Form: 424B5

Prospectus filed pursuant to Rule 424(b)(5)

April 25, 1997

424B5: Prospectus filed pursuant to Rule 424(b)(5)

Published on April 25, 1997


Filed Pursuant To Rule 424(b)(5)
File No. 333-20967

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 14, 1997)

2,000,000 SHARES

OMEGA HEALTHCARE INVESTORS, INC.

9.25% SERIES A CUMULATIVE PREFERRED STOCK
(LIQUIDATION PREFERENCE $25 PER SHARE)

------------------------
OMEGA HEALTHCARE INVESTORS, INC. LOGO

Dividends on the 9.25% Series A Cumulative Preferred Stock, par value $1.00
per share (the "Series A Preferred Stock"), of Omega Healthcare Investors, Inc.
(the "Company") are cumulative from the date of original issue and are payable
quarterly, commencing on August 15, 1997, to shareholders of record on July 31,
1997 for the period through July 31, 1997 at the rate of 9.25% per annum of the
$25 liquidation preference (the "Liquidation Preference") per share (equivalent
to a fixed annual amount of $2.31 per share). See "Description of Series A
Preferred Stock -- Dividends."

Except in certain circumstances relating to preservation of the Company's
qualification as a real estate investment trust (a "REIT"), the Series A
Preferred Stock is not redeemable prior to July 1, 2002. On and after such date,
the Series A Preferred Stock may be redeemed for cash at the option of the
Company in whole or in part, at a redemption price of $25 per share, plus
accrued and unpaid dividends thereon, if any, up to the redemption date without
interest. The Series A Preferred Stock has no stated maturity and will not be
subject to any sinking fund or mandatory redemption and will not be convertible
into any other security of the Company. See "Description of Series A Preferred
Stock -- Maturity" and "-- Redemption."

In order to ensure that the Company continues to meet the requirements for
qualification as a REIT under the Internal Revenue Code of 1986, as amended,
(the "Code"), shares of Series A Preferred Stock shall be deemed "Excess Shares"
if a holder owns more than 9.9% in value of the Company's outstanding capital
stock, and the Company will have the right to purchase Excess Shares from the
holder. See "Description of Series A Preferred Stock -- Restrictions on
Ownership."

Application has been made to list the Series A Preferred Stock on the New
York Stock Exchange ("NYSE"), subject to official notice of issuance, under the
symbol "OHI PrA." Trading of the Series A Preferred Stock on the NYSE is
expected to commence within 30 days of initial delivery of the Series A
Preferred Stock. While the Underwriters have advised the Company that they
intend to make a market in the Series A Preferred Stock prior to commencement of
trading on the NYSE, they are under no obligation to do so and no assurance can
be given that a market for the Series A Preferred Stock will exist prior to
commencement of trading. See "Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE S-7 OF THIS PROSPECTUS SUPPLEMENT FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SERIES A PREFERRED STOCK OFFERED HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.



===============================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
- ---------------------------------------------------------------------------------------------------------------

Per Share................................................ $25.00 $.7875 $24.2125
- ---------------------------------------------------------------------------------------------------------------
Total(4)................................................. $50,000,000 $1,575,000 $48,425,000
===============================================================================================================


(1) Plus accrued distributions, if any, from the date of original issue.

(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(3) Before deducting estimated expenses of $500,000 payable by the Company.

(4) The Company has granted to the several Underwriters an option for 30 days to
purchase up to an additional 300,000 shares of Series A Preferred Stock,
solely to cover over-allotments, if any. If all of such shares are
purchased, the total Price to Public, Underwriting Discounts and Commissions
and Proceeds to Company will be $57,500,000, $1,811,250 and $55,688,750,
respectively. See "Underwriting."
------------------------

The Series A Preferred Stock is offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by the Underwriters,
subject to approval of certain legal matters by counsel for the Underwriters and
to certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the certificates evidencing the Series A Preferred
Stock will be made on or about April 29, 1997.

A.G. EDWARDS & SONS, INC.
COWEN & COMPANY
EVEREN SECURITIES, INC.
------------------------

THE DATE OF THIS PROSPECTUS SUPPLEMENT IS APRIL 25, 1997

AVAILABLE INFORMATION

Electronic filings made through the electronic data gathering, analysis and
retrieval system are publicly available through the Commission's web site
(http://www.sec.gov).

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME. SEE "UNDERWRITING."

S-2

PROSPECTUS SUPPLEMENT SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus or incorporated herein or therein by reference.
Investors should consider carefully the risk factors related to the purchase of
Series A Preferred Stock of the Company. See "Risk Factors." Unless otherwise
specifically indicated, the information in this Prospectus Supplement assumes
the Underwriters' over-allotment option is not exercised.

THE COMPANY

Omega Healthcare Investors, Inc. (the "Company") was incorporated in the
State of Maryland on March 31, 1992. It is a self administered real estate
investment trust ("REIT") which invests in income producing healthcare
facilities, principally long-term care facilities located in the United States.

As of March 31, 1997, the Company's portfolio of domestic investments
consisted of 229 long-term care facilities and 3 medical office buildings. The
Company owns and leases 144 long-term care facilities and 3 medical office
buildings, and provides mortgages, including participating and convertible
mortgages, on 85 long-term care facilities. The facilities are located in 26
states and operated by 35 unaffiliated operators. The Company is also an owner
of and provides management/advisory services to Principal Healthcare Finance
Limited ("Principal") which owns and leases 44 nursing homes in the United
Kingdom. The Company's gross investments at March 31, 1997 totaled $737.8
million.

The investment objectives of the Company are to pay regular cash dividends
to shareholders; to provide the opportunity for increased dividends from annual
increases in rental and interest income from revenue participations and from
portfolio growth; to preserve and protect shareholders' capital; and to provide
the opportunity to realize capital growth.

The Company intends to make and manage its investments (including the sale
or disposition of property or other investments) in such a manner as to be
consistent with the requirements of the Code (and regulations thereunder) to
qualify as a REIT, unless, because of changes in circumstances or changes in the
Code (or regulations thereunder), the Board of Directors determines that it is
no longer in the best interests of the Company to qualify as a REIT.

The executive offices of the Company are located at 905 West Eisenhower
Circle, Suite 110, Ann Arbor, Michigan 48103. Its telephone number is (313)
747-9790.

INVESTMENT STRATEGIES AND POLICIES

The Company maintains a diversified portfolio of income-producing
healthcare facilities or mortgages thereon, with a primary focus on long-term
care facilities located in the United States. The Company currently owns 147
facilities with a total of approximately 13,250 beds. The Company also has
mortgage loans on 85 facilities with approximately 8,900 beds. See "Properties."

In evaluating potential investments, the Company considers such factors as:
(i) the quality and experience of management and the creditworthiness of the
operator of the facility; (ii) the facility's historical, current and forecasted
cash flow and its adequacy to meet operational needs, capital expenditures and
lease or debt service obligations, while providing a competitive return on
investment to the Company; (iii) the construction quality, condition and design
of the facility; (iv) the geographic area and type of facility; (v) the tax,
growth, regulatory and reimbursement environment of the community in which the
facility is located; (vi) the occupancy and demand for similar healthcare
facilities in the same or nearby communities; and (vii) the payor mix of
private, Medicare and Medicaid patients.

In making investments, the Company generally seeks established,
creditworthy, middle market healthcare operators which meet the Company's
standards for quality and experience of management. Although the Company has
emphasized long-term care investments, it intends to diversify prudently into
other types of healthcare facilities or other properties. The Company actively
seeks to diversify its investments in terms of geographic location, operators
and facility types.
S-3

A fundamental investment strategy of the Company is to obtain contractual
rent escalations under long-term, non-cancelable triple net leases (whereby the
tenant is responsible for all maintenance, repairs, taxes and insurance on the
leased properties) and revenue participations through participating mortgage
loans, and to obtain substantial security deposits. Additional security is
typically provided by covenants regarding minimum working capital and net worth,
liens on accounts receivable and other operating assets, and various provisions
for cross-default, cross-collateralization, and corporate/personal guarantees,
when appropriate.

The Company prefers to invest in equity ownership of properties. Due to
regulatory, tax or other considerations, the Company sometimes pursues
alternative investment structures, including Convertible Participating and
Participating Mortgages, that achieve returns comparable to equity investments.
The following summarizes the four primary structures currently used by the
Company:

Purchase/Leaseback. The Company's owned properties are generally
leased under provisions of leases for terms ranging from 5 to 17 years,
plus renewal options. The leases originated by the Company generally
provide for minimum annual rentals which are subject to annual formula
increases (i.e., based upon such factors as increases in the Consumer Price
Index ("CPI") or increases in the revenues of the underlying properties),
with certain fixed minimum and maximum levels. Generally, the operator
holds an option to repurchase at set dates at formula prices.

Convertible Participating Mortgage. Convertible Participating
Mortgages are secured by first mortgage liens on the underlying real estate
and personal property of the mortgagor. Interest rates are usually subject
to annual increases based upon increases in the CPI or increases in
revenues of the underlying long-term care facilities, with certain maximum
limits. Convertible Participating Mortgages afford the Company an option to
convert its mortgage into direct ownership of the property, generally at a
point six to nine years from inception; they are then subject to a
leaseback to the operator for the balance of the original agreed term and
for the original agreed participations in revenues or CPI adjustments. This
allows the Company to capture a portion of the potential appreciation in
value of the real estate. The operator has the right to buy out the
Company's option at formula prices.

Participating Mortgage. Participating Mortgages of the Company are
secured by first mortgage liens on the underlying real estate and personal
property of the mortgagor. Interest rates are usually subject to annual
increases based upon increases in the CPI or increases in revenues of the
underlying long-term care facilities, with certain maximum limits.

Fixed-Rate Mortgage. These Mortgages of the Company, with a fixed
interest rate for the mortgage term, are also secured by first mortgage
liens on the underlying real estate and personal property of the mortgagor.

The Company may determine to finance acquisitions through the exchange of
properties or the issuance of shares of its capital stock to others, if such
transactions otherwise satisfy the Company's investment criteria. The Company
also has authority to repurchase or otherwise reacquire its Common Stock or any
other securities and may determine to do so in the future.

To the extent that the Company's Board of Directors determines to obtain
additional capital, the Company may raise such capital through additional equity
offerings, debt financings or retention of cash flow (subject to provisions of
the Code, as amended concerning the taxability of undistributed income of
REITs), or a combination of these methods.

The Bylaws of the Company permit the Board of Directors, without the
approval of the shareholders, to alter the Company's investment policies if they
determine in the future that such a change is in the best interests of the
Company and its shareholders. The methods of implementing the Company's
investment policies may vary as new investments and financing techniques are
developed or otherwise employed.

RECENT DEVELOPMENTS

Unison Healthcare Corp. On March 11, 1997, a lessee and mortgagor of the
Company, Unison Healthcare ("Unison"), announced its intention to restate its
earnings with respect to its operations for the
S-4

nine-month period ended September 30, 1996. Unison's announcement indicated that
the restatement was necessary to correct certain inaccuracies generated by its
accounting systems. Unison is currently converting to a new general ledger and
accounts payable system and is undertaking a review of its accounting policies.
Unison's press releases indicated that its Board of Directors accepted the
resignation of its chief accounting officer and its chief financial officer and
subsequently placed its president/chief executive officer on administrative
leave pending an investigation relating to the restatement of financial results.
Unison's previously-reported financial results had shown profitable operations
and lease coverage in excess of 1.9x for the Company's owned and mortgaged
facilities.

The Company's investment with Unison represents approximately $45 million
related to approximately 2,000 beds and approximately 6.2% of total assets of
the Company at March 31, 1997 and approximately 6.3% of the Company's annualized
revenue at the same date. The Company holds $4 million in cash as additional
security for payment and performance by Unison and also holds the personal
guarantee of a principal shareholder of Unison in an amount not less than $5.2
million. Unison's rent and interest payments are current as of the date of this
Prospectus Supplement.

