Fitch Affirms Nationwide Health Properties; Revises Outlook to Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 12, 2004

Fitch Ratings has affirmed the senior unsecured rating of 'BBB-' on approximately $541 million of senior unsecured notes of Nationwide Health Properties, Inc. (NYSE: NHP) due 2004 through 2038. Fitch has also affirmed the 'BB+' ratings on $100 million of outstanding preferred stock. The Rating Outlook is revised to Stable from Negative.

The revision of Fitch's Rating Outlook to Stable reflects NHP's improved debt maturity schedule as well as access to capital. On May 19, 2003, Fitch reviewed NHP and kept its Rating Outlook at Negative due to the near-term maturities the company faced under its medium term notes (MTN) program. Since that time, the majority of NHP's 2003 debt maturities that had a putable feature in its bonds opted not to put the bonds back to the company and extended the maturities of these bonds out another five years to 2008. Additionally, NHP raised a combined total of approximately $250 million in common equity in two offerings (April 2003 and January 2004) improving the company's liquidity.

Fitch's 'BBB-' rating of NHP continues to recognize the support from a geographically diverse portfolio of assets with stable cash flows, a well-laddered lease maturity schedule minimizing rollover risk, and a portfolio with over 80% of the company's facilities subject to master leases. Additional credit strength is found in the largely unencumbered asset base offering downside protection to the unsecured bond and preferred investor. Finally, favorable demographic trends (i.e. an aging population) will increasingly drive demand for health care services in 2004 and beyond, which in turn will result in greater demand for health care facilities.

Additionally, on March 30, 2004, NHP announced that it had agreed in principle to acquire up to 24 assisted living facilities (ALFs) in thirteen states from Emeritus Corporation (AMEX: ESC) for approximately $187 million. On April 6, 2004, NHP closed the first phase of the transaction acquiring 17 ALFs for $139 million ($99 million in cash funded off NHP's line of credit and $37 million of assumed mortgage debt). Fitch views the acquisition as a positive with the introduction of a new tenant to NHP's roster as well as a portfolio of very productive assets with average occupancy of 90% (currently higher than NHP's as well as the health care real estate investment trust (REIT) universe's average occupancy for ALFs) and average current cash flow coverage of rent before management fees of 1.5 times (x) (again higher than NHP's and the other REIT's averages). Emeritus Corporation is a national provider of assisted living and related services to seniors. Emeritus is one of the largest developers and operators of freestanding assisted living communities throughout the United States. At Dec. 31, 2003, ESC operated, or had an interest in, 175 assisted living communities, consisting of approximately 14,845 units with a capacity for 18,208 residents, located in 33 states. These include nineteen communities that ESC owned, 109 communities that the ESC leased, and 47 communities that ESC managed.

Fitch's primary rating concern centers on NHP's tenant concentration with the top five tenants accounting for 49% of the company's revenue as of Dec. 31, 2003. Additional concerns on a macro basis surrounds NHP's investment in skilled nursing facilities and the volatile nature of the payments system for SNFs due to dependence on public reimbursement, which continue to change with public policy initiatives, and the somewhat lingering effect of industry overbuilding in the assisted living sector, resulting in slower fill rates for newly developed ALF properties. An additional concern for Fitch is NHP's increased use of mortgage debt, which now stands at 10.6% of undepreciated book capital proforma the Emeritus acquisition up from 6.9% as of March 31, 2003. Fitch will continue to monitor NHP's use of secured debt.

NHP's interest coverage ratios proforma the proposed Emeritus transaction remain satisfactory for the 'BBB-' ratings category, with EBITDA to total interest expense of 3.0x as of Dec. 31, 2003. Including preferred stock dividends, proforma fixed charge coverage is 2.6x as of Dec. 31, 2003. Both credit statistics have shown improvement on a year over year basis. Fitch believes this level provides an appropriate measure of protection for the unsecured bondholders as well as preferred shareholders relative to the assigned rating.

Overall usage of debt leverage has steadily decreased from a high of 53% of undepreciated book capital in the first quarter of 2003 to 46.1% proforma as of Dec. 31, 2003. Total debt plus preferred stock has experienced similar decreases with proforma leverage of 50.7% down from 59.2%. Fitch does note that NHP's line of credit currently has $134 million outstanding (including first Emeritus acquisition) leaving only $16 million of availability. Fitch expects NHP to introduce additional sources of liquidity into the company's capital structure. Additionally, NHP maintains a well laddered debt maturity schedule, with just under $100 million of bonds maturing in 2004 ($55 million being a putable bond), only $18 million in 2005 and $63.5 million in 2006.

Nationwide Health Properties, Inc. (NHP) is a $1.8 billion (undepreciated book capitalization) equity REIT focused on the health care sector, with investments in assisted living facilities (54% of investments), skilled nursing facilities (34%), continuing care retirement communities (11%) and other (1%). NHP's wholly-owned investments in 350 facilities are located in 38 states. NHP's largest single operator is Alterra Healthcare Corp. (NYSE: ALI), which leases 59 assisted living facilities representing 12% of NHP's total investments (13% of revenues) as of Dec. 31, 2003. Additionally, Nationwide has a 25% interest in an unconsolidated joint venture with an institutional investor that owns 49 assisted living facilities operated by Alterra.

More information about Nationwide Health Properties, Inc. can be found on the Fitch Ratings web site at 'www.fitchratings.com'.