Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Health Care REIT Inc. First Quarter 2008 Earnings Conference Call. This call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we'll conduct a question-and-answer session. Instructions will be provided at that time for to queue you up for questions. I'd like to remind everyone that this conference is being recorded. And I would like to now turn the conference over to Ms. Vicki Baker of the Financial Relations Board. Please go ahead, ma'am.

Good morning, and thank you for joining us today for Health Care REIT's first quarter 2008 conference call. In the event you did not receive a copy of the news release distributed late yesterday afternoon, you may access it via the company's website at www.hcreit.com. I would like to remind everyone that we are holding a live webcast of today's call, which may be accessed through the company's website as well. At this time, management would like me to inform you that certain statements made during this conference call which are non-historical may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Health Care REIT believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can give no assurances that its expectations will be attained. Factors and risks that could cause actual results to differ materially from expectations are detailed in the news release and from time to time in the company's filings with the SEC. Having said, I would now like to turn the call over to George Chapman, Chairman and CEO of Health Care REIT, for his opening remarks. Please go ahead, sir.

Thank you Vicki. We're quite pleased with our first quarter 2008 results, as we reported, normalized FFO and FAD growth of 7% and 9% respectively. Moreover, our portfolio continues to perform quite well as coverage at the facility level was 1.99 to 1, with approximately two-thirds of our revenues derived from private pay. We hope to drive the private pay percentage to approximately 70% by year-end. We also continue to have a very diversified portfolio with our top operators comprising only 27% of our portfolio. You'll also note that we are increasing our gross investment guidance by $200 million to a range of $1.1 billion to $1.4 billion. Yet our net guidance remains unchanged at $700 million to $1.1 billion because we plan to accelerate the movement to a more modern, customer-focused facility base through additional dispositions. Dispositions, as you know, allow us to recycle capital efficiently into preferred assets and demonstrates our financial flexibility. We have on many occasions now discussed our goal of acquiring and developing real estate platforms that address the needs of the ever-more demanding customer. In the senior housing and care side, we continue to believe that all components, including skilled nursing, assisted living, independent living and dementia are excellent investments going forward. We simply believe that combinations of some or all of these service levels tend to have more appeal to the customer, driving higher occupancies and revenues. And with longer lengths of stay combination facilities, in our judgment, will also tend to be more stable over time than standalone facilities. You will note that our new supplement breaks down our existing senior housing and care portfolio in two ways. One is based upon the predominant service type, the other is based upon combination in standalone facilities, i.e., those facilities with multiple service levels…

Thank you, George. I'll review investments, the market art [ph] portfolio and the reimbursement outlook. Please note we've created a supplement with new disclosure that's available on our website. Scott will provide some more derail about the supplement in his remarks. During the first quarter, we completed $181 million of growth investments, including $93 million of acquisitions at average initial yields of 8.8 %. We also funded $77 million of development. We have 33 properties and five expansion projects currently way with a total commitment of $1.1 billion. There were $21 million of conversions during the quarter at average initial yield of 8.5%. We did not have any dispositions during the quarter. In terms of the market update, we continue to see good yield flow, attributable to our relationship investment strategy. Based on the opportunities we're seeing, we've increased our guidance and Scott will review that during his remarks. Turning to the portfolio, at the end of March, 69% of our portfolio was invested in senior housing and care and 31% of the portfolio was invested in medical facilities. We have 498 properties in our senior housing and care portfolio with 56 operators in 37 states. Payment coverage has remained strong at 1.5 for independent living and CCRCs, 1.6 for assisted living and 2.3 for skilled nursing. 34 properties are in fill-ups with an investment balance of $445 million. Our medical facilities include 125 medical office buildings with 5.3 million square feet and 23 specialty care facilities with 1,581 beds. Payment coverage for our specialty facilities was strong at 2.6 times. We currently have four specialty care properties in fill-ups with an investment balance of $85 million. MOB net operating income increased $22 million in the first quarter and same-store NOI increased 4.2%. Occupancy declined slightly to 89%, in line with the budget. We project increased leasing activity throughout rest of the year and expect occupancy to increase to 92% by year-end. At March 31, 81% of our medical office NOI is attributable to properties on the hospital campus or affiliates [ph] of hospitals. Looking at reimbursement, CMS released a proposal to skilled nursing FY 2009 Medicare rates providing a full market basket update of 3.1%, offset by an estimated 3.3% administrative reduction. The final rule is expected after the 60-day comment period and will be effective October 1. CMS also released a final rule for the long-term acute care hospital reimbursement, which includes a 2.7 increase in payment beginning July 1, slightly offset by an increase of the high-cost outlier threshold or net increase of 2.5%. Turning to Medicaid, most states are still in the process of finalizing budgets. We'll provide an update on our second quarter call with any significant information after the states release budget at the end of June. Given our strong skilled nursing payment coverage, we don't anticipate any material increase in payment risk. With that, I will turn it over Scott for the financial update.