The Company has, on a periodic basis, received financial information on the
operating results of each individual facility which it has leased or with
respect to which it has a mortgage loan to Unison. Based upon that information,
the facilities which are security for the leases and loans to Unison appear to
provide cash flows exceeding the payments due to the Company. Based upon
information now in the Company's possession, which the Company believes reflects
restated results, the combined operating lease and interest coverage for these
facilities is in excess of 1.5x. The Company is monitoring the situation,
including the obligations of Unison with respect to a senior note interest
payment of approximately $6 million, which is due May 1, 1997. Current
information from Unison indicates that Unison has cash and funds available under
its line of credit which is such as to enable Unison to meet its obligations as
they mature. The Company will continue to monitor the situation so as to
exercise appropriate steps to protect the interests of the Company. The Company
believes there will be no material adverse effect on its financial position or
results of operations as a result of Unison's current financial situation.
However, there can be no assurance that there will be no further adverse
financial developments within Unison.

Principal Healthcare Finance, Ltd. The Company's Board of Directors has
from time to time authorized temporary advances of up to L22.5 million
(approximately $36 million) to Principal, a partially-owned affiliate, which
provides financing for United Kingdom nursing home operators, and is managed by
the Company pursuant to a management advisory agreement. Funds advanced bear
interest at 9.25%, and are typically outstanding for no more than sixty days.
The current balance of temporary advances to Principal is L5.3 million. The
Company has also agreed to provide Principal a guarantee of borrowings of up to
L41 million (approximately $66 million), pending its completion of permanent
financing for an anticipated purchase of a company which operates nursing homes
in the United Kingdom. No amounts subject to such guarantee are currently
outstanding.

Other Transactions. The Company regularly evaluates investment
opportunities and extends credit to its customers in the ordinary course of its
business. It is regularly engaged in lease and loan extensions and modifications
and believes its management has the experience and expertise to deal with such
issues as may arise from time to time.

THE OFFERING

Securities Offered............ 2,000,000 shares of 9.25% Series A Cumulative
Preferred Stock. The Company has applied to
list its Series A Preferred Stock on the NYSE
under the symbol "OHI PrA." See "Underwriting."

Maturity...................... The Series A Preferred Stock has no stated
maturity and will not be subject to any sinking
fund or mandatory redemption. See "Description
of Series A Preferred Stock--Maturity."
S-5

Use of Proceeds............... Net proceeds from the sale of the Series A
Preferred Stock will be used to repay
outstanding borrowings on the Company's
revolving line of credit. See "Use of
Proceeds.".

Ranking....................... With respect to the payment of dividends and
amounts upon liquidation, the Series A
Preferred Stock will rank senior to the Common
Stock, which is the only capital stock of the
Company currently outstanding. See "Description
of Series A Preferred Stock--Rank," "Dividends"
and "Liquidation Preference."

Dividends..................... Dividends on the Series A Preferred Stock are
cumulative from the date of original issue and
are payable quarterly on or before the 15th day
of August, November, February and May,
commencing on August 15, 1997 to shareholders
of record on the last business day of the
preceding month, for the quarterly periods
ended July 31, October 31, January 31 and April
30 as applicable at the rate of 9.25% per annum
of the Liquidation Preference. See "Description
of Series A Preferred Stock--Dividends."

Liquidation Preference........ The Liquidation Preference is equal to $25 per
share of Series A Preferred Stock, plus accrued
and unpaid dividends (whether or not declared).
See "Description of Series A Preferred
Stock--Liquidation Preference."

Redemption.................... Except in certain circumstances relating to
preservation of the Company's status as a REIT,
the Series A Preferred Stock is not redeemable
prior to July 1, 2002. On and after such date,
the Series A Preferred Stock will be redeemable
for cash at the option of the Company, in whole
or in part, at a redemption price of $25 per
share, plus dividends accrued and unpaid at the
redemption date (whether or not declared)
without interest. See "Description of Series A
Preferred Stock--Redemption" and "Restrictions
on Ownership."

Voting Rights................. Holders of Series A Preferred Stock generally
will have no voting rights. However, whenever
dividends on any shares of Series A Preferred
Stock shall be in arrears for six or more
quarterly periods, whether or not such
quarterly periods are consecutive, the holders
of such shares (voting separately as a class
with all other series of preferred stock upon
which like voting rights have been conferred
and are exercisable), will be entitled to vote
for the election of two additional directors of
the Company until all dividends accumulated on
such shares of Series A Preferred Stock have
been fully paid or declared and a sum
sufficient for the payment thereof set aside
for payment. In addition, certain changes to
the terms of the Series A Preferred Stock that
would be materially adverse to the rights of
holders of the Series A Preferred Stock cannot
be made without the affirmative vote of holders
of at least two-thirds of the outstanding
Series A Preferred Stock. See "Description of
Series A Preferred Stock--Voting Rights."

Conversion.................... The Series A Preferred Stock is not convertible
into or exchangeable for any other property or
securities of the Company.
S-6

RISK FACTORS

An investment in the Series A Preferred Stock involves various risks,
including those described below under the caption "Risk Factors." Investors
should carefully consider these risk factors together with all of the
information set forth or incorporated by reference in this Prospectus Supplement
and the accompanying Prospectus in determining whether to purchase shares of
Series A Preferred Stock. Information contained or incorporated by reference in
this Prospectus Supplement or in the accompanying Prospectus may contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, which statements can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," or "continue" or the negative thereof or other comparable
terminology. The following matters and certain other factors noted throughout
this Prospectus Supplement and the accompanying Prospectus, and any documents
incorporated by reference herein or therein and exhibits hereto and thereto,
constitute cautionary statements identifying important factors with respect to
any such forward-looking statements, including certain risks and uncertainties,
that could cause the Company's actual results to differ materially from those
contained in any such forward-looking statements.

GOVERNMENT REGULATION

Healthcare Reform. Federal healthcare legislation enacted in 1996 focused
on assuring portability of employee healthcare benefits and increasing
enforcement powers of federal agencies that investigate and prosecute fraud and
abuse in federally funded healthcare programs. Renewed efforts in 1997 to
balance the federal budget will continue to place priority on the need to slow
the growth rate in federal healthcare expenditures. It is anticipated that
further debate on overall structural reform of federal healthcare programs will
affect additional legislative action on cost-containment. It also is anticipated
that private payor efforts to contain or reduce healthcare costs will continue.
These trends are likely to lead to reduced or slower growth in reimbursement for
certain services provided by some of the Company's lessees and borrowers. No
assurance can be given that the implementation of any reforms will not have a
material adverse effect on the Company's financial condition or results of
operations.

Potential Operator Loss of Licensure or Certification. The healthcare
industry is highly regulated by federal, state and local law, and is directly
affected by state and local licensure, fines, and loss of certification to
participate in the Medicare and Medicaid programs, as well as potential criminal
penalties. The failure of any lessee or borrower to comply with such laws,
requirements and regulations could adversely affect its ability to operate its
facilities and could affect such lessee's or borrower's ability to make debt or
lease payments to the Company.

Reliance on Government Reimbursement. A significant portion of the revenue
of the Company's lessees and borrowers is derived from governmentally-funded
reimbursement programs, such as Medicare and Medicaid. These programs are highly
regulated and subject to frequent and substantial changes resulting from
legislation, adoption of rules and regulations, and administrative and judicial
interpretations of existing law.

Any changes in reimbursement policies which reduce reimbursement levels
could adversely affect revenues of the Company's lessees and borrowers and
thereby adversely affect those lessees' and borrowers' abilities to make their
monthly lease or debt payments to the Company. Failure of the lessees or
borrowers to make their monthly payments would have a direct and material
adverse impact on the Company.

HEALTHCARE REAL ESTATE INVESTMENT RISKS

The Company's investments in healthcare facilities are subject to various
real estate related risks.

Volatility of Income and Returns. The possibility that the healthcare
facilities will not generate income sufficient to meet operating expenses or
will yield returns lower than those available through investments in comparable
real estate or other investments are additional risks of investing in healthcare
related real estate. Income from properties and yields from investments in such
properties may be affected by many factors, including changes in governmental
regulation (such as zoning laws), general or local economic conditions (such as
fluctuations in interest rates and employment conditions), the available local
supply of and demand

S-7

for improved real estate, a reduction in rental income as the result of an
inability to maintain occupancy levels, natural disasters (such as earthquakes
and floods) or similar factors.

Illiquidity of Real Estate Investments. Real estate investments are
relatively illiquid and, therefore, tend to limit the ability of the Company to
vary its portfolio promptly in response to changes in economic or other
conditions. All of the Company's properties are "special purpose" properties
that could not be readily converted to general residential, retail or office
use. Transfers of operations of nursing homes and other healthcare-related
facilities are subject to regulatory approvals not required for transfers of
other types of commercial operations and other types of real estate. Thus, if
the operation of any of the Company's properties becomes unprofitable due to
competition, age of improvements or other factors such that the lessee or
borrower becomes unable to meet its obligations on the lease or mortgage loan,
the liquidation value of the property may be substantially less -- particularly
relative to the amount owing on any related mortgage loan -- than would be the
case if the property were readily adaptable to other uses. The receipt of
liquidation proceeds could be delayed by the approval process of any state
agency necessary for the transfer of the property. In addition, certain
significant expenditures associated with real estate investment (such as real
estate taxes and maintenance costs) are generally not reduced when circumstances
cause a reduction in income from the investment. Should such events occur, the
Company's income and cash flows from operations would be adversely affected.

Uninsured Loss. The Company currently requires, and it is the intention of
the Company to continue to require, all lessees and borrowers to secure adequate
comprehensive property and liability insurance that covers the Company as well
as the lessee and borrower. Certain risks may, however, be uninsurable or not
economically insurable and there can be no assurance the Company or a lessee
will have adequate funds to cover all contingencies itself. Should such an
uninsured loss occur, the Company could lose its invested capital.

RELIANCE ON OPERATORS OF HEALTHCARE FACILITIES

As of March 31, 1997, three companies operated/managed 36 facilities
representing 33.2% ($222.7 million) of the Company's real estate investments.
The financial position of the Company and its ability to make distributions may
be adversely affected by financial difficulties experienced by any of such
operators, or any other major operator of the Company.

ENVIRONMENTAL MATTERS

Under various federal, state and local environmental laws, ordinances and
regulations, an owner of real property or a secured lender (such as the Company)
may be liable in certain circumstances for the costs of removal or remediation
of certain hazardous or toxic substances at, under or disposed of in connection
with such property, as well as certain other potential costs relating to
hazardous or toxic substances (including government fines and damages for
injuries to persons and adjacent property). Such laws often impose such
liability without regard to whether the owner knew of, or was responsible for,
the presence or disposal of such substances and may be imposed on the owner in
connection with the activities of an operator of the property. The cost of any
required remediation, removal, fines or personal or property damages and the
owner's liability therefore could exceed the value of the property, and/or the
assets of the owner. In addition, the presence of such substances, or the
failure to properly dispose of or remediate such substances, may adversely
affect the owner's ability to sell or rent such property or to borrow using such
property as collateral which, in turn, would reduce the Company's revenues.

Although the Company's leases and mortgage loans require the lessee and the
borrower to indemnify the Company for certain environmental liabilities, the
scope of such obligations may be limited and there can be no assurance that any
such borrower or lessee would be able to fulfill its indemnification
obligations.

