentas Realty, Limited Partnership et al. v. Black Diamond CLO 1998-1 Ltd., et al.,Case No. 99C107076, filed November 22, 1999 in the Circuit Court of Jefferson County, Kentucky. Two of the three defendants in that action, Black Diamond International Funding, Ltd. and BDC Finance, LLC (collectively “Black Diamond”), have asserted counterclaims against us under theories of breach of contract, tortious interference with contract and abuse of process. We dispute the material allegations contained in Black Diamond’s counterclaims and we intend to continue to pursue our claims and defend the counterclaims vigorously. There were no material developments in this action during the six month period ended June 30, 2005. We are unable at this time to estimate the possible loss or range of loss for the counterclaims in this action, and therefore, no provision for liability, if any, resulting from this litigation has been made in our Condensed Consolidated Financial Statements as of June 30, 2005.

We are the plaintiff in an action entitledVentas, Inc. v. Sullivan & Cromwell,Case No. 02-5232 filed by us on June 27, 2002 in the Superior Court of the District of Columbia. The complaint asserts claims of legal

malpractice and breach of fiduciary duty by Sullivan & Cromwell in connection with its legal representation of us in the 1998 Spin Off. The Court set a January 23, 2006 trial date for this action. The parties in this action are currently conducting discovery. There were no material developments in this action during the six-month period ended June 30, 2005. Although we intend to pursue our claims in this action vigorously, there can be no assurances that we will prevail on any of the claims in this action, or, if we do prevail on one or more of the claims, the amount of the recovery that may be awarded to us for such claims.

We are party to various other lawsuits arising in the normal course of our business. It is the opinion of management that, except as set forth in this Note 9, the disposition of these lawsuits will not, individually or in the aggregate, have a material adverse effect on us. If management’s assessment of our liability with respect to these actions is incorrect, such lawsuits could have a material adverse effect on us.

NOTE 10—COMMITMENTS AND CONTINGENCIES

In connection with the 1998 Spin Off, Kindred agreed, among other things, to assume all liabilities and to indemnify, defend and hold us harmless from and against certain losses, claims and litigation arising out of the ownership or operation of the healthcare operations or any of the assets transferred to Kindred in the spin off. Under Kindred’s plan of reorganization, Kindred assumed and agreed to fulfill these obligations. Similarly, in connection with Provident’s acquisition of certain Brookdale-related and Alterra-related entities in 2004, Brookdale and Alterra agreed to indemnify and hold Provident (and, as a result of the Provident Acquisition, us) harmless from and against, among other things, certain liabilities arising out of the ownership or operation of such entities prior to the acquisition by Provident. There can be no assurance that Kindred, Brookdale or Alterra will have sufficient assets, income and access to financing to enable them to satisfy, or that they will be willing to satisfy, their respective obligations under these arrangements. If Kindred, Brookdale or Alterra does not satisfy or otherwise honor their respective obligations to indemnify, defend and hold us harmless under their respective contractual arrangements with us, then we may be liable for the payment and performance of such obligations and may have to assume the defense of such claims or litigation, which could have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and our ability to make distributions to our stockholders as required to maintain our status as a REIT.

NOTE 11—EARNINGS PER SHARE

The following table shows the amounts used in computing basic and diluted earnings per share:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2005		2004		2005		2004
	(in thousands, except per share amounts)
Numerator for basic and diluted earnings per share:
Income before discontinued operations	$	27,068	$	25,464	$	54,641	$	48,555
Discontinued operations		—		190		—		374

Net income	$	27,068	$	25,654	$	54,641	$	48,929

Denominator:
Denominator for basic earnings per share—weighted average shares		88,574		83,820		86,626		82,762
Effect of dilutive securities:
Stock options		766		715		749		866
Time vesting restricted stock awards		10		30		11		34

Dilutive potential common stock		776		745		760		900

Denominator for diluted earnings per share—adjusted weighted average shares		89,350		84,565		87,386		83,662

Basic earnings per share:
Income before discontinued operations	$	0.31	$	0.30	$	0.63	$	0.59
Discontinued operations		—		0.01		—		—

Net income	$	0.31	$	0.31	$	0.63	$	0.59

Diluted earnings per share:
Income before discontinued operations	$	0.30	$	0.30	$	0.63	$	0.58
Discontinued operations		—		—		—		—

Net income	$	0.30	$	0.30	$	0.63	$	0.58

NOTE 12—CONDENSED CONSOLIDATING INFORMATION

We and certain of our direct and indirect wholly owned subsidiaries (the “Wholly Owned Subsidiary Guarantors”) have fully and unconditionally guaranteed, on a joint and several basis, the obligation to pay principal and interest with respect to the senior notes issued by the Issuers. ETOP, which is a 95.5% owned indirect subsidiary, and certain of its wholly owned subsidiaries (the “ETOP Subsidiary Guarantors” and collectively, with the Wholly Owned Subsidiary Guarantors, the “Guarantors”), have also provided a guarantee, on a joint and several basis, of the senior notes. We have other subsidiaries (“Non-Guarantor Subsidiaries”) that are not included among the Guarantors, and such subsidiaries are not obligated with respect to the senior notes. Contractual and legal restrictions, including those contained in the agreements governing the CMBS Loan, and instruments governing certain Non-Guarantor Subsidiaries’ outstanding indebtedness, may under certain circumstances restrict our ability to obtain cash from our Non-Guarantor Subsidiaries for the purpose of meeting our debt service obligations, including our guarantee of payment of principal and interest on the senior notes. Additionally, as of December 31, 2004, approximately $113.5 million of the net assets of Ventas Realty were mortgaged to secure our revolving credit facility. Certain of our real estate assets are also subject to mortgages. The following summarizes our condensed consolidating information as of June 30, 2005 and December 31, 2004 and for the three and six months ended June 30, 2005 and 2004.

CONDENSED CONSOLIDATING BALANCE SHEET

As of June 30, 2005


(in thousands)	Ventas, Inc.		ETOP and ETOP Subsidiary Guarantors		Wholly Owned Subsidiary Guarantors		Issuers (1)			Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Net real estate investments	$	12,462	$	57,269	$	875,433	$	892,867		$	594,268	$	—		$	2,432,299
Cash and cash equivalents		1		—		—		62			739		—			802
Escrow deposits and restricted cash		239		138		28,473		3,499			19,602		—			51,951
Deferred financing costs, net		—		—		—		16,368			1,946		—			18,314
Subscriptions receivable		—		—		—		97,020			—		—			97,020
Equity in affiliates		294,306		80,538		113,386		710,386			15		(1,198,631	)		—
Other		1,751		408		5,966		13,363			3,581		—			25,069

Total assets	$	308,759	$	138,353	$	1,023,258	$	1,733,565		$	620,151	$	(1,198,631	)	$	2,625,455

Liabilities and stockholders’ equity
Liabilities:
Senior notes payable and other debt	$	—	$	430	$	302,617	$	1,047,438		$	482,199	$	—		$	1,832,684
Intercompany		—		3,621		125,000		(133,100	)		4,479		—			—
Deferred revenue		57		—		—		9,542			2,114		—			11,713
Interest rate swap agreement		—		—		—		11,155			—		—			11,155
Accrued dividend		—		—		—		—			—		—			—
Accrued interest		—		3		1,408		10,011			2,217		—			13,639
Accounts payable and other accrued liabilities		1,955		102		25,111		34,051			9,098		393			70,710
Deferred income taxes		30,394		—		—		—			—		—			30,394

Total liabilities		32,406		4,156		454,136		979,097			500,107		393			1,970,295
Total stockholders’ equity		276,353		134,197		569,122		754,468			120,044		(1,199,024	)		655,160

Total liabilities and stockholders’ equity	$	308,759	$	138,353	$	1,023,258	$	1,733,565		$	620,151	$	(1,198,631	)	$	2,625,455

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2004


(in thousands)	Ventas, Inc.		ETOP and ETOP Subsidiary Guarantors		Wholly Owned Subsidiary Guarantors		Issuers (1)			Non- Guarantor Subsidiaries			Consolidated Elimination			Consolidated
Assets
Net real estate investments	$	12,806	$	58,339	$	—	$	772,883		$	227,104		$	—		$	1,071,132
Cash and cash equivalents		48		37		3		1,846			1,431			—			3,365
Escrow deposits and restricted cash		237		138		—		12,812			12,523			—			25,710
Deferred financing costs, net		—		—		—		10,938			2,612			—			13,550
Subscriptions receivable		—		—		—		—			—			—			—
Equity in affiliates		391,817		80,447		114,867		—			15			(587,146	)		—
Other		1,716		298		—		10,055			1,109			—			13,178

Total assets	$	406,624	$	139,259	$	114,870	$	808,534		$	244,794		$	(587,146	)	$	1,126,935

Liabilities and stockholders’ equity
Liabilities:
Senior notes payable and other debt	$	—	$	436	$	—	$	530,037		$	312,705		$	—		$	843,178
Intercompany		—		3,622		—		(7,802	)		4,180			—			—
Deferred revenue		71		—		—		10,489			2,327			—			12,887
Interest rate swap agreement		—		—		—		16,550			—			—			16,550
Accrued dividend		27,498		—		—		—			—			—			27,498
Accrued interest		—		3		—		7,435			1,305			—			8,743
Accounts payable and other accrued liabilities		2,030		175		—		19,895			4,968			393			27,461
Deferred income taxes		30,394		—		—		—			—			—			30,394