Thanks, Ray. Good morning everybody. As Ray and George said, we are pleased to introduce our new supplemental information package this quarter. We have obviously added a considerable amount of information in response to request from investors and analysts. And I'd like to quickly highlight a few of the new items. First, many of you have requested additional detail on timings for acquisitions, dispositions and construction conversions, which can be found on page 17, including average initial cash yields. We've also added a lot of new portfolio data, including same-store information, which is included on pages 18 to 27, and we've added to our development disclosure to include development yields by property types and additional quarterly conversion estimates. We believe this additional information will help investors to better understand our portfolio and we look forward to your comments. Turning to earnings, our first quarter normalized FFO per fully diluted share increased 7% to $0.81 from $0.76 in 2007. Normalized FAD per fully diluted share increased 9% to $0.76 from $0.70 in the comparable quarter last year. Please refer to the earnings release for a detailed reconciliation of FFO and FAD to net income per common share. We recently declared the dividend for the quarter ended March 31st of $0.68 or $2.72 annually, which represent a 3% increase above last year's rate. The payment represent the company's 148th consecutive quarterly dividend. Taking a look now at our operating results, gross revenues including discontinued operations totaled $136 million for the first quarter, up 20% versus the same quarter last year with 92% of gross revenues coming from rental income. Our interest expense increased to $34 million from $32 million last year, primarily as a result of our convertible debt offering completed in July 2007, as well as slightly higher average borrowings on…

Thank you, Scott. Let me conclude with some comments relating to our investment programs, and our success in generating attractive investments with solid returns. During the last five years, we have made over $4.7 billion of new investments, again clearly indicating our success with our investment program. And a great deal of our investment success is driven by our relationship investing strategy that enables us to source transactions with quality operators regardless of market cycles. This multi-year multi-facility approach with a quality operator essentially converts the operator into part of Chuck Herman's marketing team, which, we already believe, is the best in the sector. The operator understands our underwriting standards and knows capital will be available for conforming projects. In the last two years alone, we added 25 new relationships under these types of programs. Our lines of credit have over $2 billion of availability for these key quality operators and largely because of these relationship programs, our shadow pipeline stands at approximately $3 billion, broken down roughly two-thirds senior housing and care, and one-third acute care and medical office buildings. And we believe this approach essentially eliminates any need to engage in, be dependent upon large auction transactions to grow our portfolio. Another key contributor to our investment success during the last several years has been our commitment to the full spectrum of senior housing and healthcare. By rolling out our relationship investment programs to a broader market that now includes hospitals, ambulatory surgery centers, and medical office buildings, we have effectively doubled our previous investment trends. And lastly, our ability to provide full service solutions through our investment programs as well as our development services and property management capabilities significantly enhance our ability to market to healthcare systems and operators. These programs and capabilities, together with the credit dislocations that force [ph] many liners and investors out of our sector, give us great confidence that we will continue to be successful in making accretive investments in quality senior housing and healthcare projects. And with that, we are not open for questions. Question And Answer

Thank you, sir. [Operator Instructions] I'll go first to Rich Anderson with BMO Capital Markets.

Hi, thanks and good morning everybody.

Hi, Rich.

I am sort of curious how you raised your acquisition guidance, and you disposition guidance at the same time. Usually you do one or the other in response to cap rate movements and what not. So, how would you sort of reconcile, what are you seeing in a cap rate... from a cap ate perspective and any sort of color on how that might have influenced dispositions to change that guidance?