RESTRICTIONS ON TRANSFER AND LIMITATION ON OWNERSHIP OF STOCK

For the Company to continue to qualify as a REIT in any taxable year, no
more than 50% in value of its outstanding capital stock may be owned, actually
or constructively, by five or fewer individuals (as defined in

S-8

the Code to include certain entities) at any time during the second half of the
Company's taxable year. Furthermore, if the Company, or an owner actually or
constructively of 10% or more of the value of the Company, actually or
constructively owns 10% or more of the value or voting power of a tenant of the
Company (or a tenant of any partnership in which the Company is a partner), the
rent received by the Company (either directly or through any such partnership)
from such tenant will not be qualifying income for purposes of the REIT gross
income tests of the Code. See "Certain Federal Income Tax Considerations -
Taxation of the Company." In addition, the capital stock must be owned by 100 or
more persons during at least 335 days of each taxable year.

In order to protect the Company against the risk of losing REIT status due
to a concentration of ownership among its shareholders, certain provisions of
the Amended and Restated Articles of Incorporation of the Company and Articles
Supplementary authorize the Company (i) to refuse to permit the transfer of
capital stock to any person if such transfer could jeopardize the qualification
of the Company as a REIT and (ii) to redeem any shares of capital stock in
excess of 9.9% of the value of the outstanding capital stock of the Company
beneficially owned by any person ("Excess Shares"). In addition, the Amended and
Restated Articles of Incorporation of the Company and Articles Supplementary
provide that any transfer of shares of capital stock, options, warrants or other
securities convertible into capital stock that would create a beneficial owner
of more than 9.9% of the outstanding shares of capital stock of the Company
shall be deemed void ab initio and the intended transferee shall be deemed never
to have had an interest in such shares. If such provision is determined to be
void or invalid by virtue of any legal decision, statute, rule or regulation,
then the transferee of such shares, options, warrants or other securities
convertible into such shares shall be deemed, at the option of the Company, to
have acted as agent on behalf of the Company in acquiring such shares and to
hold such shares on behalf of the Company. Such provisions may inhibit market
activity and the resulting opportunity for shareholders to realize a premium for
their capital stock that might otherwise exist if an individual were attempting
to assemble a block of capital stock in excess of 9.9% of the value of the
outstanding capital stock. Also, there can be no assurance that such provisions
will in fact prevent the Company from failing to meet such ownership
requirements. See "Description of Series A Preferred Stock -- Restrictions on
Ownership."

CERTAIN BANKRUPTCY LIMITATIONS

Generally, the Company's lease arrangements with a single operator who
operates more than one of the Company's Facilities is pursuant to a single
master lease (a "Master Lease" or collectively, the "Master Leases"). Although
each lease or Master Lease provides that the Company may terminate the Master
Lease upon the bankruptcy or insolvency of the tenant, the Bankruptcy Reform Act
of 1978 ("Bankruptcy Code") provides that a trustee in a bankruptcy or
reorganization proceeding under the Bankruptcy Code (or debtor-in-possession in
a reorganization under the Bankruptcy Code) has the power and the option to
assume or reject the unexpired lease obligations of a debtor-lessee. In the
event that the unexpired lease is assumed on behalf of the debtor-lessee, all
the rental obligations thereunder generally would be entitled to a priority over
other unsecured claims. However, the court also has the power to modify a lease
if a debtor-lessee in a reorganization were required to perform certain
provisions of a lease that the court determined to be unduly burdensome. It is
not possible to determine at this time whether or not any lease or Master Lease
contains any such provisions. If a lease is rejected, the lessor has a general
unsecured claim limited to any unpaid rent already due plus an amount equal to
the rent reserved under the lease, without acceleration, for the greater of one
year or 15% of the remaining term of such lease, not to exceed three years. If
any lease is rejected, the Company may also lose the benefit of any
participation interest or conversion right.

POSSIBLE CHANGE OF INVESTMENT STRATEGIES AND POLICIES AND CAPITAL STRUCTURE

The Bylaws of the Company permit the Board of Directors, without the
approval of the shareholders, to alter the Company's investment strategies and
policies if they determine in the future that such a change is in the best
interests of the Company and its shareholders. The methods of implementing the
Company's investment strategies and policies may vary as new investments and
financing techniques are developed. See "The Company -- Investment Strategies
and Policies."

S-9

TAX RISKS

The Company was organized and believes that it has conducted and it intends
to conduct its operations so as to qualify for taxation as a REIT under Sections
856 through 860 of the Code. See "Certain Federal Income Tax Considerations."
Qualification as a REIT involves the satisfaction of numerous requirements (some
on an annual and quarterly basis) established under highly technical and complex
Code provisions for which there are only limited judicial and administrative
interpretations and involve the determination of various factual matters and
circumstances not entirely within the Company's control. No assurances can be
given that the Company will at all times satisfy these rules and tests.

If the Company were to fail to qualify as a REIT in any taxable year, as a
result of a determination that it failed to meet the annual distribution
requirements or otherwise, the Company would be subject to Federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Moreover, unless entitled to relief under certain
statutory provisions, the Company also would be disqualified from treatment as a
REIT for the four taxable years following the year during which qualification is
lost. This treatment would reduce the net earnings of the Company available for
investment or distribution to shareholders because of the additional tax
liability to the Company for the years involved. In addition, distributions to
shareholders would no longer be required to be made. See "Certain Federal Income
Tax Considerations."

RISKS ASSOCIATED WITH DEBT FINANCING

The Company currently uses and intends to continue to use debt financing
for existing and additional investments. Such debt financing may include the
revolving credit agreement or long-term secured or unsecured long-term debt. The
Company's use of debt financing presents the risk to holders of the Series A
Preferred Stock that payments of principal and interest on borrowings will leave
the Company with insufficient cash resources to pay dividends required by the
terms of the Series A Preferred Stock.

RISKS RELATED TO ISSUANCE OF ADDITIONAL PREFERRED STOCK

The Company's Amended and Restated Articles of Incorporation do not limit
the issuance of additional series of preferred stock ranking in parity with the
Series A Preferred Stock. The issuance of additional preferred stock in parity
with the Series A Preferred Stock could have the effect of diluting the
interests of holders of the Series A Preferred Stock.

RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS

The ratios of earnings to fixed charges are as follows:



QUARTER ENDED
MARCH 31 YEAR ENDED DECEMBER 31 AUGUST 14, 1992
------------- ----------------------------- (INCEPTION) TO
1997 1996 1996 1995 1994 1993 DECEMBER 31, 1992(1)
----- ----- ----- ----- ----- ----- --------------------

Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends(2)...................... 2.88x 2.77x 2.66x 2.92x 2.69x 3.51x 15.45x


- ---------------
(1) Operations of the Company commenced on August 14, 1992.

(2) For purposes of calculating the ratio of earnings to combined fixed charges
and preferred stock dividends, net earnings (before extraordinary charge
from prepayment of debt in 1995) has been added to fixed charges and that
sum has been divided by such fixed charges. Fixed charges consist of
interest expense and amortization of deferred financing costs. There are no
preferred stock dividends as no shares of preferred stock were outstanding
for the periods presented.

S-10

USE OF PROCEEDS

The net cash proceeds to the Company from the sale of Series A Preferred
Stock after payment of all underwriting discounts and commissions and expenses
of the Offering (estimated to be $500,000) will be approximately $47.9 million
($55.2 million if the Underwriters exercise their over-allotment option in
full). The Company intends to use such net proceeds to pay down a portion of its
borrowings outstanding at March 31, 1997 of $98,425,000 under its revolving line
of credit.

On July 17, 1995, the company consummated a $100,000,000 unsecured
revolving line of credit facility, which replaced a $60,000,000 secured line of
credit. The 1995 agreement was amended and restated on June 6, 1996, increasing
the facility to $150,000,000 and extending the term to July, 1999. Borrowings
presently bear interest at LIBOR plus 1.125% or, at the Company's option, at the
prime rate. Although portions of the borrowings under the Company's line of
credit will be paid down with net proceeds from the Offering, the Company
expects to incur additional indebtedness under the revolving credit facility to
finance future investments.

S-11

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as reported as of March 31, 1997, and on a pro forma basis giving effect
to the issuance of the 2,000,000 shares of Series A Preferred Stock offered
hereby (assuming the Underwriters' over-allotment option is not exercised) and
the application of the net proceeds therefrom as described in "Use of Proceeds."
The capitalization table should be read in conjunction with the Company's
condensed consolidated financial statements for the quarter ended March 31, 1997
and related notes thereto incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus.



MARCH 31, 1997
------------------------
AS REPORTED PRO FORMA
----------- ---------
(UNAUDITED)
(IN THOUSANDS)

DEBT:
Acquisition line of credit................................ $ 98,425 $ 50,500
Bank term loan............................................ 25,000 25,000
Unsecured borrowings...................................... 86,381 86,381
Secured borrowings........................................ 27,765 27,765
Subordinated convertible debentures....................... 73,225 73,225
--------- ---------
Total debt............................................. 310,796 262,871
SHAREHOLDERS' EQUITY:
Preferred stock $1.00 par value: 10,000 shares authorized,
none outstanding as reported; 2,000 shares Series A pro
forma.................................................. -- 2,000
Common stock $.10 par value; 50,000 shares authorized,
18,975 issued and outstanding.......................... 1,898 1,898
Additional paid-in capital................................ 426,705 472,630
Cumulative net earnings................................... 101,363 101,363
Cumulative dividends paid................................. (126,130) (126,130)
Unamortized restricted stock awards....................... (545) (545)
--------- ---------
Total shareholders' equity............................. 403,291 451,216
--------- ---------
TOTAL CAPITALIZATION................................... $ 714,087 $ 714,087
========= =========


S-12

SELECTED FINANCIAL AND OPERATING DATA

The following table sets forth summary operating and financial information
which should be read in conjunction with the condensed consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and the Quarterly Report on Form 10-Q
for the three-month period ended March 31, 1997, which are incorporated by
reference into this Prospectus Supplement. This data also should be read in
conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Prospectus
Supplement.



NINE-MONTH
PERIOD FROM
DATE OF
THREE-MONTH PERIOD INCORPORATION
ENDED MARCH 31 YEAR ENDED DECEMBER 31, TO
------------------- ----------------------------------------- DECEMBER 31,
1997 1996 1996 1995 1994(1) 1993 1992
---- ---- ---- ---- ------- ---- -------------
(UNAUDITED)(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

OPERATING DATA:
Revenue:
Rental income............... $ 11,420 $ 10,467 $ 42,688 $ 40,335 $ 22,142 $ 10,035 $ 2,654
Mortgage interest income.... 6,999 5,375 24,692 18,621 14,578 10,077 3,236
Other....................... 1,593 1,332 5,747 2,474 1,027 638 78
-------- -------- -------- -------- -------- -------- --------
20,012 17,174 73,127 61,430 37,747 20,750 5,968
Expenses:
Depreciation and
amortization.............. 3,569 3,375 13,693 12,995 6,684 2,743 717
Interest.................... 5,320 4,632 20,836 15,325 10,549 4,605 306
General and
administrative............ 1,134 976 4,008 3,620 2,737 1,829 521
-------- -------- -------- -------- -------- -------- --------
10,023 8,983 38,537 31,940 19,970 9,177 1,544
-------- -------- -------- -------- -------- -------- --------
Net earnings before
extraordinary charge........ 9,989 8,191 34,590 29,490 17,777 11,573 4,424
Extraordinary charge from
prepayment of debt.......... -- -- -- 6,479 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net earnings.................. $ 9,989 $ 8,191 $ 34,590 $ 23,011 $ 17,777 $ 11,573 $ 4,424
======== ======== ======== ======== ======== ======== ========
Per share:
Net earnings before
extraordinary charge...... $.53 $.49 $2.01 $1.83 $1.70 $1.78 $.68
Net earnings................ $.53 $.49 $2.01 $1.43 $1.70 $1.78 $.68
Dividends per share(2)...... $.645 $.62 $2.48 $2.36 $2.20 $2.04 $.26
Weighted average number of
shares outstanding
(000's)................... 18,708 16,885 17,196 16,071 10,451 6,513 6,464
BALANCE SHEET DATA:
Real estate properties --
net......................... $418,338 $334,287 $343,293 $336,720 $325,048 $123,753 $ 76,448
Mortgage notes receivable..... 216,586 181,277 217,474 158,290 141,360 104,641 65,831
Total investments............. 701,769 555,860 610,377 527,609 466,408 228,394 142,279
Total assets.................. 725,540 578,273 634,836 551,188 500,731 243,587 144,752
Acquisition line of credit.... 98,425 4,500 6,000 74,690 20,000 14,500 14,083
Subordinated convertible
debentures.................. 73,225 95,000 94,810 -- -- -- --
Long-term borrowings.......... 139,146 110,767 135,659 120,453 133,602 103,573 6,246
Total liabilities............. 322,248 221,308 251,829 204,059 162,188 120,873 22,241
Total shareholders' equity.... 403,291 356,965 383,007 347,129 338,543 122,714 122,511
OTHER DATA:
Number of facilities.......... 232 193 217 186 176 71 39


- ---------------
(1) The Company acquired Health Equity Properties Incorporated on September 30,
1994. (See Note 13 to the Consolidated Financial Statements for the year
ended December 31, 1996.)

