780053--2/18/2010--NATIONWIDE_HEALTH_PROPERTIES

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The bankruptcy, insolvency or financial deterioration of our tenants could significantly delay our ability to collect unpaid rents or require us to find new operators for rejected facilities. Our tenants may be affected by the financial deterioration, insolvency and/or bankruptcy of other significant operators in the healthcare industry. Operators that fail to comply with governmental reimbursement programs such as Medicare or Medicaid, licensing and certification requirements, fraud and abuse regulations or new legislative developments may be unable to meet their obligations to us. Two of the operators of our facilities each account for more than 10% of our revenues. If these operators experience financial difficulties, or otherwise fail to make payments to us, our revenues may significantly decline. We may be unable to find another tenant for our properties if we have to replace Brookdale, Hearthstone or any of our other tenants. Because of the unique and specific improvements required for healthcare facilities, we may be required to incur substantial development and renovation costs to make certain of our properties suitable for other tenants, which could materially adversely affect our business, results of operations and financial condition. If our tenants are unable or unwilling to incur capital expenditures to maintain and improve our properties, our properties may cease to be competitive and our results of operations would be adversely impacted. Our tenants are faced with significant potential litigation and rising insurance costs that not only affect their ability to obtain and maintain adequate liability and other insurance, but also may affect their ability to pay their lease or mortgage payments and fulfill their insurance, indemnification and other obligations to us. Increased competition has resulted in lower revenues for some operators and may affect their ability to meet their payment obligations to us. Adverse trends in the healthcare industry may negatively affect our revenues and the values of our investments. RISKS RELATING TO US AND OUR OPERATIONS We are subject to particular risks associated with real estate ownership, which could result in unanticipated losses or expenses. General economic conditions and other events or occurrences that affect areas in which our investments are geographically concentrated may impact our financial results. Our ownership of properties through ground leases exposes us to certain restrictions and the loss of such properties upon breach or termination of the ground leases. We have now, and may have in the future, exposure to contingent rent escalators and floating interest rates, both of which can have the effect of reducing our profitability. We have now, and may have in the future, exposure related to our leases and loans secured by letters of credit, some of which are issued by banks that may be affected by the severely distressed housing and credit markets or other factors. Underinsured or uninsured losses and/or the failure of one or more of our insurance carriers could adversely impact our business. As owners of real estate, we are subject to environmental laws that expose us to the possibility of having to pay damages to the government and costs of remediation if there is contamination on our property. We may recognize impairment charges or losses on the sale of certain facilities. We may face competitive risks related to reinvestment of sale proceeds. We rely on external sources of capital to fund future capital needs, and continued turbulence in financial markets could impair our ability to meet maturing commitments or make future investments necessary to grow our business. A downgrade of our credit rating could impair our ability to obtain additional debt financing on favorable terms, if at all, and significantly reduce the trading price of our common stock. Our level of indebtedness may adversely affect our financial results. Our debt instruments contain covenants that restrict our ability to engage in certain transactions and may impair our ability to respond to changing business and economic conditions. If the holders of our senior notes exercise their rights to require us to repurchase their securities, we may have to make substantial payments, incur additional debt or issue equity securities to finance the repurchase. The market price of our common stock has fluctuated and could fluctuate significantly. We may issue shares of preferred stock that will give holders of such shares rights that are senior to the rights of holders of our common stock or significant influence over our affairs, and their interests may differ from those of our other stockholders. There is no assurance that we will make distributions in the future. We face risks associated with short-term liquid investments. Our growth to date has been in part dependent on acquisitions which may not be available in the future, and we cannot make any assurances that any future growth strategies will be successful or not expose us to additional risks. Unforeseen costs associated with investments in new properties could reduce our profitability. Increasing consolidation at the operator or REIT level could increase competition and reduce our profitability. Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, results of operations, financial condition and stock price. Compliance with changing government regulations may result in additional expenses. Our success depends in part on our ability to retain key personnel, and if we are not successful in succession planning for our senior management team our business could be adversely impacted. Some of our directors are involved in other real estate activities and investments and, therefore, may have potential conflicts of interest with us. Our charter and bylaws and the laws of the state of our incorporation contain provisions that may delay, defer or prevent a change in control or other transactions that could provide stockholders with the opportunity to realize a premium over the then-prevailing market price for our common stock. RISKS RELATED TO OUR TAXATION AS A REIT If we fail to remain qualified as a REIT, we will be subject to tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our stockholders. Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends. Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. Complying with REIT requirements with respect to our TRS limits our flexibility in operating or managing certain properties through our TRS. Complying with REIT requirements may cause us to forego otherwise attractive opportunities. Complying with REIT requirements may limit our ability to hedge effectively.

Full 10-K form ▸

780053--2/18/2010--NATIONWIDE_HEALTH_PROPERTIES_INC