Total liabilities		59,993		4,236		—		576,604			325,485			393			966,711
Total stockholders’ equity		346,631		135,023		114,870		231,930			(80,691	)		(587,539	)		160,224

Total liabilities and stockholders’ equity	$	406,624	$	139,259	$	114,870	$	808,534		$	244,794		$	(587,146	)	$	1,126,935

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended June 30, 2005


(in thousands)	Ventas, Inc.		ETOP and ETOP Subsidiary Guarantors			Wholly Owned Subsidiary Guarantors		Issuers (1)			Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental income	$	586	$	1,418		$	4,933	$	50,298		$	15,307	$	—		$	72,542
Interest income from loans receivable		—		—			—		1,492			—		—			1,492
Equity earnings (loss) in affiliates		26,900		(179	)		877		—			—		(27,598	)		—
Interest and other income		18		1			—		1,051			50		—			1,120

Total revenues		27,504		1,240			5,810		52,841			15,357		(27,598	)		75,154

Expenses:
Property-level operating expenses		—		—			—		106			535		—			641
General, administrative and professional fees		261		143			410		3,469			1,270		—			5,553
Restricted stock amortization		2		6			22		410			66		—			506
Depreciation		173		534			3,163		10,586			3,829		—			18,285
Interest		—		9			1,235		16,166			5,516		—			22,926
Intercompany interest		—		(3	)		—		(150	)		153		—			—

Total expenses		436		689			4,830		30,587			11,369		—			47,911

Income before net loss on real estate disposals and discontinued operations		27,068		551			980		22,254			3,988		(27,598	)		27,243
Net loss on real estate disposal		—		—			—		(175	)		—		—			(175	)

Income before discontinued operations		27,068		551			980		22,079			3,988		(27,598	)		27,068
Discontinued operations		—		—			—		—			—		—			—

Net income	$	27,068	$	551		$	980	$	22,079		$	3,988	$	(27,598	)	$	27,068

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended June 30, 2004


(in thousands)	Ventas, Inc.		ETOP and ETOP Subsidiary Guarantors			Wholly Owned Subsidiaries Guarantors		Issuers (1)			Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental income	$	567	$	1,758		$	—	$	44,125		$	11,918	$	—		$	58,368
Interest income from loans receivable		—		—			—		755			—		—			755
Equity earnings in affiliates		25,339		729			924		—			—		(26,992	)		—
Interest and other income		36		18			—		233			15		—			302

Total revenues		25,942		2,505			924		45,113			11,933		(26,992	)		59,425

Expenses:
Property-level operating expenses		—		—			—		—			290		—			290
General, administrative and professional fees		111		155			10		3,115			911		—			4,302
Restricted stock amortization		2		9			—		327			55		—			393
Depreciation		173		522			—		9,131			2,259		—			12,085
Interest		—		320			—		13,125			3,446		—			16,891
Intercompany interest		—		(77	)		—		(107	)		184		—			—

Total expenses		286		929			10		25,591			7,145		—			33,961

Income before net loss on real estate disposals and discontinued operations		25,656		1,576			914		19,522			4,788		(26,992	)		25,464
Net loss on real estate disposals		—		—			—		—			—		—			—

Income before discontinued operations		25,656		1,576			914		19,522			4,788		(26,992	)		25,464
Discontinued operations		—		—			—		190			—		—			190

Net income	$	25,656	$	1,576		$	914	$	19,712		$	4,788	$	(26,992	)	$	25,654

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the six months ended June 30, 2005


(in thousands)	Ventas, Inc.		ETOP and ETOP Subsidiary Guarantors			Wholly Owned Subsidiary Guarantors		Issuers (1)			Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental income	$	1,160	$	2,837		$	4,933	$	98,409		$	27,942	$	—		$	135,281
Interest income from loans receivable		—		—			—		2,144			—		—			2,144
Equity earnings (loss) in affiliates		54,218		(335	)		1,662		—			—		(55,545	)		—
Interest and other income		36		1			—		1,603			92		—			1,732

Total revenues		55,414		2,503			6,595		102,156			28,034		(55,545	)		139,157

Expenses:
Property-level operating expenses		—		—			—		215			978		—			1,193
General, administrative and professional fees		423		291			410		7,097			2,352		—			10,573
Restricted stock amortization		5		13			22		755			131		—			926
Depreciation		345		1,069			3,163		20,712			6,262		—			31,551
Interest		—		18			1,235		28,982			9,863		—			40,098
Intercompany interest		—		(1	)		—		(298	)		299		—			—

Total expenses		773		1,390			4,830		57,463			19,885		—			84,341

Income before net loss on real estate disposals and discontinued operations		54,641		1,113			1,765		44,693			8,149		(55,545	)		54,816
Net loss on real estate disposals		—		—			—		(175	)		—		—			(175	)

Income before discontinued operations		54,641		1,113			1,765		44,518			8,149		(55,545	)		54,641
Discontinued operations		—		—			—		—			—		—			—

Net income	$	54,641	$	1,113		$	1,765	$	44,518		$	8,149	$	(55,545	)	$	54,641

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the six months ended June 30, 2004


(in thousands)	Ventas, Inc.		ETOP and ETOP Subsidiary Guarantors		Wholly Owned Subsidiaries Guarantors		Issuers (1)		Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental income	$	1,122	$	2,696	$	—	$	85,115	$	22,341	$	—		$	111,274
Interest income from loans receivable		—		—		—		1,511		—		—			1,511
Equity earnings in affiliates		48,273		1,172		1,637		—		—		(51,082	)		—
Interest and other income		87		35		—		441		20		—			583

Total revenues		49,482		3,903		1,637		87,067		22,361		(51,082	)		113,368

Expenses:
Property-level operating expenses		—		—		—		—		497		—			497
General, administrative and professional fees		201		312		10		6,348		1,655		—			8,526
Restricted stock amortization		6		14		—		652		106		—			778
Depreciation		347		805		—		17,635		4,105		—			22,892
Interest		—		263		—		25,256		6,601		—			32,120

Total expenses		554		1,394		10		49,891		12,964		—			64,813

Income before net loss on real estate disposals and discontinued operations		48,928		2,509		1,627		37,176		9,397		(51,082	)		48,555
Net loss on real estate disposals		—		—		—		—		—		—			—

Income before discontinued operations		48,928		2,509		1,627		37,176		9,397		(51,082	)		48,555
Discontinued operations		—		—		—		374		—		—			374

Net income	$	48,928	$	2,509	$	1,627	$	37,550	$	9,397	$	(51,082	)	$	48,929

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2005


(in thousands)	Ventas, Inc.			ETOP and ETOP Subsidiary Guarantors			Wholly Owned Subsidiary Guarantors			Issuers (1)			Non- Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Net cash provided by operating activities	$	683		$	2,346		$	(616	)	$	85,070		$	12,699		$	—	$	100,182

Net cash used in investing activities		(12,823	)		—			—			(512,021	)		—			—		(524,844	)

Cash flows from financing activities:
Net change in borrowings under revolving credit facility		—			—			—			117,400			—			—		117,400
Proceeds from debt		—			—			—			400,000			—			—		400,000
Repayment of debt		—			(6	)		—			(4,562	)		(2,276	)		—		(6,844	)
Issuance of intercompany note		—			—			125,000			(125,000	)		—			—		—
Issuance of common stock		4,694			—			—			—			—			—		4,694
Proceeds from stock option exercises		2,036			—			—			—			—			—		2,036
Cash distribution to stockholders		5,363			(2,377	)		(124,387	)		43,801			(10,988	)		—		(88,588	)
Other		—			—			—			(6,599	)		—			—		(6,599	)

Net cash provided by financing activities		12,093			(2,383	)		613			425,040			(13,264	)		—		422,099

Net decrease in cash and cash equivalents		(47	)		(37	)		(3	)		(1,911	)		(565	)		—		(2,563	)
Cash and cash equivalents at beginning of period		48			37			3			1,973			1,304			—		3,365

Cash and cash equivalents at end of period	$	1		$	—		$	—		$	62		$	739		$	—	$	802

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2004


(in thousands)	Ventas, Inc.			ETOP and ETOP Subsidiary Guarantors			Wholly Owned Subsidiary Guarantors			Issuers (1)			Non- Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Net cash provided by operating activities	$	1,221		$	2,248		$	(13	)	$	52,620		$	14,449		$	—	$	70,525

Net cash (used in) provided by investing activities		(204,739	)		27,152			14			(69,043	)		853			—		(245,763	)

Cash flows from financing activities:
Net change in borrowings under revolving credit facility		—			—			—			114,000			—			—		114,000
Proceeds from debt		—			—			—			—			—			—		—
Repayment of debt		—			(3,775	)		—			(298	)		(1,822	)		—		(5,895	)
Cash distributions from (to) affiliates		209,608			(32,200	)		3			(164,923	)		(12,488	)		—		—
Issuance of common stock		54,533			7,500			—			(7,500	)		—			—		54,533
Proceeds from stock option exercises		15,506			—			—			—			—			—		15,506
Cash distribution to stockholders		(76,130	)		—			—			—			—			—		(76,130	)
Other		—			—			—			—			—			—		—

Net cash provided by (used in) financing activities		203,517			(28,475	)		3			(58,721	)		(14,310	)		—		102,014

Net (decrease) increase in cash and cash equivalents		(1	)		925			4			(75,144	)		992			—		(73,224	)
Cash and cash equivalents at beginning of period		47			—			—			82,051			6			—		82,104

Cash and cash equivalents at end of period	$	46		$	925		$	4		$	6,907		$	998		$	—	$	8,880

(1)	Ventas Capital is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offerings of the senior notes and has no assets or operations.