(2) Dividends per share are those declared and paid during such period.

S-13

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

"Safe Harbor" Statement Under the United States Private Securities
Litigation Reform Act of 1995.

Statements that are not historical facts contained in Management's
Discussion and Analysis are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ from projected results.
Some of the factors that could cause actual results to differ materially
include: the financial strength of the operators of the Company's facilities as
it affects their continuing ability to meet their obligations to the Company
under the terms of the Company's agreements with such operators; changes in
operators or ownership of operators; government policy relating to the
healthcare industry, including changes in the reimbursement levels under the
Medicare and Medicaid programs; operators' continued eligibility to participate
in the Medicare and Medicaid programs; changes in reimbursement by other third
party payors; occupancy levels at the Company's facilities; the availability and
cost of capital; the strength and financial resources of the Company's
competitors; the Company's ability to make additional real estate investments at
attractive yields; and changes in tax laws and regulations affecting real estate
investment trusts.

Following is a discussion of the consolidated financial condition and
results of operations of the Company which should be read in conjunction with
the consolidated financial statements and accompanying notes.

RESULTS OF OPERATIONS

Quarter ended March 31, 1997 compared to Quarter ended March 31, 1996

Revenues for the quarter ended March 31, 1997 totaled $20.0 million, an
increase of $2.8 million over the period ending March 31, 1996. The 1997 revenue
growth stems primarily from additional investments of approximately $158 million
during the twelve-month period ended March 31, 1997. Real estate investments of
$671 million as of March 31, 1997 had an average yield of approximately 12.1%.

Expenses for the quarter ended March 31, 1997 totaled $10,023,000, an
increase of $1,040,000 over expenses of $8,983,000 for 1996. The provision for
depreciation and amortization for the three-month period ending March 31, 1997
totaled $3.6 million, increasing by $194,000 over the 1996 period as a result of
additional investments.

Interest expense for the quarter ended March 31, 1997 was approximately
$5.3 million, compared with $4.6 million for 1996. The increase in 1997 is
primarily due to higher average borrowings outstanding during the 1997 period.

General and administrative expenses for the three-month period ending March
31, 1997 and 1996 totaled $1,134,000 and $976,000, respectively, and represented
approximately 5.7% of revenues for each period.

No provision for Federal income taxes has been made since the Company
intends to continue to qualify as a real estate investment trust under the
provision of Section 856 through 860 of the Internal Revenue Code of 1986, as
amended. Accordingly, the Company will not be subject to Federal income taxes on
amounts distributed to shareholders provided it distributes at least 95% of its
real estate investment trust taxable income and meets certain other conditions.

Year Ended December 31, 1996 compared to Year Ended December 31, 1995

Revenues for the year ended December 31, 1996 totaled $73,127,000,
increasing $11.7 million over 1995 revenues. The 1996 revenue growth stems
primarily from additional investments during 1995 and 1996. A partial year of
revenues from 1996 investments provided revenue increases of approximately $6.1
million, while a full year of revenues from 1995 investments added $3.8 million
to revenues. Additionally, approximately $1.4 million of the revenue growth
stems from participating incremental revenues which became effective during
1996.

Total investments of $643 million as of December 31, 1996 will provide 1997
annualized operating revenues based on contractual terms of $77.8 million.
Revenues will continue at this level until additional 1997 investments are made
and additional escalation provisions commence in 1997. Annualized revenues for
1997

S-14

represent an $12.7 million increase over the 1996 annualized revenues of $65.1
million based on investments of $548 million as of January 1, 1996.

Expenses for the year ended December 31, 1996 totaled $38,537,000,
increasing $6.6 million over expenses of $31.9 million for 1995. The 1996
provision for depreciation and amortization of real estate totaled $13,693,000,
increasing $698,000 over 1995. This increase stems from additional investments
funded in 1995 and 1996.

Interest expense for the year ended December 31, 1996 was approximately
$20,836,000, compared with $15.3 million for 1995. The increase in interest
expense is due to higher average borrowings of approximately $88 million, offset
by lower interest rates and reduced amortization of debt issue costs.

General and administrative expenses for 1996 totaled $4,008,000 or
approximately 5.5% of revenues as compared to 5.9% for 1995. The 1996 percentage
decrease relates to economies of scale stemming from additional investments made
in 1996 and 1995.

Year Ended December 31, 1995 compared to Year Ended December 31, 1994

Revenues for the year ended December 31, 1995 totaled $61,430,000,
increasing $23.7 million over 1994 revenues. The 1995 revenue growth stems
primarily from additional investments during 1994 and 1995. A partial year of
revenues from 1995 investments provided revenue increases of approximately $3.3
million, while a full year of revenues from 1994 investments added $19.4 million
to revenues, including $14.3 million from the September 30, 1994 acquisition of
Health Equity Properties Incorporated ("HEP") as described in Note 13 to the
consolidated financial statements. Additionally, approximately $1.1 million of
the revenue growth stems from participating incremental revenues which became
effective during 1995.

Expenses for the year ended December 31, 1995 totaled $31,940,000,
increasing approximately $12.0 million over expenses of $20 million for 1994.
The 1995 provision for depreciation and amortization of real estate totaled
$12,995,000, increasing $6.3 million over 1994. This increase stems from a full
year provision for 1994 investments ($6 million, including $5.5 million from the
acquisition of HEP), plus a partial year of provision for 1995 investments.

Interest expense for the year ended December 31, 1995 was approximately
$15,325,000, compared with $10.5 million for 1994. The increase in interest
expense is primarily due to an increase in average outstanding borrowings on the
acquisition line of credit, partially offset by lower rates, plus interest on
debt assumed or incurred through the HEP acquisition in 1994.

General and administrative expenses for 1995 totaled $3.6 million or
approximately 5.9% of revenues as compared to 7.2% for 1994. The 1995 percentage
decrease is due to economies of scale resulting from the HEP acquisition and the
additional investments made in 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company continually seeks new investments in healthcare properties,
primarily long-term care facilities, with the objective of profitable growth and
further diversification of the investment portfolio. Permanent financing for
future investments is expected to be provided through a combination of private
and public offerings of debt and equity securities. Management believes the
Company's liquidity and various sources of available capital are adequate to
finance operations, fund future investments in additional facilities and meet
debt service requirements.

The Company has demonstrated a strong capacity to access the capital
markets by raising more than $900 million in capital since it was organized in
1992. The Company has raised more than $400 million in equity, including $130
from the initial public offering in 1992, $165 million from the HEP acquisition
in 1994 and two additional offerings, the latest completed in November 1996.
Additionally, nearly $500 million of debt capital has been raised, some of which
has been used to retire secured borrowing debt with higher interest rates. In
1996, the Company completed a placement of $95 million of 8.5% Convertible
Subordinated Debentures due 2001, and executed an agreement to increase its
current bank line of credit facility by

S-15

$50 million and to extend the term of the revolving credit agreement to July
1999. The increase in the credit facility allows for an additional $25 million
on the revolving credit facility, increasing it to $125 million, plus the
equivalent of $25 million in a pounds sterling denominated term loan due in
October 2000, for total permitted borrowings of up to $150 million.

In February 1997, the Company filed two shelf registration statements with
the Securities and Exchange Commission permitting the issuance of up to
$250,000,000 of securities. The Company registered up to $150,000,000 related to
common stock, unspecified debt, preferred stock, and convertible securities
which may be issued from time to time in connection with a Registration
Statement on Form S-3 of which this Prospectus Supplement is a part.
Additionally, the Company registered on Form S-4 common stock totaling
$100,000,000 to be issued in connection with future property acquisitions.

As of March 31, 1997, the Company had total assets of $726 million,
shareholders' equity of $403 million, and long-term borrowings of $212 million
representing approximately 30% of the total capitalization. The Company
anticipates eventually attaining and then maintaining a long-term
debt-to-capitalization ratio of approximately 40%. The Company has available
permitted additional borrowings of $26.6 million under its line of credit
arrangement.

The Company distributes a large portion of the funds from operations
available for distribution. Cash dividends paid totaled $2.48 per share for the
year ended December 31, 1996 compared with $2.36 per share for the year ended
December 31, 1995. The dividend pay-out ratio, that is the ratio of per share
amounts for dividends paid to funds from operations was 87.2% and 88.6% for the
three-month periods ended March 31, 1997 and 1996, respectively, and 87.0% for
the year ended December 31, 1996. The Company believes that cash provided from
quarterly operating activities at current levels will continue to be sufficient
to fund normal working capital requirements and pay 1997 common stock dividends
at a quarterly rate of $0.645 per share as declared in January and April 1997,
plus dividends on Series A Preferred Stock.

New investments generally are funded from temporary borrowings on the line
of credit agreement. The purpose of the acquisition line is to provide temporary
funds for investments in healthcare facilities. Interest cost incurred by the
Company on borrowings under the acquisition line will vary depending upon
fluctuations in prime and/or LIBOR rates, and upon changes in the Company's
ratings by rating agencies. The Company's borrowings under its line of credit
currently bear interest at LIBOR plus 1.125% or, at the Company's option at the
prime rate. The Company expects to periodically replace funds drawn on the
acquisition line through fixed-rate long-term borrowings, the placement of
convertible debentures, or the issuance of additional shares of capital stock.
Historically, the Company's strategy has been to match the maturity of its
indebtedness with the maturity of its assets and to employ fixed-rate long-term
debt to the extent practicable.

INDUSTRY

The long-term care industry provides sub-acute medical and custodial care
to the senior population of the United States. The demand for long-term care
comes principally from those individuals over 85 years of age. According to data
from the U.S. Census Bureau, as of January 1, 1995 there are currently 3.6
million Americans over the age of 85, comprising just over 1% of the total
population. From 1960 to 1994, the population within this age group increased at
more than five times the rate of increase for the total population. By the year
2030, it is expected that approximately 8.8 million Americans will be age 85 or
older, representing almost 3% of the total population.

The demand for long-term care will be met by several types of care
providers, including acute care hospitals, skilled nursing facilities and
assisted living facilities. The level of care required by the individual will be
a significant determinant of the type of facility that the individual chooses.