Well, cap rates, Rich, have been generally tweaking upward, probably a little slower than really the market should demand, but that happens in every cycle. It just so happens that we have been making a decision to, as you know, for the last two to three years to commence the combination projects and have opportunities to dispose of certain assets, we believe, this quarter or next and we are going to act on that, we hope. And at the same time, we are seeing a great deal of activity through the Chuck and his group, Fred and whatever. And we are very, very bullish about our ability to bring home a lot of transactions. So, it just so happens that they hit at the same time, and it might be convenient, but we think it's very favorable for the company and repositioning our portfolio toward combination facility, as well as more acute care and combination facilities. Ray or Scott, do you want to add anything?

No.

No.

Okay. So, why the aversion to the capital markets, particularly your equity, the stock has done very well. I don't think anyone would misunderstand the use of the... your stock to fund pretty heavy investment guidance for 2008. What's... why you are not thinking in terms of equity?

I think we will think about all of our capital raising possibilities as we move on. Our ability to recycle assets and use cash, we think, is a great opportunity. We are going to keep our leverage, debt and equity in the range of Baa2 BBB flat kind of ratings, and try to pick the best way to raise the capital from time to time. Scott?

I think it's great.

And I know the focus is on combination facilities, but in terms of the medical office portfolio, do you see that also going up or do you sort of like it where it is as a percentage of your total portfolio?

That... we are never able to tell you that we are going to be at 22%, 25% or 31% on MOB portfolio because all of us to some degree are opportunistic. Over time, we are pretty happy with the MOB portfolio around a quarter of our portfolio and Fred Farrar and Dan Loftus and our whole team are dedicated over the next 5 to 10 years to having the best MOB platform in the country, and I think we will achieve that. So, we are very pleased with our MOB portfolio, we would like though to have a reasonable balance among all of our different asset classes.

Do you have a comment SNF HRP transaction? I am sure you didn't get look at that portfolio, something tells me, but what do you think of the pricing?

Scott, do you want to comment on it?

I guess the pricing would be, I think, in the general range of what we are seeing in the MOB space right now. I think generally we are looking at the 7% to 7.45% range in terms of the initial cash NOI in the transactions that we are looking at right now.

Okay. And last question is on the SNF comment, the SNF reimbursement comments from the CMS, would you characterize that as a disappointment relative to what your internal expectations were at this point?

Well, we would always like to see it going up more.

Did you sort of expect a little bump upwards?

We expected what they did. The inflationary increase in the administrative treaty [ph].

Okay, thank you very much.

And we will go to Christian Brown with Deutsche Bank.

Hi, good morning guys. First of all, thank you for the added disclosure; it's really helpful.

Great.

And then my first question is, are you still exploring alternative capital sources like JVs?

We were always looking at JVs as a capital raising tool. Probably more importantly, we will look at JVs as a way to do certain transactions that are very appealing and perhaps done best within a JV situation. And we are always also looking at JVs as always to expand our relationships with key financial partners who we'd like to do business with. So we don't know always view it simply as an alternative capital markets opportunity.

Okay. And then just in terms of the housing impact on [indiscernible], does this make you... I mean, so far you have described the impact as pretty minimal, but does this make you biased against buying CCRC facilities versus rental in terms of acquisitions and developments?

It's Ray, Christian. We are seeing some slight slowing of absorption in some of our projects, but we still believe as a model, long term, it's going to be a good applecart [ph].

Okay. And then on page 22 of the supplemental in terms of revenue and expenses for occupied units for independent living and CCRCs, I was just wondering why there is such a big gap between the same-store portfolio and the stable portfolio.

Sure. You have a relatively small bucket, and I think the difference there, Christian, if you look, I know until the second quarter of 2007, there is a considerable addition to just the stable bucket, which causes the disparity between those two numbers. One includes a higher sniff component and skilled nursing has obviously higher revenue per occupied unit and also higher expenses. Sot that's skewing our same-store numbers upward a little bit. So it's really just what comprises those two... the two lines at stable versus same store.

Okay, thank you.

Sure.

We'll go to Chris Pike with Merrill Lynch. Mr. Pike, your line is open. Please go ahead.

Good morning, everybody.

Hey Chris.

Hey Chris.

Scott, great job on this. I'm sure a lot of other folks helped out in terms of putting the supplemental together?

Thank you.

Thanks for taking my questions. I guess back to Richard's question, I know he asked a different way. Where do you see the spreads between buying and selling assets today versus when you originally cast your net investment guidance back a couple of months ago? Have they widened such that it's more accretive, tightened? Can you just categorize that for us?