NOTE 13—ETOP CONDENSED CONSOLIDATING INFORMATION

ETOP, which is a 95.5% owned indirect subsidiary of Ventas, Inc., and the ETOP Subsidiary Guarantors have provided full and unconditional guarantees, on a joint and several basis with us and certain of our direct and indirect wholly owned subsidiaries, of the obligation to pay principal and interest with respect to the senior notes of the Issuers. See “Note 12—Condensed Consolidating Information.” Certain of ETOP’s other direct and indirect wholly owned subsidiaries (the “ETOP Non-Guarantor Subsidiaries”) that have not provided the guarantee of the senior notes are therefore not directly obligated with respect to the senior notes.

Contractual and legal restrictions, including those contained in the instruments governing certain of the ETOP Non-Guarantor Subsidiaries’ outstanding indebtedness, may under certain circumstances restrict ETOP’s (and, therefore, our) ability to obtain cash from the ETOP Non-Guarantor Subsidiaries for the purpose of satisfying our and ETOP’s debt service obligations, including our respective guarantees of payment of principal and interest on the senior notes. Certain of the ETOP Subsidiary Guarantors’ properties are subject to mortgages.

For comparative purposes, the ETOP Condensed Consolidating Financial Statements for the periods prior to our acquisition of ElderTrust, the general partner of ETOP, in February 2004 are presented as “Predecessor Company” financial statements and are not included as part of our Condensed Consolidating Financial Statements for those periods.

CONDENSED CONSOLIDATING BALANCE SHEET

As of June 30, 2005


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Net real estate investments	$	57,269		$	95,733	$	—		$	153,002
Cash and cash equivalents		—			459		—			459
Escrow deposits and restricted cash		138			7,647		—			7,785
Equity in affiliates		80,538			15		(80,553	)		—
Other		408			585		—			993

Total assets	$	138,353		$	104,439	$	(80,553	)	$	162,239

Liabilities and partners’ equity
Liabilities:
Senior notes payable and other debt	$	430		$	76,660	$	—		$	77,090
Intercompany		(4,479	)		4,479		—			—
Note payable to affiliate		8,100			—		—			8,100
Accounts payable and other accrued liabilities		102			3,029		—			3,131
Accrued interest		3			688		—			691

Total liabilities		4,156			84,856		—			89,012
Total partners’ equity		134,197			19,583		(80,553	)		73,227

Total liabilities and partners’ equity	$	138,353		$	104,439	$	(80,553	)	$	162,239

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2004


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Net real estate investments	$	58,339		$	97,404	$	—		$	155,743
Cash and cash equivalents		37			1,173		—			1,210
Escrow deposits and restricted cash		138			6,567		—			6,705
Equity in affiliates		80,447			15		(80,462	)		—
Other		298			592		—			890

Total assets	$	139,259		$	105,751	$	(80,462	)	$	164,548

Liabilities and partners’ equity
Liabilities:
Senior notes payable and other debt	$	436		$	77,297	$	—		$	77,733
Intercompany		(4,180	)		4,180		—			—
Note payable to affiliate		7,802			—		—			7,802
Accounts payable and other accrued liabilities		175			3,148		—			3,323
Accrued interest		3			700		—			703

Total liabilities		4,236			85,325					89,561
Total partners’ equity		135,023			20,426		(80,462	)		74,987

Total liabilities and partners’ equity	$	139,259		$	105,751	$	(80,462	)	$	164,548

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended June 30, 2005


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Revenues:
Rental income	$	1,418		$	2,862		$	—	$	4,280
Interest and other income		1			31			—		32
Equity loss in affiliates		(179	)		—			179		—

Total revenues		1,240			2,893			179		4,312

Expenses:
Property-level operating expenses		—			366			—		366
General, administrative and professional fees		143			217			—		360
Restricted stock amortization		6			11			—		17
Depreciation		534			839			—		1,373
Interest		9			1,486			—		1,495
Intercompany interest		(3	)		153			—		150

Total expenses		689			3,072			—		3,761

Net income (loss)	$	551		$	(179	)	$	179	$	551

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended June 30, 2004


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination			Consolidated
Revenues:
Rental income	$	1,758		$	2,500		$	—		$	4,258
Interest and other income		18			15			—			33
Equity earnings in affiliates		729			—			(729	)		—

Total revenues		2,505			2,515			(729	)		4,291

Expenses:
Property-level operating expenses		—			290			—			290
General, administrative and professional fees		155			175			—			330
Restricted stock amortization		9			10			—			19
Depreciation		522			682			—			1,204
Interest		427			1,290			—			1,717
Intercompany interest		(184	)		184			—			—

Total expenses		929			2,631			—			3,560

Net income (loss)	$	1,576		$	(116	)	$	(729	)	$	731

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the six months ended June 30, 2005


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Revenues:
Rental income	$	2,837		$	5,723		$	—	$	8,560
Interest and other income		1			61			—		62
Equity loss in affiliates		(335	)		—			335		—

Total revenues		2,503			5,784			335		8,622

Expenses:
Property-level operating expenses		—			697			—		697
General, administrative and professional fees		291			452			—		743
Restricted stock amortization		13			24			—		37
Depreciation		1,069			1,676			—		2,745
Interest		18			2,971			—		2,989
Intercompany interest		(1	)		299			—		298

Total expenses		1,390			6,119			—		7,509

Net income (loss)	$	1,113		$	(335	)	$	335	$	1,113

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the period from February 5, 2004 through June 30, 2004


(in thousands)	ETOP and ETOP Subsidiary Guarantors		ETOP Non-Guarantor Subsidiaries			Consolidated Elimination			Consolidated
Revenues:
Rental income	$	2,696	$	4,399		$	—		$	7,095
Interest and other income		35		19			—			54
Equity earnings in affiliates		1,172		—			(1,172	)		—

Total revenues		3,903		4,418			(1,172	)		7,149

Expenses:
Property-level operating expenses		—		497			—			497
General, administrative and professional fees		326		318			—			644
Depreciation		805		1,198			—			2,003
Interest		263		2,471			—			2,734

Total expenses		1,394		4,484			—			5,878

Net income (loss)	$	2,509	$	(66	)	$	(1,172	)	$	1,271

PREDECESSOR COMPANY CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the period from January 1, 2004 through February 4, 2004


(in thousands)	ETOP and ETOP Subsidiary Guarantors		ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental income	$	507	$	1,005	$	—		$	1,512
Interest and other income		113		10		(63	)		60
Equity earnings in affiliates		66		—		(66	)		—

Total revenues		686		1,015		(129	)		1,572

Expenses:
Property-level operating expenses		—		101		—			101
General, administrative and professional fees		182		18		—			200
Depreciation		192		295		—			487
Interest		40		509		—			549
Intercompany interest		37		26		(63	)		—
Loss on sale of fixed assets		10		—		—			10
Loss on extinguishment of debt		8		—		—			8

Total expenses		469		949		(63	)		1,355

Income before discontinued operations		217		66		(66	)		217
Discontinued operations		414		—		—			414

Net income	$	631	$	66	$	(66	)	$	631

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2005


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Net cash provided by operating activities	$	2,346		$	460		$	—	$	2,806

Net cash used in investing activities		—			(4	)		—		(4	)

Cash flows from financing activities:
Repayment of debt		(6	)		(638	)		—		(644	)
Cash distribution to partner		(2,377	)		(532	)		—		(2,909	)

Net cash used in financing activities		(2,383	)		(1,170	)		—		(3,553	)

Net decrease in cash and cash equivalents		(37	)		(714	)		—		(751	)
Cash and cash equivalents at beginning of period		37			1,173			—		1,210

Cash and cash equivalents at end of period	$	—		$	459		$	—	$	459

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the period from February 5, 2004 through June 30, 2004


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Net cash provided by operating activities	$	2,248		$	957		$	—	$	3,205

Net cash used in investing activities		—			(16	)		—		(16	)

Cash flows from financing activities:
Repayment of debt		(3,775	)		(401	)		—		(4,176	)
Proceeds from issuance of note payable to affiliate		7,500			—			—		7,500
Cash distribution to partner		(32,200	)		(721	)		—		(32,921	)

Net cash used in financing activities		(28,475	)		(1,122	)		—		(29,597	)

Net decrease in cash and cash equivalents		(26,227	)		(181	)		—		(26,408	)
Cash and cash equivalents at beginning of period		27,152			868			—		28,020

Cash and cash equivalents at end of period	$	925		$	687		$	—	$	1,612

PREDECESSOR COMPANY CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the period from January 1, 2004 through February 4, 2004


(in thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Net cash provided by operating activities	$	820		$	260		$	—	$	1,080

Net cash provided by investing activities		2,806			—			—		2,806

Cash flows from financing activities:
Cash distribution to unitholders		(1,293	)		—			—		(1,293	)
Payments on mortgages payable		(30	)		(212	)		—		(242	)

Net cash used in financing activities		(1,323	)		(212	)		—		(1,535	)

Net increase in cash and cash equivalents		2,303			48			—		2,351
Cash and cash equivalents at beginning of period		24,848			821			—		25,669

Cash and cash equivalents at end of period	$	27,151		$	869		$	—	$	28,020

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statements

Unless otherwise indicated or the content otherwise requires, the terms “we,” “us” and “our” and other similar terms in this Quarterly Report on Form 10-Q refer to Ventas, Inc. and its consolidated subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding our expected future financial position, results of operations, cash flows, funds from operations, dividends and dividend plans, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive positions, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations and statements that include words such as “anticipate,” “if”, “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and security holders must recognize that actual results may differ from our expectations. We do not undertake a duty to update such forward-looking statements.