S-16

PROPERTIES

The following is a summary of the Company's investments as of March 31,
1997:

OWNED PROPERTIES



NUMBER OF NUMBER COST OF ANNUALIZED
LOCATION FACILITIES OF BEDS INVESTMENTS REVENUES(1)
- -------- ---------- ------- ------------ -----------

Alabama......................................... 9 1,121 $ 35,223,753 $ 4,104,504
Arkansas........................................ 12 1,273 37,887,832 5,000,545
Colorado........................................ 1 56 750,000 96,000
Florida......................................... 4 770 35,642,178 3,902,306
Idaho........................................... 1 40 600,000 63,000
Illinois........................................ 9 1,302 42,948,833 4,562,486
Indiana......................................... 68 3,327 101,191,398 12,560,816
Iowa............................................ 1 77 2,700,000 283,500
Kansas.......................................... 1 173 2,500,000 218,868
Kentucky........................................ 10 1,103 35,281,008 3,910,726
Louisiana....................................... 1 131 4,602,573 501,216
Massachusetts................................... 1 135 8,300,000 871,500
Missouri........................................ 1 360 9,000,000 1,160,052
North Carolina.................................. 6 805 27,418,132 2,833,888
Ohio............................................ 1 151 5,854,186 760,626
Pennsylvania.................................... 3 0 30,031,250 3,852,072
Tennessee....................................... 5 606 17,447,260 2,042,604
Texas........................................... 9 1,315 35,663,571 4,153,332
Washington...................................... 2 319 15,900,000 1,716,012
West Virginia................................... 2 182 5,437,221 706,450
--- ------ ------------ -----------
Total........................................... 147 13,246 $454,379,195 $53,300,503
=== ====== ============ ===========


- -------------------------
(1) Based upon contractual terms of leases and levels of investment at March 31,
1997.

The Company's owned properties, represented by 144 long-term care
facilities and 3 medical office buildings at March 31, 1997, are leased under
provisions of master leases with initial terms ranging from 5 to 17 years, plus
renewal options. Substantially all of the master leases provide for minimum
annual rentals which are subject to annual increases based upon increases in the
Consumer Price Index or increases in revenues of the underlying properties, with
certain maximum limits. Under the terms of the leases, the lessee is responsible
for all maintenance, repairs, taxes and insurance on the leased properties.

S-17

MORTGAGES



NUMBER OF NUMBER FACE AMOUNT CURRENT AMOUNT ANNUALIZED
LOCATION FACILITIES OF BEDS OF MORTGAGE LOANS OF MORTGAGE LOANS REVENUES(1)
- -------- ---------- ------- ----------------- ----------------- -----------

California.................... 6 571 $ 7,948,726 $ 7,642,263 $ 911,255
Florida....................... 12 1,370 43,953,750 43,924,521 5,238,680
Iowa.......................... 2 250 3,359,432 3,272,824 381,493
Kentucky...................... 3 203 4,453,692 4,416,454 482,056
Maine......................... 11 619 24,386,000 24,386,000 2,897,211
Massachusetts................. 1 33 2,114,000 2,000,994 251,157
Michigan...................... 13 1,863 58,800,000 58,800,000 9,005,164
Missouri...................... 5 330 5,600,000 5,405,739 651,516
Nevada........................ 1 73 529,316 515,670 60,109
New Mexico.................... 2 156 1,435,614 1,398,605 163,027
Ohio.......................... 7 735 20,031,888 19,419,808 2,260,520
Tennessee..................... 5 666 21,214,452 21,137,562 2,818,856
Texas......................... 16 1,913 20,874,311 20,599,117 2,459,657
Utah.......................... 1 100 1,695,329 1,651,620 192,519
Other -- construction loans... -- -- 2,181,597 2,014,601 184,312
-- ----- ------------ ------------ -----------
Total......................... 85 8,882 $218,578,107 $216,585,778 $27,957,532
== ===== ============ ============ ===========


- -------------------------
(1) Based upon contractual terms of the mortgages and principal outstanding at
March 31, 1997.

The mortgage notes are secured by first mortgage liens on the borrowers'
underlying real estate and personal property.

DESCRIPTION OF SERIES A PREFERRED STOCK

The description of the particular terms of the Series A Preferred Stock
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Preferred Stock set forth in the
accompanying Prospectus, to which description reference is hereby made.

GENERAL

Pursuant to the Company's amended and restated Articles of Incorporation
(the "Charter"), the Company is authorized to issue up to 10,000,000 shares of
preferred stock ("Preferred Stock") in one or more series, with such
designations, powers, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
and terms or conditions of redemption, in each case, if any, as are permitted by
Maryland law and as the Board of Directors may determine by adoption of an
amendment to the Charter without any further vote or action by the Company's
shareholders. As of the date of this Prospectus Supplement, no shares of
Preferred Stock were outstanding.

The following summary of the terms and provisions of the Series A Preferred
Stock does not purport to be complete and is qualified in its entirety by
reference to the pertinent sections in the Articles Supplementary creating the
Series A Preferred Stock, (the "Articles Supplementary") which has been filed as
an Exhibit to the registration statement.

MATURITY

The Series A Preferred Stock has no stated maturity and will not be subject
to any sinking fund or mandatory redemption.

S-18

RANK

The Series A Preferred Stock will, with respect to dividend rights and
rights upon liquidation, dissolution or winding up of the Company, rank (i)
senior to all classes or series of Common Stock of the Company, and to all
equity securities ranking junior to the Series A Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company; (ii) on a parity with all equity securities issued by the Company the
terms of which specifically provide that such equity securities rank on a parity
with the Series A Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Company, and (iii) junior to all
existing and future indebtedness of the Company. The term "equity securities"
does not include convertible debt securities, which will rank senior to the
Series A Preferred Stock prior to conversion.

DIVIDENDS

Holders of shares of the Series A Preferred Stock are entitled to receive,
when and as declared by the Board of Directors (or a duly authorized committee
thereof), out of funds legally available for the payment of dividends,
preferential cumulative cash dividends at the rate of 9.25% per annum of the
Liquidation Preference per share (equivalent to a fixed annual amount of $2.31
per share).

Dividends on the Series A Preferred Stock shall be cumulative from the date
of original issue and shall be payable in arrears for each quarterly period
ended July, October, January and April on or before the 15th day of August,
November, February and May of each year, or, if not a business day, the next
succeeding business day (each, a "Dividend Payment Date"). The first dividend
will be paid on August 15, 1997 with respect to the period commencing on the
date of issue and ending July 31, 1997. Any quarterly dividend payable on the
Series A Preferred Stock for any partial dividend period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Dividends will be
payable to holders of record as they appear in the stock records of the Company
at the close of business on the applicable record date, which shall be the last
day of the preceding calendar month prior to the applicable Dividend Payment
Date or such other date designated by the Board of Directors of the Company for
the payment of dividends that is not more than 30 nor less than 10 days prior to
such Dividend Payment Date (each, a "Dividend Record Date").

No dividends on shares of Series A Preferred Stock shall be declared by the
Board of Directors or paid or set apart for payment by the Company at such time
as the terms and provisions of any agreement of the Company, including any
agreement relating to its indebtedness, prohibits such declaration, payment or
setting apart for payment or provides that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default thereunder, or
if such declaration or payment shall be restricted or prohibited by law.

Notwithstanding the foregoing, dividends on the Series A Preferred Stock
will accrue whether or not the Company has earnings, whether or not there are
funds legally available for the payment of such dividends and whether or not
such dividends are declared. Accrued but unpaid dividends on the Series A
Preferred Stock will not bear interest and holders of the Series A Preferred
Stock will not be entitled to any distributions in excess of full cumulative
distributions described above. Except as set forth in the next sentence, no
dividends will be declared or paid or set apart for payment on any capital stock
of the Company or any other series of Preferred Stock ranking, as to dividends,
on a parity with or junior to the Series A Preferred Stock (other than a
dividend in shares of the Company's Common Stock or in shares of any other class
of stock ranking junior to the Series A Preferred Stock as to dividends and upon
liquidation) for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment on the Series A Preferred Stock
for all past dividend periods and the then current dividend period. When
dividends are not paid in full (or a sum sufficient for such full payment is not
so set apart) upon the Series A Preferred Stock and the shares of any other
series of Preferred Stock ranking on a parity as to dividends with the Series A
Preferred Stock, all dividends declared upon the Series A Preferred Stock and
any other series of Preferred Stock ranking on a parity as to dividends with the
Series A Preferred Stock shall be declared pro rata so that the amount of
dividends declared per share of Series A Preferred Stock and such other series
of Preferred Stock, shall in all cases bear to each other the

S-19

same ratio that accrued dividends per share on the Series A Preferred Stock and
such other series of Preferred Stock (which shall not include any accrual in
respect of unpaid dividends for prior dividend periods if such Preferred Stock
does not have a cumulative dividend) bear to each other.

Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series A Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for all past dividend periods and the
then current dividend period, no dividends (other than in shares of Common Stock
or other shares of capital stock ranking junior to the Series A Preferred Stock
as to dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Common
Stock, or any other capital stock of the Company ranking junior to or on a
parity with the Series A Preferred Stock as to dividends or upon liquidation,
nor shall any shares of Common Stock, or any other shares of capital stock of
the Company ranking junior to or on a parity with the Series A Preferred Stock
as to dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such shares) by the Company (except by conversion
into or exchange for other capital stock of the Company ranking junior to the
Series A Preferred Stock as to dividends and upon liquidation or redemptions for
the purpose of preserving the Company's qualification as a REIT). Holders of
shares of the Series A Preferred Stock shall not be entitled to any dividend,
whether payable in cash, property or stock, in excess of full cumulative
dividends on the Series A Preferred Stock as provided above. Any dividend
payment made on shares of the Series A Preferred Stock shall first be credited
against the earliest accrued but unpaid dividend due with respect to such shares
which remains payable.

LIQUIDATION PREFERENCE

Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, the holders of shares of Series A Preferred Stock
are entitled to be paid out of the assets of the Company legally available for
distribution to its shareholders a liquidation preference of $25 per share, plus
an amount equal to any accrued and unpaid dividends to the date of payment, but
without interest, before any distribution of assets is made to holders of Common
Stock or any other class or series of capital stock of the Company that ranks
junior to the Series A Preferred Stock as to liquidation rights. Holders of
Series A Preferred Stock will be entitled to written notice of any event
triggering the right to receive such Liquidation Preference. After payment of
the full amount of the Liquidation Preference, plus any accrued and unpaid
dividends to which they are entitled, the holders of Series A Preferred Stock
will have no right or claim to any of the remaining assets of the Company. The
consolidation or merger of the Company with or into any other corporation, trust
or entity or of any other corporation with or into the Company, or the sale,
lease or conveyance of all or substantially all of the property or business of
the Company, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Company.

In determining whether a distribution (other than upon voluntary or
involuntary liquidation) by dividend, redemption or other acquisition of shares
of stock of the Company or otherwise is permitted under the Maryland General
Corporation Law (the "MGCL") no effect shall be given to amounts that would be
needed, if the Company were to be dissolved at the time of the distribution, to
satisfy the preferential rights upon distribution of holders of shares of stock
of the Company whose preferential rights upon distribution are superior to those
receiving the distribution.

REDEMPTION

The Series A Preferred Stock is not redeemable prior to July 1, 2002.
However, in order to ensure that the Company will continue to meet the
requirements for qualification as a REIT, the Company will have the right to
purchase from the holder any shares of Series A Preferred Stock in excess of
9.9% of the value of the outstanding capital stock of the Company (the "Excess
Shares"). See "-- Restrictions on Ownership." On and after July 1, 2002, the
Company, at its option, upon not less than 30 nor more than 60 days' written
notice, may redeem shares of the Series A Preferred Stock, in whole or in part,
at any time or from time to time, for cash at a redemption price of $25 per
share, plus all accrued and unpaid dividends thereon to the date fixed for
redemption (except with respect to Excess Shares. See "-- Restrictions on
Ownership."), without interest.