I think on the acquisition front, Chris, obviously, the market has been in a shakeout period for at least six to nine months and there probably hasn't been too much change in our original expectations on the acquisition front. I think we've been a little bit more proactive on the disposition front. And really, the two ways we are thinking about dispositions are opportunities to... one category is when an operator has approached us and it's in their best interest to repurchase some facilities. And from our perspective, an opportunity to harvest significant gains in a portfolio. And I think the other way we're looking at dispositions is if we can recycle capital, but improve the overall quality of the portfolio and move our mix to the, as George mentioned, the customer friendly combination facilities that will improve our overall portfolio. That's the other way we're looking at dispositions right now.

So would you quantify let's say the spread between buying and selling, 100 basis points, 125 basis points on aggregate?

I don't think we really look at it that way, Chris. I think on the disposition side, we're looking at opportunities to harvesting and redeploy it accretively.

Okay.

And as you move from one asset class to another asset class, it compounds the difficulty of answering your questions.

Yes, the mix issue is probably very difficult to get through. The MOB vacancy, what drove that?

Fred... I don't know... are you on Fred? Great. I don't know if you want to take that. We did have two large leases that didn't renew in the first quarter as was in our forecast. But I don't know what Fred would like to add.

Yes, we had a couple of properties transition from master lease. If you look at the supplementals, we had 177,000 square feet expiring in the quarter. We also have 212,000 square feet expiring next quarter. And so our forecasts are that our... with those levels of renewals or expirations, we are forecasting that it continues to dip slightly before rebounding by the end of year. We are on the verge of executing a 26,000 square foot lease hopefully this week that will help the portfolio occupancy.

And the two existing customers or tenants are outside your network?

No, it's an expansion to an existing customer.

Okay. And I guess with respect to the MSA concentration chart, I guess you guys provide, I forgot what page it's on, across various concentrations in the U.S. I don't know. Ray, maybe this is another difficult question given how vast the portfolio is. But I guess if you were to look at your same-store metrics, if you were to look at our coverages and your occupancies so forth so on, and you were to bucket those statistics across you concentrations within the top 31, top 75, top 100 so forth, would there be significant differences in how each of those buckets look from an operating perspective?

That is a difficult question.

But just directionally, I mean you guys know your portfolio better than anyone. I've got to think that you should have some type of feeling about the relative performance, whether it is "in a top 31 market versus a top 100 market".

I think our focus is more matching the platform to the market. So if we get that right, we tend to see comparable performance. For example, we have a world portfolio of assisted living is that fine because the buildings are right sized for the market. So we don't really think about it that way.

Okay. So it would be probably fair to say that this statistic should be comparable across each of those concentrations regardless if it's a 31 top... a top 31 market or a top 100 market?

We can look into that and give you some more detail on that.

Yes, the only reason I ask is because in analyzing the NIC [ph] data and looking at the NIC data and applying it to let's say your portfolio or let's say some of your peers portfolios, when all I am looking at is the top 31 market and here you have 42% of your assets in the top 31 markets. I don't want to make... I don't want to have any misinterpretations in terms of fundamentals matching between your portfolio and what we get from NIC. That's the only reason I'm asking the question.

Sure. And we can drill down on that and generally, we are pretty much in line with what you see in NIC.

Okay. And I guess, George, given your relationships with your existing operators and your ability to push some of your investment guidance, how would you describe your current relationship with Tenet, your top office name, especially given the fact I guess they just announced a couple of days ago they are looking to divest 2.2 million square feet of MOB space?

That... the Tenet relationship largely came to us through Rendina. And there have been a lot of changes not only at Tenet, but also in Rendina too. And Fred, I don't know if you want to expand on that, but we [Technical Difficulty]

Pipeline that are 150,000 to 250,000 square foot individual buildings, so you'll see a different make up of this as those come on line.

Thanks for that. I guess given your relationship or given that the Tenet exposure did come for Rendina, does that give you guys any additional foresight into these assets or are you a little familiar or more familiar with some of these MOB positions relative to let's say some of your peers or given the scale, how you just described it, it really makes it a tough thing?