Our actual future results and trends may differ materially depending on a variety of factors discussed in our filings with the Securities and Exchange Commission (the “Commission”). Factors that may affect our plans or results include without limitation: (a) the ability and willingness of our operators, tenants, borrowers and other third parties to meet and/or perform the obligations under their various contractual arrangements with us; (b) the ability and willingness of Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”), Brookdale Living Communities, Inc. (together with its subsidiaries, “Brookdale”) and Alterra Healthcare Corporation (together with its subsidiaries, “Alterra”) to meet and/or perform their obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities under our respective contractual arrangements with Kindred, Brookdale and Alterra; (c) the ability of our operators, tenants and borrowers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities, including without limitation, their existing credit facilities; (d) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions or investments; (e) the nature and extent of future competition; (f) the extent of future healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (g) increases in our cost of borrowing; (h) the ability of our operators to deliver high quality care and to attract patients; (i) the results of litigation affecting us; (j) changes in general economic conditions and/or economic conditions in the markets in which we may, from time to time, compete; (k) our ability to pay down, refinance, restructure, and/or extend our indebtedness as it becomes due; (l) the movement of interest rates and the resulting impact on the value of and the accounting for our interest rate swap agreement; (m) our ability and willingness to maintain our qualification as a REIT due to economic, market, legal, tax or other considerations; (n) final determination of our taxable net income for the year ended December 31, 2004 and for the year ending December 31, 2005; (o) the ability and willingness of our tenants to renew their leases with us upon expiration of the leases and our ability to relet our properties on the same or better terms in the event such leases expire and are not renewed by the existing tenants; (p) risks associated with our acquisition of Provident Senior Living Trust (“Provident”), including our ability to timely and fully realize expected revenues and cost savings from the merger; (q) the impact on the liquidity, financial condition and results of operations of our operators resulting from increased operating costs and uninsured liabilities for professional liability claims, and the ability of our operators to accurately estimate the magnitude of such liabilities; and (r) the value of our rental reset right with Kindred, which is dependent on a variety of factors and is highly speculative. Many of these factors are beyond our control and the control of our management.

Kindred Information

Kindred is subject to the reporting requirements of the Commission and is required to file with the Commission annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Kindred contained in this Quarterly Report on Form 10-Q is derived from filings made with the Commission or other publicly available information, or has been provided to us by Kindred. We have not verified this information either through an independent investigation or by reviewing Kindred’s public filings. We have no reason to believe that such information is inaccurate in any material respect, but we cannot assure you that all of this information is accurate. Kindred’s filings with the Commission can be found at the Commission’s website at www.sec.gov. We are providing this data for informational purposes only, and you are encouraged to obtain Kindred’s publicly available filings from the Commission.

Brookdale Information

Brookdale is neither subject to the reporting requirements of the Commission nor required to file with the Commission reports containing any financial or other information. The information related to Brookdale contained as an exhibit in this Quarterly Report on Form 10-Q has been provided to us by Brookdale. We have not verified this information through an independent investigation or otherwise. We have no reason to believe that such information is inaccurate in any material respect, but we cannot assure you that all such information is accurate. We are providing this data for informational purposes only.

Background Information

We are a healthcare REIT with a geographically diverse portfolio of healthcare and seniors housing facilities. As of June 30, 2005, this portfolio consisted of 200 skilled nursing facilities, 41 hospitals and 128 seniors housing and other facilities in 41 states. Except with respect to our medical office buildings, we lease these facilities to healthcare operating companies under “triple-net” or “absolute net” leases. Kindred leased 225 of our facilities as of June 30, 2005. We also have real estate loan investments relating to 37 healthcare and seniors housing facilities as of June 30, 2005.

We conduct substantially all of our business through a wholly owned operating partnership, Ventas Realty, Limited Partnership (“Ventas Realty”), a wholly owned limited liability company, Ventas Finance I, LLC (“Ventas Finance”), a wholly owned limited partnership, PSLT OP, L.P., and ElderTrust Operating Partnership (“ETOP”), in which we own 95.5% of the partnership units. Our primary business consists of financing, owning and leasing healthcare-related and seniors housing facilities and leasing or subleasing such facilities to third parties.

Our business strategy is comprised of two primary objectives: diversifying our portfolio of properties and increasing our earnings. We intend to continue to diversify our real estate portfolio by operator, facility type and reimbursement source. We intend to invest in or acquire additional healthcare-related and/or seniors housing assets across a wide spectrum.

As of June 30, 2005, approximately 35.6% and 37.3% of our properties, based on their original cost, were operated by Kindred and Brookdale, respectively. Approximately 70.7% of our total revenues for the six months ended June 30, 2005 was derived from our master lease agreements with Kindred (the “Kindred Master Leases”).

Recent Developments Regarding Acquisitions

Provident

living units all of which are leased to affiliates of Brookdale and Alterra pursuant to triple-net leases with renewal options. As of June 30, 2005, the aggregate 2005 contractual cash rent expected from the Provident properties was approximately $83.2 million.

We funded the cash portion of the purchase price for the Provident Acquisition, which was approximately $231.0 million, and repaid all outstanding borrowings under Provident’s credit facility at closing from a combination of net proceeds from the sale of $350 million aggregate principal amount of senior notes, comprised of $175 million aggregate principal amount of 6³/4% Senior Notes due 2010 (the “2010 Senior Notes”) and $175 million aggregate principal amount of 7¹/8% Senior Notes due 2015 (the “2015 Senior Notes”), issued by Ventas Realty and a wholly owned subsidiary, Ventas Capital Corporation (“Ventas Capital” and, together with Ventas Realty, the “Issuers”), and borrowings under our revolving credit facility. Additionally, we issued approximately 15.0 million shares of common stock and share equivalents to Provident equity holders as part of the purchase price for the Provident Acquisition. We also assumed approximately $459.4 million of property-level mortgage debt.

As a result of the Provident Acquisition Brookdale is expected to be a significant source of our total revenues. Approximately 12.4% of our total revenues for the three months ended June 30, 2005 was derived from our lease agreements with Brookdale, which includes the three months ended June 30, 2005 for our prior lease agreements with Brookdale and the lease agreements acquired from Provident for the twenty-four day period following the acquisition.

As a result of the Provident Acquisition, we assumed substantially all of Provident’s liabilities, including those that Provident may have succeeded to when it acquired the ownership interests in certain Brookdale-related and Alterra-related entities in 2004. See “Note 10—Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements.

In addition, we may be subject to built-in gains tax as a result of Provident’s acquisition of certain Brookdale entities. Since Provident acquired some of its facilities by purchasing the stock of the applicable Brookdale entity and that entity was a C corporation, the difference between the fair market value on the acquisition date and the federal tax basis is considered a built-in gain. If we dispose of any of those facilities and recognize gain on the disposition during the 10-year period following October 2004, then we will generally be subject to regular corporate income tax on the gain equal to the lower of (i) the recognized gain at the time of disposition or (ii) the built-in gain in that asset as of October 2004.

Other Acquisitions

During the six months ended June 30, 2005, we acquired 11 seniors housing facilities and one hospital for an aggregate purchase price of $104.4 million in five separate transactions. The facilities are leased under triple-net leases, each having initial terms ranging from 10 to 15 years and initially providing aggregate, annual cash base rent of approximately $9.6 million, subject to escalation as provided in the leases. We also acquired a parcel of land that is adjacent to one of our healthcare facilities for $0.7 million.

Additionally, during the six months ended June 30, 2005, we acquired three medical office buildings for an aggregate purchase price of $13.0 million in two separate transactions. These buildings are leased to various tenants under leases having various remaining terms and initially providing aggregate, annual cash base rent of approximately $1.7 million, subject to escalation as provided in the leases. We have engaged managers to manage the operations at the medical office buildings.

Recent Developments Regarding Government Regulation

Medicare Reimbursement; Long-Term Acute Care Hospitals

On February 3, 2005, the Centers for Medicare & Medicaid Services (“CMS”) issued a proposed rule to update payment rates for the 2006 rate year (July 1, 2005 through June 30, 2006) under the prospective payment

system for long-term acute care hospitals (“LTAC PPS”). The final rule updating 2006 payment rates under LTAC PPS was issued by CMS on April 29, 2005 and published on May 6, 2005. In the final rule, CMS, among other things, increased the inflationary rate from the 3.1% under the proposed rule to 3.4% and eliminated the budget neutrality adjustment. We are currently analyzing this final rule and at this time we cannot predict what impact the final rule will have on the liquidity or profitability of the operators of our long-term acute care hospitals.