S-20

Holders of Series A Preferred Stock to be redeemed shall surrender such Series A
Preferred Stock at the place designated in such notice and shall be entitled to
the redemption price and any accrued and unpaid dividends payable upon such
redemption following such surrender. If notice of redemption of any shares of
Series A Preferred Stock has been given and if the funds necessary for such
redemption have been set aside by the Company in trust for the benefit of the
holders of any shares of Series A Preferred Stock so called for redemption, then
from and after the redemption date dividends will cease to accrue on such shares
of Series A Preferred Stock, such shares of Series A Preferred Stock shall no
longer be deemed outstanding and all rights of the holders of such shares will
terminate, except the right to receive the redemption price. If less than all of
the outstanding Series A Preferred Stock is to be redeemed, the Series A
Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be
practicable without creating fractional shares) or by any other equitable method
determined by the Company.

Unless full cumulative dividends on all shares of Series A Preferred Stock
shall have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past dividend
periods and the then current dividend period, no shares of Series A Preferred
Stock shall be redeemed unless all outstanding shares of Series A Preferred
Stock are simultaneously redeemed and the Company shall not purchase or
otherwise acquire directly or indirectly any shares of Series A Preferred Stock
(except by exchange for capital stock of the Company ranking junior to the
Series A Preferred Stock as to dividends and upon liquidation); provided,
however, that the foregoing shall not prevent the purchase by the Company of
Excess Shares in order to ensure that the Company continues to meet the
requirements for qualification as a REIT, or the purchase or acquisition of
shares of Series A Preferred Stock pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding shares of Series A Preferred
Stock. So long as no dividends are in arrears, the Company shall be entitled at
any time and from time to time to repurchase shares of Series A Preferred Stock
in open-market transactions duly authorized by the Board of Directors and
effected in compliance with applicable laws.

Notice of redemption will be given by publication in a newspaper of general
circulation in the City of New York, such publication to be made once a week for
two successive weeks commencing not less than 30 nor more than 60 days prior to
the redemption date. A similar notice will be mailed by the Company, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series A Preferred Stock to
be redeemed at their respective addresses as they appear on the stock transfer
records of the Company. No failure to give such notice or any defect therein or
in the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of Series A Preferred Stock except as to the holder to
whom notice was defective or not given. Each notice shall state: (i) the
redemption date; (ii) the redemption price; (iii) the number of shares of Series
A Preferred Stock to be redeemed; (iv) the place or places where the Series A
Preferred Stock is to be surrendered for payment of the redemption price; and
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. If less than all of the Series A Preferred Stock held by any
holder is to be redeemed, the notice mailed to such holder shall also specify
the number of shares of Series A Preferred Stock held by such holder to be
redeemed.

Immediately prior to any redemption of Series A Preferred Stock, the
Company shall pay, in cash, any accumulated and unpaid dividends through the
redemption date, unless a redemption date falls after a Dividend Record Date and
prior to the corresponding Dividend Payment Date, in which case each holder of
Series A Preferred Stock at the close of business on such Dividend Record Date
shall be entitled to the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares before such
Dividend Payment Date.

The Series A Preferred Stock has no stated maturity and will not be subject
to any sinking fund or mandatory redemption. However, in order to ensure that
the Company continues to meet the requirements for qualification as a REIT,
Series A Preferred Stock acquired by a shareholder, actually or constructively,
in excess of 9.9% of the value of the outstanding capital stock of the Company
will automatically become Excess Shares, and the Company will have the right to
purchase such Excess Shares from the holder. In addition, Excess Shares may be
redeemed, in whole or in part, at any time when outstanding shares of Series A
Preferred Stock are being redeemed, for cash at a redemption price of $25 per
share, but excluding accrued

S-21

and unpaid dividends on such Excess Shares, without interest. Such Excess Shares
shall be redeemed in such proportion and in accordance with such procedures as
shares of Series A Preferred Stock are being redeemed.

VOTING RIGHTS

Holders of the Series A Preferred Stock will not have any voting rights,
except as set forth below.

Whenever dividends on any shares of Series A Preferred Stock shall be in
arrears for eighteen or more months (a "Preferred Dividend Default"), the number
of directors then constituting the Board of Directors shall be increased by two
(if not already increased by reason of a similar arrearage with respect to any
Parity Preferred (as hereinafter defined), the holders of such shares of Series
A Preferred Stock (voting separately as a class with all other series of
Preferred Stock ranking on a parity with the Series A Preferred Stock as to
dividends or upon liquidation (and upon which like voting rights have been
conferred and are exercisable ("Parity Preferred")) will be entitled to vote
separately as a class, in order to fill the vacancies thereby created, for the
election of a total of two additional directors of the Company (the "Preferred
Stock Directors") at a special meeting called by the holders of record of at
least 20% of the Series A Preferred Stock or the holders of record of at least
20% of any series of Parity Preferred so in arrears (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of shareholders) or at the next annual meeting of shareholders, and at
each subsequent annual meeting until all dividends accumulated on such shares of
Series A Preferred Stock and Parity Preferred for the past dividend periods and
the dividend for the then current dividend period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
the event the directors of the Company are divided into classes, each such
vacancy shall be apportioned among the classes of directors to prevent stacking
in any one class and to insure that the number of directors in each of the
classes of directors, are as equal as possible. Each Preferred Stock Director,
as a qualification for election as such (and regardless of how elected) shall
submit to the Board of Directors of the Company a duly executed, valid, binding
and enforceable letter of resignation from the Board of Directors, to be
effective upon the date upon which all dividends accumulated on such shares of
Series A Preferred Stock and Parity Preferred for the past dividend periods and
the dividend for the then current dividend period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment,
whereupon the terms of office of all persons elected as Preferred Stock
Directors by the holders of the Series A Preferred Stock and any Parity
Preferred shall, upon the effectiveness of their respective letters of
resignation, forthwith terminate, and the number of directors then constituting
the Board of Directors shall be reduced accordingly. A quorum for any such
meeting shall exist if at least a majority of the outstanding shares of Series A
Preferred Stock and shares of Parity Preferred upon which like voting rights
have been conferred and are exercisable are represented in person or by proxy at
such meetings. Such Preferred Stock Directors shall be elected upon the
affirmative vote of a plurality of the shares of Series A Preferred Stock and
such Parity Preferred present and voting in person or by proxy at a duly called
and held meeting at which a quorum is present. If and when all accumulated
dividends and the dividend for the then current dividend period on the Series A
Preferred Stock shall have been paid in full or declared and set aside for
payment in full, the holders thereof shall be divested of the foregoing voting
rights (subject to revesting in the event of each and every Preferred Dividend
Default) and, if all accumulated dividends and the dividend for the then current
dividend period have been paid in full or declared and set aside for payment in
full on the Series A Preferred Stock and all series of Parity Preferred upon
which like voting rights have been conferred and are exercisable, the term of
office of each Preferred Stock Director so elected shall terminate. Any
Preferred Stock Director may be removed at any time with or without cause by,
and shall not be removed otherwise than by the vote of, the holders of record of
a majority of the outstanding shares of the Series A Preferred Stock when they
have the voting rights described above (voting separately as a class with all
series of Parity Preferred upon which like voting rights have been conferred and
are exercisable). So long as a Preferred Dividend Default shall continue, any
vacancy in the office of a Preferred Stock Director may be filled by written
consent of the Preferred Stock Director remaining in office, or if none remains
in office, by a vote of the holders of record of a majority of the outstanding
shares of Series A Preferred Stock when they have the voting rights described
above (voting separately as a class with all series of Parity Preferred upon
which like voting rights have been conferred and are exercisable). The Preferred
Stock Directors shall each be entitled to one vote per director on any matter.

S-22

So long as any shares of Series A Preferred Stock remain outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least two-thirds of the shares of the Series A Preferred Stock outstanding at
the time, given in person or by proxy, either in writing or at a meeting (voting
separately as a class), amend, alter or repeal the provisions of the Charter or
the Articles Supplementary, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of the Series A Preferred Stock or the holders
thereof; including without limitation, the creation of any series of Preferred
Stock ranking senior to the Series A Preferred Stock with respect to payment of
dividends or the distribution of assets upon liquidation, dissolution or winding
up; provided, however, that with respect to the occurrence of any Event set
forth above, so long as the Series A Preferred Stock (or any equivalent class or
series of stock issued by the surviving corporation in any merger or
consolidation to which the Company became a party) remains outstanding with the
terms thereof materially unchanged, the occurrence of any such Event shall not
be deemed to materially and adversely affect such rights, preferences,
privileges or voting power of holders of the Series A Preferred Stock and
provided, further that (i) any increase in the amount of the authorized
Preferred Stock or the creation or issuance of any other series of Preferred
Stock, or (ii) any increase in the amount of the authorized shares of such
series, in each case ranking on a parity with or junior to the Series A
Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers.

The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Series A Preferred Stock shall have been
redeemed or called for redemption upon proper notice and sufficient funds shall
have been deposited in trust to effect such redemption.

Except as expressly stated in the Articles Supplementary, the Series A
Preferred Stock will not have any relative, participating, optional or other
special voting rights and powers, and the consent of the holders thereof shall
not be required for the taking of any corporate action, including but not
limited to, any merger or consolidation involving the Company or a sale of all
or substantially all of the assets of the Company, irrespective of the effect
that such merger, consolidation or sale may have upon the rights, preferences or
voting power of the holders of the Series A Preferred Stock.

CONVERSION

The Series A Preferred Stock is not convertible into or exchangeable for
any other property or securities of the Company.

RESTRICTIONS ON OWNERSHIP

If the Board of Directors shall, at any time and in good faith, be of the
opinion that actual or constructive ownership of at least 9.9% or more of the
value of the outstanding capital stock of the Company, has or may become
concentrated in the hands of one owner, the Board of Directors shall have the
power (i) by means deemed equitable by it to call for the purchase from any
holder of Series A Preferred Stock of the Company that number of shares of
Series A Preferred Stock sufficient, in the opinion of the Board of Directors,
to maintain or bring the actual or constructive ownership of such owner to a
level of no more than 9.9% of the value of the outstanding capital stock of the
Company, and (ii) to refuse to transfer or issue shares of Series A Preferred
Stock to any person whose acquisition of such shares of Series A Preferred Stock
would, in the opinion of the Board of Directors, result in the actual or
constructive ownership by that person of more than 9.9% of the value of the
outstanding capital stock of the Company. The purchase price for any shares of
Series A Preferred Stock so redeemed shall be equal to the fair market value of
the shares reflected in the closing sales price for the sales, if then listed on
a national securities exchange, or if the shares are not then listed on a
national securities exchange, the purchase price shall be equal to the
redemption price of shares of Series A Preferred Stock. From and after the date
fixed for purchase by the Board of Directors, the holder of any shares so called
for purchase shall cease to be entitled to distributions and other benefits with
respect to such shares, except the right to payment of the purchase price for
the shares. Any transfer of Series A Preferred Stock that would create an actual
or constructive owner of more than 9.9% of the value of the outstanding shares
of capital stock of the Company shall be deemed void ab initio and the intended
transferee shall be deemed never to have had an interest therein. If the
foregoing provision is determined to be void or

S-23

invalid by virtue of any legal decision, statute, rule or regulation, then the
transferee of such Series A Preferred Stock shall be deemed, at the option of
the Company, to have acted as agent on behalf of the Company in acquiring such
shares and to hold such shares on behalf of the Company.

The Company and its transfer agent may refuse to transfer any shares of
Series A Preferred Stock passing either by voluntary transfer, by operation of
law, or under the last will and testament of any shareholder if such transfer
would or might, in the opinion of the Board of Directors or counsel to the
Company, disqualify the Company as a REIT under the Code. Nothing herein
contained shall limit the ability of the Company to impose or seek judicial or
other imposition of additional restrictions if deemed necessary or advisable to
preserve the Company's tax status as a qualified REIT.