Well, you've actually hit on a point that is part of our business initiative, and that is to make sure that through managing our own properties, we are staying as close as possible to our system partners where our assets are. And we are in the process of revisiting all of those relationships as we speak.

Okay, great. Thanks a lot guys.

Thanks Chris.

We'll go next to Jerry Doctrow with Stifel Nicolaus.

Good morning.

Hi Jerry.

I've just got a couple of things. I wanted to get a little more color on sort of who's financing or how people are financing the things that you are selling. I mean because you are sort of telling us that you can find more investments, I assume, partly because the capital markets are tighter. So you are selling at... my sense is to... well I guess what I would call strategic buyers the operators in most cases and where are they kind of getting financing?

I think it's bank financing and equity.

So it's more sort of ones and twosies that you are selling rather than sort of larger chunks to.

The three large packages that we think we have are going to go: one, to bank financing in one case; two, some combination of debt and equity in another and two, some non-profit financing in the third. So, Jerry, frankly it's all over the map. And I guess the only surprise I suppose to some of you is that people who are pretty good quality regional operators or regionally focused operators for that matter have the ability to continue to do this, but... what they do and we are looking forward to the dispositions.

And again, I think it's certainly less combo facilities, but is it also primarily snips or senior housing or sort of a mix of both?

Well, we will announce it once we get them done.

Okay.

But clearly, our goal is to move toward combination projects, and for that matter to increase our acute care space as well as keep our MOBs where they are at least.

Okay. And then just a follow up on the MOB stuff. Are the rents rolling up, rolling down as you sort of move some of these leases off? I just want to get a little more color there.

Fred?

Yes, it actually depends property by property, Jerry. On the whole, when a master lease expires, we generally see some decline in the rents. But on the properties that aren't subject to master lease, we are seeing increases in that.

Okay. So on the space, the big chunks of space that are rolling, we need to build in both an occupancy decline until you kind of refill, but also the rent levels might be a little lower as we go forward?

That's correct.

Okay. And then last thing, and I think you touched on this, but just wanted to come back to it a little bit. I mean we have now had a number of the operators report just a little bit more color on sort of the whole sort of housing market flu season just in terms of how it's kind of affecting occupancy and stuff. What's your sort of take? And again, I am really not so much looking for kind of even the historical that you reported, just your sense of where things are now?

Yes, I mean generally, two things affect the metrics. One is operating performance of the buildings and obviously and second is what assets are classified with each portfolio. And we don't see any... based on our asset management and of course any deterioration in the operating environment and some of them more [ph] around the numbers [indiscernible] classifying different assets in our portfolio.

And just you're more broader generalizing the operators because I know you stay fairly close to your operators, people seeing... we've been seeing some slippage in occupancy from flu, some slippage in occupancy from the housing market. Just your characterization overall. Is some of that temporary? Do you see the market being... housing market being more of an issue? Just any color there you could give us would be helpful.

Our operators are reporting that there is a slight slowdown in traffic, but there hasn't been enough of a trend yet for us to draw any conclusions.

And flu issue, is that sort of a real meaningful impact or you don't really notice it that much?

Occasionally, flu can hit a building and cause occupancy declines from time to time but it's not something that's pervasive throughout the portfolio as we move the business [ph].

Okay. All right, thanks a lot.

[Operator Instructions]. We'll go to Robert Mains with Morgan Keegan.

Good morning. One numbers question for you, Scott. The guidance for capital expenses I think was about the same. It was pretty low in the quarter. Is there any particular reason why it's going to ramp up a lot?

It's really... and it actually is... you can see our projections there in the medical office section on page 26. It is obviously back end loaded and it's really due to timing of some buildouts as we accelerate some leasing activity towards the second half of the year.

Okay. And then... since we are near the end of it, page 29 where you have got the development project conversions. I assume that a... a footnote said this; I just want to confirm... if rates go up, your projected yields go up as well.

Right, right. Yes, that fluctuates Rob. Really, we set the initial yield at the time of certificate of occupancy based on a spread over the comparable treasury at that time. So when we show the chart, it might move slightly as rates move. But again, wouldn't ultimately be set in most cases until certificate of occupancy.

Okay. And then sort of going at the same question I think about the third way on this call, the issue about entry fee buildings. If I remember right, Ray, last call, you had suggested that of your developed entry fee buildings, you had only one that you felt was lagging where you wanted it to be in terms of lease up and other three being... despite concerns about the real estate markets, you are going to be doing okay. Would you still characterize your lease up of those buildings that way?