On May 4, 2004, CMS published a proposed rule updating the categorization system for each defined patient category (called “Long Term Care—Diagnosis Related Groups” or “LTC-DRGs”) for the LTAC PPS for the 2006 federal fiscal year (October 1, 2005 through September 30, 2006). The proposed rule, among other things, would revise the relative weights for each LTC-DRG used to estimate the resource needs of patients classified in each LTC-DRG and would revise the minimum average length of stay requirements for each LTC-DRG necessary to receive full payment under the system. Comments on the proposed rule were accepted until June 24, 2005 and a final rule is expected to be published in the third quarter of 2005, which may be different from the proposed rule. If this proposed rule becomes final, CMS estimates that the combined effective decrease in fiscal year 2006 Medicare revenues for long-term acute care hospitals would be 4.7%. We are currently analyzing this proposed rule and at this time we cannot predict what impact the proposed rule, or any modification thereof that may be included in the final rule, will have on the liquidity or profitability of the operators of our long-term acute care hospitals.

Medicare Reimbursement; Skilled Nursing Facilities

On May 19, 2005, CMS published a proposed rule under the prospective payment system for skilled nursing facilities (“SNF PPS”). Under the rule, CMS proposes, among other things, a refinement (the “RUGs refinement”) to the resource utilization groups (“RUGs”), which will add nine new payment categories which determine the daily payments for Medicare beneficiaries in skilled nursing facilities. CMS is also proposing increases in the case mix index for all of the RUGs categories. The increase in the index is equal to half of the value of the temporary “add-on” payment that ends with the refinement of the current system. The increase in payments along with the RUGs refinement, together with an annual inflation increase of 3%, will result in a small overall reduction in skilled nursing facility Medicare payments in fiscal year 2006. The RUGs refinement under the proposed rule, as may be modified in the final rule, will be implemented on January 1, 2006, and the market basket increase, as may be modified in the final rule, will be implemented on October 1, 2005. The comment period on the proposed rule expired July 12, 2005 and a final rule is expected to be published in the third quarter of 2005, which may be different from the proposed rule. We are currently analyzing this proposed rule and at this time we cannot predict what impact the proposed rule, or any modification thereof that may be included in the final rule, will have on the liquidity or profitability of the operators of our skilled nursing facilities.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. We believe that the following critical accounting policies, among others, affect our more significant estimates used in the preparation of our financial statements.

Long-Lived Assets

Investments in real estate properties are recorded at cost. We account for acquisitions using the purchase method. The cost of the properties acquired is allocated among tangible land, buildings and equipment and recognized intangibles based upon estimated fair values in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” We estimate fair values of the

components of assets acquired as of the acquisition date or engage a third party appraiser as necessary. Recognized intangibles, if any, include the value of acquired lease contracts and related customer relationships.

Our method for determining fair value varies with the categorization of the asset acquired. We estimate the fair value of buildings on an as-if-vacant basis, and amortize the building value over the estimated remaining life of the building. We determine the allocated value of other fixed assets based upon the replacement cost and amortize such value over their estimated remaining useful lives. We determine the value of land either based on real estate tax assessed values in relation to the total value of the asset, internal analyses of recently acquired and existing comparable properties within our portfolio or third party appraisals. The fair value of in-place leases, if any, reflects (i) above and below market leases, if any, determined by discounting the difference between the estimated current market rent and the in-place rentals, the resulting intangible asset of which is amortized to rental revenue over the remaining life of the associated lease plus any fixed rate renewal periods, if applicable, (ii) the estimated value of the cost to obtain tenants, including tenant allowances, tenant improvements and leasing commissions, which is amortized over the remaining life of the associated lease, and (iii) an estimated value of the absorption period to reflect the value of the rents and recovery costs foregone during a reasonable lease-up period, as if the acquired space was vacant, which is amortized over the remaining life of the associated lease. We also estimate the value of tenant or other customer relationships acquired by considering the nature and extent of existing business relationships with the tenant, growth prospects for developing new business with such tenant, such tenant’s credit quality, expectations of lease renewals with such tenant, and the potential for significant, additional future leasing arrangements with such tenant. We amortize such value, if any, over the expected term of the associated arrangements or leases, which would include the remaining lives of the related leases and any expected renewal periods.

Impairment of Long-Lived Assets

We periodically evaluate our long-lived assets, primarily consisting of our investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations and adjust the net book value of leased properties and other long-lived assets to fair value if the sum of the expected future cash flow or sales proceeds is less than book value. An impairment loss is recognized at the time we make any such adjustment. Future events could occur which would cause us to conclude that impairment indicators exist and an impairment loss is warranted.

Revenue Recognition

Certain of our leases, excluding the Kindred Master Leases, provide for periodic and determinable increases in base rent. Base rental revenues under these leases are recognized on a straight-line basis over the term of the applicable lease. Certain of our other leases, including the Kindred Master Leases, provide for an annual increase in rental payments only if certain revenue parameters or other contingencies are met. We recognize the increased rental revenue under these leases only if the revenue parameters or other contingencies are met rather than on a straight-line basis over the term of the applicable lease. We recognize income from rent, lease termination fees and other income once all of the following criteria are met in accordance with the Commission’s Staff Accounting Bulletin 104: (i) the agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) the collectibility is reasonably assured.

Legal Contingencies

We are involved in litigation as described in “Note 9—Litigation” of the Notes to Condensed Consolidated Financial Statements. We evaluate such matters by (i) ascertaining the probability that such litigation could result in a loss for us and (ii) determining an estimate of any possible loss. In accordance with SFAS No. 5, “Accounting for Contingencies,” we accrue for any probable losses that are estimable and disclose any loss contingencies that are possible. If management’s assessment of our liability with respect to these actions is incorrect, such matters could have a material adverse effect on us.

Fair Value of Derivative Instruments

The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values for our derivatives are verified with a third party consultant, which utilizes pricing models that consider forward yield curves and discount rates. Such amounts and the recognition of such amounts in the financial statements are subject to significant estimates which may change in the future.

Certain Information Regarding ElderTrust Operating Limited Partnership

Not later than the deadline prescribed by the Securities Exchange Act of 1934, as amended, we will cause ETOP to file a Quarterly Report on Form 10-Q for the quarter ended June 30, 2005. Such Quarterly Report upon filing, shall be deemed incorporated by reference in this Quarterly Report on Form 10-Q.

Results of Operations

Three Months Ended June 30, 2005 and 2004

The table below shows our results of operations for the three months ended June 30, 2005 and 2004 and the absolute and percentage change in those results from period to period.


	For the Three Months Ended June 30,					Change
	For the Three Months Ended June 30,					Change
	2005			2004		$			%
	(dollars in thousands)
Revenues:
Rental income	$	72,542		$	58,368	$	14,174		24.3	%
Interest income from loans receivable		1,492			755		737		97.6
Interest and other income		1,120			302		818		270.9

Total revenues		75,154			59,425		15,729		26.5	%

Expenses:
Property-level operating expenses		641			290		351		121.0
General, administrative and professional fees		5,553			4,302		1,251		29.1
Restricted stock amortization		506			393		113		28.8
Depreciation		18,285			12,085		6,200		51.3
Interest		22,926			16,891		6,035		35.7

Total expenses		47,911			33,961		13,950		41.1

Income before net loss on real estate disposals and discontinued operations		27,243			25,464		1,779		7.0

Net loss on real estate disposals		(175	)		—		(175	)	nm

Income before discontinued operations		27,068			25,464		1,604		6.3	%

Discontinued operations		—			190		(190	)	100.0

Net income	$	27,068		$	25,654	$	1,414		5.5	%

nm = not meaningful.

Revenues

The increase in our second quarter 2005 rental income reflects (i) a $7.0 million increase resulting from the Provident Acquisition, (ii) a $1.7 million increase resulting from the 3.5% annual increase in the rent paid under Kindred Master Leases effective May 1, 2005, and (iii) the recognition of $5.5 million in additional rent relating to the properties acquired during the six months and year ended June 30, 2005 and December 31, 2004, respectively. See “Note 4—Acquisitions” of the Notes to Condensed Consolidated Financial Statements.

The increase in interest income from loans receivable is primarily due to loans made or acquired by us during the six months ended June 30, 2005. See “Note 6—Loans Receivable, Net” of the Notes to Condensed Consolidated Financial Statements.

Expenses

The increase in our second quarter 2005 property-level operating expenses is attributable to our acquisition of additional medical office buildings during the six months and year ended June 30, 2005 and December 31, 2004, respectively.

The increase in general, administrative and professional fees is primarily attributable to costs associated with the growth in our portfolio, expenses related to the discovery phase of our lawsuit against Sullivan & Cromwell (see “Note 9—Litigation-Other Litigation” of the Notes to Condensed Consolidated Financial Statements) and costs associated with our initiative to develop and market our strategic diversification program, engage in comprehensive asset management, and attract and retain appropriate personnel to achieve our business objectives.

Depreciation expense increased primarily due to the properties acquired during the six months and year ended June 30, 2005 and December 31, 2004, respectively. See “Note 4—Acquisitions” of the Notes to Condensed Consolidated Financial Statements.

