James G. Reynolds, EVP of HCPI, says that the reason for taking the hiatus from investing was really twofold: the capital crunch in the real estate market and a $1 billion merger of his REIT with American Health Properties in late 1999. But after selling off approximately $60 million worth of facilities during the last quarter of 2000, the REIT is busy reinvesting the proceeds of those sales. By year's end, Reynolds says the REIT is hoping to invest between $200 million and $300 million.

The $21 million in purchases divides up into $14.8 million spent on two "continuum of care" model health-care facilities located in Indiana, emphasizing nursing care, but also including assisted-living and Alzheimer care and $6.2 million for a 41,731-sf medical office building in Tuscon, AZ. The Indiana property, with 220 beds, will be leased to an operator under a 15-year triple net leases. The office building is on the campus of Triad Hospital Inc.'s Northwest Hospital. The REIT also has a commitment to purchase a third facility in Indiana with 100 beds for $6.6 million, which is expected to close next month.

"Health care is heavily government supported, so it's a counter-cyclical business," Reynolds says. "A recession is good for our customer base as are lower interest rates which generally accompany market downturns."

With a $300 million bank line-of-credit to work with and a $3 billion market cap, HCPI usually pays cash for its investments, raised either through stock issuances or unsecured public debt.

"I think our lower costs of capital and demand to do transactions will make for many opportunities for us. There hasn't been a lot of acquisitions or trading in the industry, particularly in nursing homes, for the past few years. I believe opportunities also exist in assisted-living facilities," Reynolds says. For investors, Reynolds characterizes his REIT's business as "higher yield, lower growth than some other real estate sectors. There's more certain cash flow from our type of REIT with a higher yielding dividend."

HCPI has been traded on the New York Stock Exchange since the inception of its business back in 1985. On Thursday, the REIT's stock closed at $33.44, up $0.24 on a volume of 177,600 shares traded.The REIT has continued to prosper, as Funds From Operations, the measure of a REIT's earnings, grew 4.3% in 2000 over 1999 to $171,344,000. In 1999 the REIT's earnings had grown 5.2% over 1998 numbers. Since its initial IPO back in 1985 through 2000, HCPI investors have seen a 980% return on investment, while in the last five years the REIT's RRI was 30%.

HCPI invests directly or through joint ventures. Its portfolio of 411 properties covering 42 states includes long-term care facilities, congregate care and assisted living facilities, medical office buildings, acute care hospitals, freestanding rehabilitation hospitals, and physician group practice clinics.