Yes.

I think that's fair Rob. Yes, that's right. We are four entrance fee communities in fill up... it's about $110 million balance and really only one is of any concern, and it's really more just in budget of move ins. So you are seeing a little bit of absorption may be there, but I think, I would also point out we do have two stable entrance fee communities right now and we just looked at their coverages and they are 1.34 times and the occupancy is 95%. So it's a little bit in how quickly they fill, but once they get there, they should... where the trends are, I think I would be all right.

The particular facility is one that we purchased knowing it was in frankly a tough housing market. And it is going to be part of a package that will ultimately be comprised of 10 CCRCs or CCRC look-alikes. So we felt pretty confident going forward and we are not that surprised at all with the slowness of failure in that particular facility, it's a very good piece of real estate that ultimately will be just fine in this part of a larger package.

Just to make sure I got the right, you are doing another nine in the same market?

No, we are doing with the same operator.

Same operator, okay, got you, all right, fine. That's all I have, thanks.

[Operator Instructions]. Over to Philip Martin with Cantor Fitzgerald.

Good morning everybody.

Hey Philip.

Hey Philip.

I like the supplemental but did you have to add your pictures?

That's just a real additional enhancement, Philip, that we knew you would like.

Because you are going to open yourself up for analysis now. And Ray looks a lot younger there. My first question comes from... in terms of what... can you talk specifically, George, about what's driving acquisition growth. Is it that... I mean are they operators... are they the goods supply demand fundamentals and the operators, see very good growth opportunities, what types of properties are you targeting in this incremental acquisition growth, I just want a better feel for specifically what's driving that.

I think, Philip, this is a very opportunistic market, okay, you don't have as much capital in there, some people frankly even within our space have of pulled back a little bit I supposed to be conservative. We have lines of credit relationship financing programs where people are finding very good transactions. Or even finding some CCRCs where there have previously been bond issues that perhaps can be purchased for any number of reasons, we... I think I indicated too in my comments that as you look at either the development pipeline or you look at our activity for the first quarter, which isn't necessarily going to be emblematic of the rest of the year that only 6% our portfolio or our acquisitions or our development relates to standalone facilities, so we're obviously backing a lot of people who want to accommodation facilities, who are finding medical office buildings with us, or are developing or are requiring acute care hospitals. So, it is really all over of map, and I really attribute it to the fact that... as I said, our relationship program gives us an underlying base that essentially allows us to belie different market cycles and more over the rich of our platform from lower end senior housing all the way through the most acute care hospital just gives us a tremendous reach and then you add Buck Ridges [ph] development services group and Nodos [ph] property management group and we have a lot to sell right know and we have lot of people out there and a lot of people are coming those us with very opportunity packages, so I am very pleased with our results.

Would you be surprise if you're growth pipelines... would you be surprised if didn't increase your acquisition and development target throughout the year here as your broader platform just matures that much further.

The broader platform is very, very helpful. But it's also true that, if one looks at CCRCs, especially if it's a buy-end deal, one has to spend a great deal of time and attention to make sure that they work their somewhat more sophisticated modeling projects and then two the acute care space moves at almost a snail's pace, So I don't want to say we're to increase it necessarily beyond what we just of end this year I guess it's possibility, but I guess I'm just very pleased with our direction and our momentum.

And in terms of this new incremental growth, again, you touched upon it a little bit is that a mix of kind new relationships and existing relationships or is it primarily with existing relationships?

Well, I mentioned it as a result of our activity and relationship financing, our investment program that we added 25 new relationships just during the last two years so those continue and some fall by the wayside if they just to maybe their ability to the point where they can only manage that number of facilities. And then, the acute care space maybe the MOB space as well tends to be a little bit more... a little less relationship driven, so they can be more sporadic, they can be more one-off transactions and one is never quite when we are going to land them and when not. It's just reaching out being there and talking about our ability to be a good relationship with partner. So, it's really hard to go beyond that thought, Phil. Ray, you want to add anything?

I think it's a mix and we continue to develop relationships with quality operators.

And that's just... okay.