The increase in interest expense was primarily attributable to a $7.5 million increase from increased debt to fund acquisitions during the same periods, partially offset by a $2.0 million decrease from lower effective interest rates due to debt refinancing in 2004. Our effective interest rate decreased to 7.7% for the three months ended June 30, 2005, from 8.3% for the three months ended June 30, 2004.

Six Months Ended June 30, 2005 and 2004

The table below shows our results of operations for the six months ended June 30, 2005 and 2004 and the absolute and percentage change in those results from period to period.


	For the Six Months Ended June 30,					Change
	For the Six Months Ended June 30,					Change
	2005			2004		$			%
	(dollars in thousands)
Revenues:
Rental income	$	135,281		$	111,274	$	24,007		21.6	%
Interest income from loans receivable		2,144			1,511		633		41.9
Interest and other income		1,732			583		1,149		197.1

Total revenues		139,157			113,368		25,789		22.8

Expenses:
Property-level operating expenses		1,193			497		696		140.0
General, administrative and professional fees		10,573			8,526		2,047		24.0
Restricted stock amortization		926			778		148		19.0
Depreciation		31,551			22,892		8,659		37.8
Interest		40,098			32,120		7,978		24.8

Total expenses		84,341			64,813		19,528		30.1

Income before net loss on real estate disposals and discontinued operations		54,816			48,555		6,261		12.9

Net loss on real estate disposals		(175	)		—		(175	)	nm

Income before discontinued operations		54,641			48,555		6,086		12.5	%

Discontinued operations		—			374		(374	)	(100.0	)

Net income	$	54,641		$	48,929	$	5,712		11.7	%

nm = not meaningful

Revenues

The increase in our first six months 2005 rental income reflects (i) a $7.0 million increase resulting from the Provident Acquisition, (ii) a $3.3 million increase resulting from the 3.5% annual increase in the rent paid under Kindred Master Leases effective May 1, 2005 and 2004, and (iii) the recognition of $13.7 million in additional rent relating to the properties acquired during the six months and year ended June 30, 2005 and December 31, 2004, respectively. See “Note 4—Acquisitions” of the Notes to Condensed Consolidated Financial Statements.

Expenses

The increase in our first six months 2005 property-level operating expenses is attributable to our acquisition of additional medical office buildings during the six months and year ended June 30, 2005 and December 31, 2004, respectively.

The increase in general, administrative and professional fees is primarily attributable to costs associated with growth in our portfolio, expenses related to the discovery phase of our lawsuit against Sullivan & Cromwell

(see “Note 9—Litigation-Other Litigation” of the Notes to Condensed Consolidated Financial Statements) and costs associated with our initiative to develop and market our strategic diversification program, engage in comprehensive asset management, and attract and retain appropriate personnel to achieve our business objectives.

The increase in interest expense was primarily attributable to a $10.7 million increase from increased debt to fund acquisitions during the same periods, partially offset by a $2.9 million decrease from lower effective interest rates. Our effective interest rate decreased to 7.9% for the six months ended June 30, 2005 from 8.5% for the six months ended June 30, 2004.

Funds from Operations

Our funds from operations (“FFO”) for the three and six months ended June 30, 2005 and 2004 are summarized in the following table (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2005		2004		2005		2004
Net income	$	27,068	$	25,654	$	54,641	$	48,929

Adjustments:
Depreciation on real estate assets		18,190		11,991		31,365		22,713
Net loss on real estate disposals		175		—		175		—

Other items:
Discontinued operations
Real estate depreciation—discontinued		—		51		—		102

Funds from operations	$	45,433	$	37,696	$	86,181	$	71,744

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. To overcome this problem, we consider FFO an appropriate measure of performance of an equity REIT, and we use the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

FFO presented herein is not necessarily comparable to FFO presented by other real estate companies due to the fact that not all real estate companies use the same definition. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our financial performance or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is FFO necessarily indicative of sufficient cash flow to fund all of our needs. We believe that in order to facilitate a clear understanding of our consolidated historical operating results, FFO should be examined in conjunction with net income as presented in the Condensed Consolidated Financial Statements and data included elsewhere in this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

During the six months ended June 30, 2005, our principal sources of liquidity were cash flows from operations, proceeds from debt issuances and borrowings under our revolving credit facility. We anticipate that cash flows from operations over the next twelve months will be adequate to fund our business operations, dividends to stockholders and debt amortization. Capital requirements for acquisitions may require funding from borrowings, assumption of debt from the seller, issuance of secured or unsecured long-term debt or other securities or equity offerings.

We intend to continue to fund future investments through cash flows from operations, borrowings under our revolving credit facility, assumption of indebtedness, disposition of assets and issuance of secured or unsecured long-term debt or other securities. As of June 30, 2005, we had cash and cash equivalents of $0.8 million, escrow deposits and restricted cash of $52.0 million and unused credit availability of $142.9 million under our revolving credit facility.

Cash Flows from Operating Activities

Cash flows from operating activities were $100.2 million and $70.5 million for the six months ended June 30, 2005 and 2004, respectively. The increase primarily resulted from FFO that was higher for the six months ended June 30, 2005 and favorable changes in operating assets and liabilities at June 30, 2005.

Cash Flows from Investing Activities

Cash flows used in investing activities were $524.8 million and $245.8 million for the six months ended June 30, 2005 and 2004, respectively. These activities consisted primarily of our investments in real estate and mortgage loans during the six months ended June 30, 2005 and 2004.

Cash Flows from Financing Activities

Cash flows provided by financing activities for the six months ended June 30, 2005 totaled $422.1 million and consisted primarily of proceeds from new debt issuances of $400.0 million and net borrowings on the revolving credit facility of $117.4, partially offset by $88.6 million of cash dividend payments to stockholders. Net cash provided by financing activities for the six months ended June 30, 2004 totaled $102.0 million and included net borrowings of $114.0 million under our revolving credit facility and $70.0 million of proceeds from the issuance of common stock, partially offset by $76.1 million of cash dividend payments.

During the six months ended June 30, 2005 and 2004, we received $2.0 million and $15.5 million in proceeds from the exercise of approximately 0.1 million and 1.1 million stock options, respectively. During the six months ended June 30, 2005 and 2004, approximately 176,000 and 151,000 shares of common stock have been purchased under our Distribution Reinvestment and Stock Purchase Plan for approximately $4.7 million and $3.5 million, respectively. Beginning in March 2005, we began offering a 1% discount on the purchase price of our stock to stockholders who reinvest their dividends and/or make optional cash purchases of common stock through the plan. During 2004, we offered a 2% discount. Each month or quarter, as applicable, we may increase, reduce or eliminate the discount without prior notice, thereby affecting the future proceeds that we receive from this plan.

Except for our medical office buildings, capital expenditures to maintain and improve the leased properties generally will be incurred by our tenants. Accordingly, we do not believe that we will incur any major expenditures in connection with these leased properties. After the terms of the leases expire, or in the event that the tenants are unable or unwilling to meet their obligations under the leases, we anticipate that any expenditures relating to the maintenance of leased properties for which we may become responsible will be funded by cash flows from operations or through additional borrowings. To the extent that unanticipated expenditures or

significant borrowings are required, our liquidity may be adversely affected. Our ability to borrow funds may be restricted in certain circumstances by the terms of the agreement governing our revolving credit facility and the indentures governing our senior notes.

Senior Notes Offerings

On June 7, 2005, we completed the offering of $350 million aggregate principal amount of senior notes, comprised of $175 million aggregate principal amount of the 2010 Senior Notes and $175 million aggregate principal amount of the 2015 Senior Notes issued by the Issuers. The 2010 Senior Notes and the 2015 Senior Notes mature on June 1, 2010 and 2015, respectively. We used the net proceeds from the sale of these notes, together with borrowings under our revolving credit facility, to pay the approximately $231.0 million cash portion of the purchase price for the Provident Acquisition, to repay outstanding indebtedness under Provident’s credit facility and to pay our fees and expenses related to the Provident Acquisition.

On June 14, 2005, we completed the offering of $50 million aggregate principal amount of 6⁵/8% Senior Notes due 2014 (the “2014 Senior Notes”) of the Issuers, which was in addition to the $125 million aggregate principal amount of the 2014 Senior Notes, originally issued in October 2004. The $50 million principal amount of the 2014 Senior Notes was issued at a one percent discount to par value. The $50 million aggregate principal amount and the $125 million aggregate principal amount of the 2014 Senior Notes are governed by the same indenture. We used the net proceeds from the sale of these notes to repay outstanding indebtedness under our revolving credit facility.

The senior notes are subject to a number of restrictive covenants. See “Note 7—Borrowing Arrangements” of the Notes to Condensed Consolidated Financial Statements.

Equity Offering

On June 29, 2005, we agreed to sell 3.2 million shares of our common stock in an underwritten public offering under our universal shelf registration statement. At June 30, 2005, we recorded this transaction as subscriptions receivable on our consolidated balance sheet. We received $97.0 million in net proceeds from the sale on July 6, 2005, which we used to repay indebtedness under our revolving credit facility. After completion of the offering, approximately $500.0 million of securities remains available for offering under the universal shelf registration statement.