TRANSFER AND DIVIDEND PAYING AGENT

First Chicago Trust Company of New York will act as the transfer and
dividend payment agent in respect of the Series A Preferred Stock

BOOK ENTRY, DELIVERY AND FORM

The depository will be The Depository Trust Company ("DTC") and its nominee
will be Cede & Co. ("Cede"). Accordingly, Cede is expected to be the initial
registered holder of the Series A Preferred Stock which will be represented by
one or more global certificates issued in the name of Cede (the "Global
Preferred Security"). No person that acquires an interest in such Series A
Preferred Stock will be entitled to receive a certificate representing such
person's interest in such Series A Preferred Stock except as set forth herein.
Unless and until definitive Series A Preferred Stock is issued under the limited
circumstances described herein, all references to actions by holders of Series A
Preferred Stock issued in global form shall refer to actions taken by DTC upon
instructions from its Participants (as defined below), and all references herein
to payments and notices to such holders shall refer to payments and notices to
DTC or Cede, as the registered holder of such Series A Preferred Stock.

DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act, and was created to hold
securities for its participating organizations ("Participants") and to
facilitate the clearance and settlement of securities transactions among
Participants through electronic book-entry, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations, and may include
certain other organizations. Indirect access to the DTC system also is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").

Holders that are not Participants or Indirect Participants but that desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
Series A Preferred Stock may do so only through Participants and Indirect
Participants. Under a book-entry format, holders may experience some delay in
their receipt of payments, as such payments will be forwarded by the agent
designated by the Transfer Agent to Cede, as nominee for DTC. DTC will forward
such payments to its Participants, which thereafter will forward them to
Indirect Participants or holders. Holders will not be recognized by the Company
as registered holders of the Series A Preferred Stock entitled to the benefits
of the terms of the Series A Preferred Stock. Holders that are not Participants
will be permitted to exercise their rights as such only indirectly through and
subject to the procedures of Participants and, if applicable, Indirect
Participants.

Under the rules, regulations and procedures creating and affecting DTC and
its operations as currently in effect (the "Rules"), DTC will be required to
make book-entry transfers of Series A Preferred Stock among Participants and to
receive and transmit payments to Participants. Participants and Indirect
Participants with which holders have accounts with respect to the Series A
Preferred Stock similarly are required by the Rules to make book-entry transfers
and receive and transmit such payments on behalf of their respective holders.

S-24

Because DTC can act only on behalf of Participants, who in turn act only on
behalf of holders or Indirect Participants, and on behalf of certain banks,
trust companies and other persons approved by it, the ability of a holder to
pledge Series A Preferred Stock to persons or entities that do not participate
in the DTC system, or to otherwise act with respect to such Series A Preferred
Stock, may be limited due to the absence of physical certificates for such
Series A Preferred Stock.

DTC will take any action permitted to be taken by a registered holder of
any Series A Preferred Stock under the terms of the Series A Preferred Stock
only at the direction of one or more Participants to whose accounts with DTC
such Series A Preferred Stock are credited.

GLOBAL PREFERRED SECURITIES; CERTIFICATED SECURITIES

A Global Preferred Security will be exchangeable for the relevant
definitive Series A Preferred Stock registered in the names of persons other
than DTC or its nominee only if (i) any person having a beneficial interest in
the Global Preferred Security requests that the transfer and dividend paying
agent exchange such beneficial interest for Series A Preferred Stock in
definitive form, (ii) DTC notifies the Company that it is unwilling or unable to
continue as depository for such Global Preferred Security or if at any time DTC
ceases to be a clearing agency registered under the Exchange Act at a time when
DTC is required to be so registered in order to act as such depository or, (iii)
the Company in its sole discretion determines that the Global Preferred Security
will be so exchangeable. Any Global Preferred Security that is exchangeable
pursuant to the preceding sentence will be exchangeable for definitive
certificates registered in such names as DTC directs. If Series A Preferred
Stock is issued in definitive form, such Series A Preferred Stock will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below.

Upon the occurrence of any event described in the immediately preceding
paragraph, DTC is generally required to notify all Participants of the
availability through DTC of definitive Series A Preferred Stock. Upon surrender
by DTC of the Global Preferred Security representing the Series A Preferred
Stock and delivery of instructions for re-registration, the Transfer Agent will
reissue the Series A Preferred Stock as definitive Series A Preferred Stock, and
thereafter the Company will recognize the holders of such definitive Series A
Preferred Stock as registered holders of Series A Preferred Stock entitled to
the benefits of the terms of the Series A Preferred Stock.

Except as described above, the Global Preferred Security may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or to a successor depository appointed by the
Company. Except as described above, DTC may not sell, assign, transfer or
otherwise convey any beneficial interest in a Global Preferred Security
evidencing all or part of the Series A Preferred Stock unless such beneficial
interest is in an amount equal to an authorized denomination for the Series A
Preferred Stock.

PAYMENT AND PAYING AGENCY

Payments in respect of the Series A Preferred Stock will be made to the
depository, which will credit the relevant accounts at the depository on the
applicable Distribution Dates or, if any Series A Preferred Stock is not held by
the depository, such payments will be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the securities register
relating to the Series A Preferred Stock.

Payments on Series A Preferred Stock represented by a Global Preferred
Security will be made to DTC, as the depository for the Series A Preferred
Stock. If Series A Preferred Stock is issued in definitive form, the amounts
payable in respect of the Series A Preferred Stock will be payable, the transfer
of the Series A Preferred Stock will be registrable, and Series A Preferred
Stock will be exchangeable for Series A Preferred Stock of other denominations
of a like aggregate Liquidation Amount, at the offices of any paying agent or
transfer agent appointed by the Company, provided that payment of any
Distributions may be made at the option of the Company by check mailed to the
address of the persons entitled thereto or by wire transfer.

S-25

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following summary of certain federal income tax considerations to
holders of Series A Preferred Stock is based on current law, is for general
information only, and is not tax advice. All references herein to "shareholders"
shall mean or include holders of Series A Preferred Stock and all references to
"stock" shall mean or include Series A Preferred Stock, unless otherwise
indicated. The tax treatment of a holder of Series A Preferred Stock will vary
depending upon such holder's particular situation, and this discussion does not
purport to deal with all aspects of taxation that may be relevant to particular
shareholders in light of their personal investment or tax circumstances, or to
certain types of shareholders subject to special treatment under the federal
income tax laws, including, without limitation, life insurance companies,
certain financial institutions, dealers in securities or currencies,
shareholders holding Series A Preferred Stock as part of a conversion
transaction, as part of a hedge or hedging transaction, or as a position in a
straddle for tax purposes, tax-exempt organizations, foreign corporations,
foreign partnerships and persons who are not citizens or residents of the United
States. In addition, the summary below does not consider the effects of any
foreign, state, local or other tax laws that may be applicable to prospective
holders of Series A Preferred Stock.

A general summary of certain federal income tax considerations to holders
of Series A Preferred Stock is provided under the headings "Taxation of
Shareholders-General," "Taxation of Tax-Exempt Shareholders" and "Taxation of
Non-U.S. Shareholders." The taxation of the Company and the impact on the
Company of its election to be taxed as a REIT are discussed under the heading
"Taxation of the Company."

EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH HIS OWN TAX ADVISOR
REGARDING THE TAX CONSEQUENCES TO HIM OF THE ACQUISITION, OWNERSHIP AND SALE OF
SERIES A PREFERRED STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND SALE AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.

REDEMPTION OF SERIES A PREFERRED STOCK

Cash Redemption of Series A Preferred Stock. A cash redemption of shares of
the Series A Preferred Stock will be treated under Section 302 of the Code as a
distribution taxable as a dividend (to the extent of the Company's current and
accumulated earnings and profits) at ordinary income rates unless the redemption
satisfies one of the tests set forth in Section 302(b) of the Code and is
therefore treated as a sale or exchange of the redeemed shares. The cash
redemption will be treated as a sale or exchange if it (i) is "substantially
disproportionate" with respect to the holder, (ii) results in a "complete
termination" of the holder's stock interest in the Company, or (iii) is "not
essentially equivalent to a dividend" with respect to the holder, all within the
meaning of Section 302(b) of the Code. In determining whether any of these tests
have been met, shares of capital stock (including Common Stock and other equity
interests in the Company) considered to be owned by the holder by reason of
certain constructive ownership rules set forth in the Code, as well as shares of
capital stock actually owned by the holder, must generally be taken into
account. Because the determination as to whether any of the alternative tests of
Section 302(b) of the Code will be satisfied with respect to any particular
holder of the Series A Preferred Stock depends upon the facts and circumstances
at the time that the determination must be made, prospective holders of the
Series A Preferred Stock are advised to consult their own tax advisors to
determine such tax treatment.

If a cash redemption of shares of the Series A Preferred Stock is not
treated as a distribution taxable as a dividend to a particular holder, it will
be treated, as to that holder, as a taxable sale or exchange. As a result, such
holder will recognize gain or loss for federal income tax purposes in an amount
equal to the difference between (i) the amount of cash and the fair market value
of any property received (less any portion thereof attributable to accumulated
and declared but unpaid dividends, which will be taxable as a dividend to the
extent of the Company's current and accumulated earnings and profits), and (ii)
the holder's adjusted basis in the shares of the Series A Preferred Stock for
tax purposes. Such gain or loss will be capital gain or loss if the shares of
the Series A Preferred Stock have been held as a capital asset, and will be
long-term gain or loss if such shares have been held for more than one year.

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If a cash redemption of shares of the Series A Preferred Stock is treated
as a distribution taxable as a dividend, the amount of the distribution will be
measured by the amount of cash and the fair market value of any property
received by the holder. The holder's adjusted basis in the redeemed shares of
the Series A Preferred Stock for tax purposes will be transferred to the
holder's remaining shares of capital stock in the Company, if any. If the holder
owns no other shares of capital stock in the Company, such basis may, under
certain circumstances, be transferred to a related person or it may be lost
entirely.

TAXATION OF THE COMPANY

General. The Company has elected to be taxed as a REIT under Sections 856
through 860 of the Code. The Company believes that it has been organized and has
operated in such a manner as to qualify for taxation as a REIT under the Code
and the Company intends to continue to operate in such a manner, but no
assurance can be given that the Company has operated or will be able to continue
to operate in a manner so as to qualify or remain qualified.

The sections of the Code that govern the Federal income tax treatment of a
REIT are highly technical and complex. The following sets forth the material
aspects of those sections. This summary in qualified in its entirety by the
applicable Code provisions, rules and regulations promulgated thereunder, and
administrative and judicial interpretations thereof.

In the opinion of Argue Pearson Harbison & Myers, LLP, whose opinion has
been filed as an Exhibit to the Registration Statement of which the Prospectus
is a part, the Company is organized in conformity with the requirements for
qualifications as a REIT, and its proposed method of operation will enable it to
continue to meet the requirements for continued qualification and taxation as a
REIT under the Code. This opinion is based on various assumptions and is
conditioned upon certain representations made by the Company as to factual
matters. In addition, this opinion is based upon the factual representations of
the Company concerning its business and properties set forth in the Prospectus.
Moreover, such qualification and taxation as a REIT depends upon the Company's
ability to meet, through actual annual operating results, distribution levels
and diversity of stock ownership, and the various qualification tests imposed
under the Code discussed below, the results of which have not and will not be
reviewed by Argue Pearson Harbison & Myers. Accordingly, no assurance can be
given that the various results of the Company's operation for any particular
taxable year will satisfy such requirements. Further, such requirements may be
changed, perhaps retroactively, by legislative or administrative actions at any
time. The Company has neither sought nor obtained any formal ruling from the
Internal Revenue Service regarding its qualification as a REIT and presently has
no plan to apply for any such ruling. See " -- Failure to Qualify."