Ishould add one other, okay. We are talking about tenant when, I think it was Chris had mentioned the tenant relationship, I mention that these are constantly increasing or decreasing, getting better, getting worst for a while as health systems expand or contract. I just will tell you that I am very pleased with all of the people that those of us who market in the acute care space are meeting and what kind of programs will be put in front of them especially with the property management capabilities as well as the development services capabilities we have to bring to the table and we are definitely forming new relationships with other healthcare systems and I am very pleased directionally with that as well.

That's... and it goes back to the CCRC and the combination platforms, can you talk a little bit about how this model has changed, I mean obviously a lot of us have seen the evolution of the CCRC and the private pay models over the last 10, 15 years, but how has that changed? I know in terms of consumer awareness, we are seeing much more consumer awareness out there, but how has that changed, I mean these are complex properties, they're obviously more challenging... are you finding enough operators that know what they are doing and are they up to the challenge of bandaging a fairly complex community like this?

I think they are elsewhere or else we are not going to back them. We do think that some people can fail because of development risk, if it is not an acquisition, as well as the different fill up profiles for the components with NOC, CRC make it as you say a much more sophisticated project. On the other hand we have a... I think the last time I looked, Rachael [ph], 40% or 50% of our portfolio was still rental CCRCs which again decreases somewhat the complexity of the analysis. So... but we are generally very pleased and I think Ray indicate... answered the question about the housing downturn and the affect on the buying projects, probably moving a little more slowly, but we can think overtime that CCRCs for the rental or buying projects are the place to be. Combination projects larger ones especially are definitely the place to be and you asked how are they changing? I think every year we see more and more of our CCRC and a larger combination operators meeting together, you are seeing what other people are doing and there is a profound movement toward more and more personal choice. The customer driving the types of services that are there, the advent of really terrific wellness programs, exercise programs et cetera. It's... this space is clearly being driven by the consumer, Philip, so just like... it is just taking off in terms of the types of amenities that people want today let alone when the baby boomers hit.

The other thing I'd add, George, is I think one change in the model is be healthcare benefit is no longer included. So there's less actuarial risk in the model that's going to be developed today.

Okay, okay. Now, I know your initiative to grow your relationship with larger systems both not a profit and for profit, is that also driving your increased interest in community... I mean in the CCRC or combination platforms. Are they interested in this product in terms of their systems?

Would you repeat that question?

I guess I am... I know you're looking to grow your relationships with large systems like the not for profit... both for profit and not for profit. How interested are they in these large CCRCs combination of senior living platforms? Do they want that as part of their system?

I couldn't give you a universal answer. We run into systems who could care less about it, who don't even think it's necessarily that good a feeder even if they are right next to the health system which I tend to disagree with, by the way, and then there are others who think it could be great to essentially build a smaller community that would include commercial CCRC, maybe active adult housing as well as a health system in the same proximity that could easily be out in the suburbs. So, I would... frankly it's all over the map, Philip.

Okay. Okay. My last question for Fred, on the hospitals, the two vacancies that cropped up here and than of course the tenant portfolio here and their MOB strategy going forward, net-net are these going to be upside opportunities for all of you?

Well, I'm not sure I fully understand the question.

Well, obviously there is a risk here with tenant, and potential vacancy in that HCN portion of the portfolio, are these well located enough to see some upside opportunities if in fact there is some vacancy that crops up with those assets?

Yeah, so, we have been involved in tenant assets for about four years now, and as tenant periodically divest of hospitals and/or they divest of MOBs, the strength of the individual hospital has been the critical view, a lot of these hospitals are in Florida and that market is just very strong. So, it comes down to an operator has multiple buildings and as long as these hospitals are strong there is not an issue associated with the medical office buildings, the performance of the individual hospitals. With respect to the divestiture of the portfolio, if the assets are on campuses where we already have buildings then someone will be buying that and attempting to deal with what it's occupancy is but we think our buildings are well positioned on strong hospitals.

Okay, so potential down time... if it occurs, you would expect that to be pretty minimal and rents to remain the same if not move a bit higher?

Yes.

Okay. Thank you very much.

[Operator Instructions]. And we have no other questions at this time. I'd like to turn the call back to management for any additional or closing comments.

We'd just like to thank people for participating and Scott will be available for some time... for additional time now if there are clarifying questions. Thanks very much.

Thanks.

That does conclude today's call. Again, thank you for your participation. Have a good day.