Executive Officer 10b5-1 Plans

Debra A. Cafaro, Chairman, Chief Executive Officer and President of the Company, and T. Richard Riney, Executive Vice President and General Counsel of the Company, have adopted non-discretionary, written trading plans that comply with Rule 10b5-1 of the Commission. Ms. Cafaro’s plan currently covers 309,658 shares of common stock and Mr. Riney’s plan currently covers 50,000 shares of common stock, in each case that are expected to be acquired through the exercise of options previously granted to such officer as a portion of his or her long-term incentive compensation. Both plans are expected to be in effect through December 2005. At July 28, 2005, Ms. Cafaro and Mr. Riney owned approximately 1.5 million shares and 0.5 million shares, respectively, of our common stock and options to purchase our common stock.

Contractual Obligations

The following table summarizes the effect that minimum debt (which includes principal and interest payments) and other material noncancelable commitments are expected to have on our cash flows in future periods (in thousands).


	Total		Less than 1 year		1-3 years			3-5 years			More than 5 years
Long-term debt obligations⁽¹⁾⁽²⁾	$	2,461,663	$	69,670	$	529,944	⁽³⁾	$	509,124	⁽⁴⁾	$	1,352,925	⁽⁵⁾
Obligations under interest rate swap agreement⁽²⁾		11,155		3,064		7,144			947			—
Operating lease obligations		2,981		326		1,413			891			351

Total	$	2,475,799	$	73,060	$	538,501		$	510,962		$	1,353,276

(1)	Amounts represent contractual amounts due, including interest.

(2)	Interest on variable rate debt and obligations under the interest rate swap were based on forward rates obtained as of June 30, 2005.

(3)	Includes a $206.4 million balloon payment due December 2006 on the CMBS Loan.

(4)	Includes $174.2 million outstanding principal amount of the 2009 Senior Notes and $175 million of the 2010 Senior Notes.

(5)	Includes $191.8 million outstanding principal amount of the 2012 Senior Notes, $175.0 million of the 2014 Senior Notes and $175 million of the 2015 Senior Notes.

Reset Right

We have a one-time reset right (the “Reset Right”) under each of the Kindred Master Leases, exercisable by notice (the “Reset Notice”), given by us on or after January 20, 2006 and on or before July 19, 2007, under which we may increase the base annual rent to a then fair market rental rate, commencing as early as July 19, 2006, for a total fee of $4.6 million payable on a pro-rata basis at the time of exercise under the applicable Kindred Master Lease. We currently intend to give the Reset Notice on January 20, 2006 in the absence of an earlier consensual agreement between us and Kindred regarding the Reset Right. The Reset Right applies to the four original Kindred Master Leases on a lease-by-lease basis. The Reset Rights under subsequent Kindred Master Leases derived from one of the four original Kindred Master Leases can only be exercised in conjunction with the exercise of the Reset Right under the applicable original Kindred Master Lease. If the Reset Right is exercised for any Kindred Master Lease, the annual escalations currently applicable to that particular Kindred Master Lease may be altered, depending on market conditions at the time.

We estimate that, based on information currently available to us, reports of third party experts and current market conditions, if we were currently entitled to, and did, exercise the Reset Right, the base rent under the Kindred Master Leases would increase by at least $35.0 million per year in the aggregate. The Reset Right is highly speculative and its value is dependent on and may be influenced by a variety of factors and market conditions including, without limitation, Medicare and Medicaid rules and regulations, market earnings before interest, income taxes, depreciation, amortization, rent and management fees (EBITDARM) to rent coverage ratios and the terms of the Kindred Master Leases. Changes in one or any combination of these or other factors could have a material impact on the value of the Reset Right. In addition, if we and Kindred do not consensually agree on the Reset Right, the value of the Reset Right determined by the independent appraiser selected under the Kindred Master Leases could differ materially from our estimate. The determination of the value of the Reset Right by the independent appraiser selected under the Kindred Master Leases is final. However, in no event will the base rent under the Kindred Master Leases decrease below the then current base rent payable under the Kindred Master Leases as a result of the Reset Right. There can be no assurances as to the value of the Reset Right or that the value of the Reset Right will not be less than our estimate.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion of our exposure to various market risks contains “forward-looking statements” that involve risks and uncertainties. These projected results have been prepared utilizing certain assumptions considered reasonable in light of information currently available to us. Nevertheless, because of the inherent unpredictability of interest rates as well as other factors, actual results could differ materially from those projected in such forward-looking information.

We receive revenue primarily by leasing our assets under leases that are long-term triple-net leases in which the rental rate is generally fixed with annual escalators, subject to certain limitations. We also earn revenue from loans receivable. Our obligations under our revolving credit facility, the CMBS Loan and certain mortgage loans are floating rate obligations whose interest rate and related monthly interest payments vary with the movement in LIBOR. The general fixed nature of our assets and the variable nature of certain of our obligations create interest rate risk. If interest rates were to rise significantly, our lease and other revenue might not be sufficient to meet our debt obligations. In order to mitigate this risk, on September 28, 2001, we entered into an interest rate swap agreement in the notional amount of $450 million to hedge floating rate debt for the period between July 1, 2003 and June 30, 2008 (the “Swap”). The Swap is treated as a cash flow hedge for accounting purposes and is with a highly rated counterparty on which we pay a fixed rate of 5.385% and receive LIBOR from the counterparty. On December 11, 2003, due to our lower expected future variable debt balances, we reduced the notional amount of the Swap for the period from December 11, 2003 through June 29, 2006 from $450 million to $330 million. There are no collateral requirements under the Swap. The notional amount of the Swap is scheduled to decline from $330.0 million as follows:


Notional Amount		Date
$300,000,000		June 30, 2006
150,000,000		June 30, 2007
—		June 30, 2008

To highlight the sensitivity of the Swap and fixed rate debt to changes in interest rates, the following summary shows the effects of a hypothetical instantaneous change of 100 basis points (BPS) in interest rates as of June 30, 2005 and December 31, 2004 (in thousands):


	As of June 30, 2005						As of December 31, 2004
	As of June 30, 2005						As of December 31, 2004
	Swap			Fixed Rate Debt			Swap			Fixed Rate Debt
Notional amount	$	330,000			N/A		$	330,000			N/A
Book value		N/A		$	(1,345,712	)		N/A		$	(582,251	)
Fair value (a)		(11,155	)		(1,409,407	)		(16,550	)		(635,990	)
Fair value reflecting change in interest rates: (a)
-100 BPS		(18,426	)		(1,483,394	)		(25,489	)		(672,024	)
+100 BPS		(4,100	)		(1,340,452	)		(7,917	)		(602,641	)

(a)

The change in fair value of the Swap was due to a general increase in interest rates. The change in fair value of fixed rate debt was due to the issuance of approximately $400.0 million of fixed rate senior notes and the assumption of approximately $368.7 million of fixed rate debt as a result of our acquisitions closed during the six months ended June 30, 2005, partially offset by a general increase in interest rates.

N/A	Not applicable.

We had approximately $487.0 million of variable rate debt outstanding as of June 30, 2005 and approximately $260.9 million of variable rate debt outstanding as of December 31, 2004. The increase in our outstanding variable rate debt from December 31, 2004 is primarily attributable to the funding of acquisitions, including the assumption of variable rate debt. The Swap effectively hedges $330.0 million of our outstanding variable rate debt. Any amounts of variable rate debt in excess of $330.0 million are subject to interest rate

changes. However, pursuant to terms of certain leases with one of our tenants, if interest rates increase on debt that we have totaling $110.2 million, our tenant is required to pay us additional rent (on a dollar-for-dollar basis) in an amount equal to the increase in interest expense resulting from the increased interest rates. Therefore, the increase in interest expense related to this debt is equally offset by an increase in additional rent paid to us by the tenant. As of June 30, 2005, assuming $37.5 million of variable rate debt subject to interest rate changes and not subject to rent adjustments is outstanding for an entire year, a hypothetical increase of 100 basis points in interest rates on the $37.5 million of variable rate debt would result in increased annual interest expense of $0.4 million. The carrying value of our variable rate debt approximates fair value. The fair value of our fixed rate debt is based on open market trading activity provided by a third party for our senior notes and based on rates offered for similar arrangements for our mortgage indebtedness.

We may engage in additional hedging strategies in the future, depending on management’s analysis of the interest rate environment and the costs and risks of such strategies. Our market risk sensitive instruments are not entered into for trading purposes.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to us is timely communicated to the officers who certify our financial reports and to other members of our management and Board of Directors.

Based upon their evaluation as of June 30, 2005, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

Internal Control Over Financial Reporting

During the second quarter of 2005, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information contained in “Note 9—Litigation” of the Notes to Condensed Consolidated Financial Statements is incorporated by reference into this Item 1. Except as set forth therein, there has been no material change in the status of the legal proceedings reported in our Annual Report on Form 10-K for the year ended December 31, 2004.

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

Our Annual Meeting of Stockholders was held on May 24, 2005.

Proxies for the Annual Meeting were solicited pursuant to Regulation 14A under the Exchange Act. There were no solicitations in opposition to management’s nominees for the Board of Directors or other proposals listed in our proxy statement. All nominees listed in the proxy statement were elected and all proposals listed in the proxy statement were approved.

The election of seven directors for the ensuing year was voted upon at the Annual Meeting. The number of votes cast for and withheld for each nominee for director is set forth below:


Nominee:	For:	Withheld:
Debra A. Cafaro	76,313,198	2,757,387
Douglas Crocker, II	77,405,899	1,664,686
Ronald G. Geary	75,384,930	3,685,655
Jay M. Gellert	78,405,603	664,982
Christopher T. Hannon	78,428,898	641,687
Sheli Z. Rosenberg	77,076,812	1,993,773
Thomas C. Theobald	77,120,488	1,950,097

A proposal to ratify the selection of Ernst & Young LLP as our independent auditors for fiscal year 2005 was voted upon at the Annual Meeting. The number of votes that were cast for and against this proposal and the number of abstentions and broker non-votes are set forth below:

For:

Against:

Abstentions and

Broker

Non-Votes:

78,542,491

476,414

51,680

A proposal to adopt the Ventas Employee and Director Stock Purchase Plan was voted upon at the Annual Meeting. The number of votes that were cast for and against this proposal and the number of abstentions and broker non-votes are set forth below:

For:

Against:

Abstentions and

Broker

Non-Votes:

63,254,436

5,306,022

10,510,127

ITEM 6. EXHIBITS

Exhibits


Exhibit Number	Description of Document	Location of Document
4.1	Indenture dated as of June 7, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee, relating to 6³/4% Senior Notes due 2010.	Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.2	Indenture dated as of June 7, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee, relating to 7¹/8% Senior Notes due 2015.	Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.3	Registration Rights Agreement dated as of June 7, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc. and Ventas LP Realty, LLC, as Guarantors, and J.P. Morgan Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC, UBS Securities LLC, Calyon Securities (USA) Inc., Citigroup Global Markets Inc. and Cohen & Steers Capital Advisors, LLC, as Initial Purchasers.	Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.4	Registration Rights Agreement dated as of June 7, 2005 among Ventas, Inc. and the holders of Class D units of limited partnership interest of ElderTrust Operating Limited Partnership named therein.	Incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.5	Registration Rights Agreement dated as of June 14, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc. and Ventas LP Realty, LLC, as Guarantors, and Banc of America Securities, LLC, as Initial Purchaser.	Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on June 17, 2005.

4.6	Supplemental Indenture dated as of April 4, 2005 by and among Ventas Sun LLC and Ventas Cal Sun LLC, as Guaranteeing Subsidiaries, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 8³/4% Senior Notes due 2009.	Filed herewith.

4.7	Supplemental Indenture dated as of April 4, 2005 by and among Ventas Sun LLC and Ventas Cal Sun LLC, as Guaranteeing Subsidiaries, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 9% Senior Notes due 2012.	Filed herewith.

4.8	Supplemental Indenture dated as of April 4, 2005 by and among Ventas Sun LLC and Ventas Cal Sun LLC, as Guaranteeing Subsidiaries, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6⁵/8% Senior Notes due 2014.	Filed herewith.


Exhibit Number	Description of Document	Location of Document
4.9	Supplemental Indenture dated as of June 7, 2005 by and among Ventas Provident, LLC (formerly VTRP Merger Sub, LLC), as the Guaranteeing Subsidiary, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 8³/4% Senior Notes due 2009.	Filed herewith.

4.10	Supplemental Indenture dated as of June 7, 2005 by and among Ventas Provident, LLC (formerly VTRP Merger Sub, LLC), as the Guaranteeing Subsidiary, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 9% Senior Notes due 2012.	Filed herewith.

4.11	Supplemental Indenture dated as of June 7, 2005 by and among Ventas Provident, LLC (formerly VTRP Merger Sub, LLC), as the Guaranteeing Subsidiary, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6⁵/8% Senior Notes due 2014.	Filed herewith.

4.12	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 8³/4% Senior Notes due 2009.	Filed herewith.

4.13	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6³/4% Senior Notes due 2010.	Filed herewith.

4.14	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 9% Senior Notes due 2012.	Filed herewith.

4.15	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6⁵/8% Senior Notes due 2014.	Filed herewith.

4.16	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 7¹/8% Senior Notes due 2015.	Filed herewith.


Exhibit Number	Description of Document	Location of Document
10.1	Purchase Agreement dated as of May 26, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc. and Ventas LP Realty, LLC, as Guarantors, and J.P. Morgan Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC, UBS Securities LLC, Calyon Securities (USA) Inc., Citigroup Global Markets Inc. and Cohen & Steers Capital Advisors, LLC, as Initial Purchasers.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 27, 2005.

31.1	Certification of Debra A. Cafaro, Chairman, President and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.

31.2	Certification of Richard A. Schweinhart, Senior Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.

32.1	Certification of Debra A. Cafaro, Chairman, President and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.	Filed herewith.

32.2	Certification of Richard A. Schweinhart, Senior Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.	Filed herewith.

99.1	Financial Statements of Brookdale Living Communities, Inc. as of and for the three months ended March 31, 2005.	Incorporated by reference to the Registrant’s Registration Statement on Form S-4 (File No. 333-124379), as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 28, 2005


VENTAS, INC.

By:		/s/ DEBRA A. CAFARO
		Debra A. Cafaro Chairman, President and Chief Executive Officer

By:		/s/ RICHARD A. SCHWEINHART
		Richard A. Schweinhart Senior Vice President and Chief Financial Officer

Exhibits


Exhibit Number	Description of Document	Location of Document
4.1	Indenture dated as of June 7, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee, relating to 6³/4% Senior Notes due 2010.	Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.2	Indenture dated as of June 7, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee, relating to 7¹/8% Senior Notes due 2015.	Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.3	Registration Rights Agreement dated as of June 7, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc. and Ventas LP Realty, LLC, as Guarantors, and J.P. Morgan Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC, UBS Securities LLC, Calyon Securities (USA) Inc., Citigroup Global Markets Inc. and Cohen & Steers Capital Advisors, LLC, as Initial Purchasers.	Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.4	Registration Rights Agreement dated as of June 7, 2005 among Ventas, Inc. and the holders of Class D units of limited partnership interest of ElderTrust Operating Limited Partnership named therein.	Incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed on June 13, 2005.

4.5	Registration Rights Agreement dated as of June 14, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc. and Ventas LP Realty, LLC, as Guarantors, and Banc of America Securities, LLC, as Initial Purchaser.	Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on June 17, 2005.

4.6	Supplemental Indenture dated as of April 4, 2005 by and among Ventas Sun LLC and Ventas Cal Sun LLC, as Guaranteeing Subsidiaries, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 8³/4% Senior Notes due 2009.	Filed herewith.

4.7	Supplemental Indenture dated as of April 4, 2005 by and among Ventas Sun LLC and Ventas Cal Sun LLC, as Guaranteeing Subsidiaries, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 9% Senior Notes due 2012.	Filed herewith.

4.8	Supplemental Indenture dated as of April 4, 2005 by and among Ventas Sun LLC and Ventas Cal Sun LLC, as Guaranteeing Subsidiaries, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6⁵/8% Senior Notes due 2014.	Filed herewith.


Exhibit Number	Description of Document	Location of Document
4.9	Supplemental Indenture dated as of June 7, 2005 by and among Ventas Provident, LLC (formerly VTRP Merger Sub, LLC), as the Guaranteeing Subsidiary, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 8³/4% Senior Notes due 2009.	Filed herewith.

4.10	Supplemental Indenture dated as of June 7, 2005 by and among Ventas Provident, LLC (formerly VTRP Merger Sub, LLC), as the Guaranteeing Subsidiary, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 9% Senior Notes due 2012.	Filed herewith.

4.11	Supplemental Indenture dated as of June 7, 2005 by and among Ventas Provident, LLC (formerly VTRP Merger Sub, LLC), as the Guaranteeing Subsidiary, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6⁵/8% Senior Notes due 2014.	Filed herewith.

4.12	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 8³/4% Senior Notes due 2009.	Filed herewith.

4.13	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6³/4% Senior Notes due 2010.	Filed herewith.

4.14	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 9% Senior Notes due 2012.	Filed herewith.

4.15	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 6⁵/8% Senior Notes due 2014.	Filed herewith.

4.16	Supplemental Indenture dated as of June 21, 2005 by and among the Guaranteeing Subsidiaries named therein, Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the other Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 7¹/8% Senior Notes due 2015.	Filed herewith.


Exhibit Number	Description of Document	Location of Document
10.1	Purchase Agreement dated as of May 26, 2005 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc. and Ventas LP Realty, LLC, as Guarantors, and J.P. Morgan Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC, UBS Securities LLC, Calyon Securities (USA) Inc., Citigroup Global Markets Inc. and Cohen & Steers Capital Advisors, LLC, as Initial Purchasers.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 27, 2005.

31.1	Certification of Debra A. Cafaro, Chairman, President and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.

31.2	Certification of Richard A. Schweinhart, Senior Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.

32.1	Certification of Debra A. Cafaro, Chairman, President and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.	Filed herewith.

32.2	Certification of Richard A. Schweinhart, Senior Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.	Filed herewith.

99.1	Financial Statements of Brookdale Living Communities, Inc. as of and for the three months ended March 31, 2005.	Incorporated by reference to the Registrant’s Registration Statement on Form S-4 (File No. 333-124379), as amended.

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Ventas (VTR) 10-Q2005 Q2 Quarterly report

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