If the Company qualifies for taxation as a REIT, it generally will not be
subject to Federal corporate income taxes on its net income that is currently
distributed to shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder levels) that generally results from
investment in a corporation. However, the Company will be subject to Federal
income tax as follows: First, the Company will be taxed at regular corporate
rates on any undistributed REIT taxable income, including undistributed net
capital gains; provided, however, that if the Company has a net capital gain, it
will be taxed at regular corporate rates on its undistributed REIT taxable
income, computed without regard to net capital gain and the deduction for
capital gains dividends, plus a 35% tax on undistributed net capital gain, if
its tax as thus computed is less than the tax computed in the regular manner.
Second, under certain circumstances, the Company may be subject to the
"alternative minimum tax" on its items of tax preference. Third, if the Company
has (i) net income from the sale or other disposition of "foreclosure property"
which is held primarily for sale to customers in the ordinary course of business
or (ii) other nonqualifying income from foreclosure property, it will be subject
to tax at the highest regular corporate rate on such income. Fourth, if the
Company has net income from prohibited transactions (which are, in general,
certain sales or other dispositions of property (other than foreclosure
property) held primarily for sale to customers in the ordinary course of
business by the Company, (i.e., when the Company is acting as a dealer)), such
income will be subject to a 100% tax. Fifth, if the Company should fail to
satisfy the 75% gross income test or the 95% gross income test (as discussed
below), but has nonetheless maintained its qualification as a REIT because
certain other requirements have been met, it will be subject to a 100% tax on an
amount equal to (a) the gross income

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attributable to the greater of the amount by which the Company fails the 75% or
95% test, multiplied by (b) a fraction intended to reflect the Company's
profitability. Sixth, if the Company should fail to distribute by the end of
each year at least the sum of (i) 85% of its REIT ordinary income for such year,
(ii) 95% of its REIT capital gain net income for such year, and (iii) any
undistributed taxable income from prior periods, the Company will be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. Seventh, if the Company acquires any asset (a "Built-In
Gain Asset") from a C corporation (i.e. generally a corporation subject to full
corporate-level tax) in a transaction in which the basis of the Built-In Gain
Asset in the Company's hands is determined by reference to the basis of the
asset (or any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the 10-year period (the
"Recognition Period") beginning on the date on which such asset was acquired by
the Company, then, to the extent of the Built-In Gain (i.e., the excess of (a)
the fair market value of such asset on the date such asset was acquired by the
Company over (b) the Company's adjusted basis in such asset on such date), such
gain will be subject to tax at the highest regular corporate rate pursuant to
Treasury Regulations that have not yet been promulgated. The results described
above with respect to the recognition of Built-In Gain assume the Company will
make an election pursuant to IRS Notice 88-19.

Requirements for Qualifications. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest; (3) which would be taxable as
a domestic corporation, but for Sections 856 through 859 of the Code; (4) which
is neither a financial institution nor an insurance company subject to the
provisions of the Code; (5) the beneficial ownership of which is held by 100 or
more persons; (6) during the last half year of each taxable year not more than
50% in value of the outstanding stock of which is owned, actually or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities, the "not closely held requirement"); and (7) which meets
certain other tests, described below, regarding the nature of its income and
assets and the amount of it annual distributions to shareholders. The Code
provides that conditions (1) to (4), inclusive, must be met during the entire
taxable year and that condition (5) must be met during at least 335 days of a
taxable year of twelve months, or during a proportionate part of a taxable year
of less than twelve months. For purposes of conditions (5) and (6), pension
funds and certain other tax-exempt entities are treated as individuals, subject
to a "look-through" exception in the case of condition (6).

Income Tests. In order to maintain its qualification as a REIT, the Company
annually must satisfy three gross income requirements. First, at least 75% of
the Company's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investment
relating to real property or mortgages on real property (including generally
"rents from real property," interest on mortgages on real property and gains on
sale of real property) and income derived from certain types of temporary
investments. Second, at least 95% of the Company's gross income (excluding gross
income from prohibited transactions) for each taxable year must be derived from
such real property investments, dividends, interest and gain from the sale or
disposition of stock or securities other than property held for sale to
customers in the ordinary course of business (from any combination of the
foregoing). Third, short term gain from the sale or other disposition of stock
or securities, gain from prohibited transactions and gain the sale or other
disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must represent less
than 30% of the Company's gross income (including gross income from prohibited
transactions) for each taxable year.

Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of the rent must not be based in
whole or in part on the income or profits of any person. However, any amount
received or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts of sales. Second, the Code provides that rents received
from a tenant will not qualify as "rents from real property" in satisfying the
gross income tests if the REIT, or an owner (actually or constructively) of 10%
or more of the value of the REIT, actually or constructively owns 10% or more of
the value or voting power of such tenant (a "Related Party Tenant"). Third, if
rent attributable to personal property, leased in connection with a lease of
real property, is greater than 15% of the

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total rent received under the lease, then the portion of rent attributable to
such personal property will not qualify as "rents from real property." Finally,
for rents received to qualify as "rents from real property," the REIT generally
must not operate or manage the property or furnish or render services to the
tenants of such property, other than through an independent contractor for whom
the REIT derives no revenue. The REIT may, however, directly perform certain
services that are "usually or customarily rendered" in connection with the
rental of space for occupance only and are not otherwise considered "rendered to
the occupant" of the property.

The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of gross
receipts or sales. Generally, if a loan is secured by both personal property and
real property, interest must be allocated between the personal property and the
real property, with only the interest allocable to the real property qualifying
as mortgage interest under the 75% gross income test. Treasury Regulations
provide that if a loan is secured by both personal and real property and the
fair market value of the real property as of the commitment date equals or
exceeds the amount of the loan, the entire interest amount will qualify under
the 75% gross income test. If the amount of the loan exceeds the fair market
value of the real property, the interest income is allocated between real
property and personal property based on the relative fair market value of each.
Under certain circumstances, income from shared appreciation mortgages may
qualify under the REIT gross income requirements. If the Company fails to
satisfy one or both of the 75% or 95% gross income tests for any taxable year,
it may nevertheless qualify as a REIT for such year if it is entitled to relief
under certain provisions of the Code. These relief provisions will be generally
available if the Company's failure to meet such tests was due to reasonable
cause and not due to willful neglect, the Company attaches a schedule of the
sources of its income to its return, and any incorrect information on the
schedule was not due to fraud with intent to evade tax. It is not possible,
however, to state whether in all circumstances the Company would be entitled to
the benefit of these relief provisions. If these relief provisions apply, a
special 100% tax is imposed (see "General"). No similar mitigation provision
provides relief if the Company fails the 30% income test. In such case, the
Company would cease to qualify as a REIT.

Asset Tests. The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by real
estate assets (including (i) its allocable share of real estate assets held by
partnerships in which the Company owns an interest and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Company),
cash, cash items and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those of the
75% asset class. Third, of the investments included in the 25% asset class, the
value of any one issuer's securities owned by the Company may not exceed 5% of
the value of the Company's total assets and the Company may not own more than
10% of any one issuer's outstanding voting securities.

After initially meeting the asset tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy any of the
asset tests at the end of a later quarter solely by reason of changes in asset
values. If the failure to satisfy the asset tests results from an acquisition of
securities or other property during a quarter, the failure can be cured by
disposition of sufficient nonqualifying assets within 30 days after the close of
that quarter. The Company intends to maintain adequate records of the value of
its assets to ensure compliance with the asset tests, and to take such other
action within 30 days after the close of any quarter as may be required to cure
any noncompliance.

Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its shareholders in an amount of at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Company's net capital gain) and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of noncash income. In addition, if the Company disposes of any Built-In
Gain Asset during its Recognition Period, the Company will be required, pursuant
to

S-29

Treasury Regulations which have not yet been promulgated, to distribute at least
95% of the Built-In Gain (after tax), if any, recognized on the disposition of
such asset. Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before the Company timely
files its tax return for such year and if paid on or before the first regular
dividend payment after such declaration. The Company may also be entitled to pay
and deduct deficiency dividends in later years as a relief measure to correct
errors in determining its taxable income. In addition, such distributions are
required to be made pro rata, with no preference to any share of stock as
compared with other shares of the same class, and with no preference to one
class of stock as compared with another class except to the extent that such
class is entitled to such a preference. To the extent that the Company does not
distribute all of its net capital gain or distributions of at least 95%, but
less than 100% of its "REIT taxable income," as adjusted, it will be subject to
tax thereon at regular ordinary and capital gain corporate tax rates. The
Company intends to make timely distributions sufficient to satisfy these annual
distribution requirements.

The availability of the Company of, among other things, depreciation
deductions with respect to its owned facilities depends upon the treatment of
the Company as the owner of such facilities for federal income tax purposes, and
the classification of the leases with respect to such facilities as "true
leases" rather than financing arrangements for federal income tax purposes. The
questions of whether the Company is the owner of such facilities and whether the
leases are true leases for federal tax purposes are essentially factual matters.
The Company believes and it is the opinion of tax counsel to the Company, that
the Company will be treated as the owner of each of the facilities that it
leases, and such leases will be treated as true leases for federal income tax
purposes. This opinion is not binding on the IRS, however, and no assurances can
be given that the IRS may not successfully challenge the status of the Company
as the owner of its facilities subject to leases, and the status of such leases
as true leases, asserting that the purchase of the facilities by the Company and
the leasing of such facilities merely constitute steps in secured financing
transactions in which the lessees are owners of the facilities and the Company
merely a secured creditor. In such event, the Company would not be entitled to
claim depreciation deductions with respect to any of the affected facilities. As
a result, the Company may fail to meet the 95% distribution requirement or, if
such requirement is met, then a larger percentage of distributions from the
Company would constitute ordinary dividend income to shareholders, rather than a
partial return of capital.

FAILURE TO QUALIFY

If the Company fails to qualify as a REIT in any taxable year, and the
relief provisions do not apply, the Company will be subject to tax (including
any applicable alternative minimum tax) on its taxable income at regular
corporate rates. Distributions to shareholders in any year in which the Company
fails to qualify will not be deductible and the Company's failure to qualify as
a REIT would reduce the cash available for distribution by the Company to its
shareholders. In addition, if the Company fails to qualify as a REIT, all
distributions to shareholders will be taxable as ordinary income, to the extent
of current and accumulated earnings and profits, and, subject to certain
limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, the Company will also be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances the Company would be
entitled to such statutory relief. Failure to qualify could result in the
Company's incurring indebtedness or liquidating investments in order to pay the
resulting taxes.

OTHER TAX MATTERS

The Company owns and operates a number of properties through qualified REIT
subsidiaries (the "QRSs"). The Company has owned 100% of the stock of each of
the QRSs at all times that each of the QRSs has been in existence. As a result,
the QRSs will be treated as qualified REIT subsidiaries under the Code. Code
Section 856(i) provides that a corporation which is a qualified REIT subsidiary
shall not be treated as a separate corporation, and all assets, liabilities, and
items of income, deduction, and credit of a qualified REIT subsidiary shall be
treated as assets, liabilities and such items (as the case may be) of the REIT.
Thus, in applying the tests for REIT qualification described in the Prospectus
under the heading " -- Taxation of the

S-30

Company," the QRSs will be ignored, and all assets, liabilities and items of
income, deduction, and credit of such QRSs will be treated as assets,
liabilities and items of the Company. The Company has not, however, sought or
received a ruling from the IRS that the QRSs are qualified REIT subsidiaries.

TAXATION OF SHAREHOLDERS -- GENERAL

As long as the Company qualifies as a REIT, distributions made to the
Company's shareholders out of current or accumulated earnings and profits (and
not designated as capital gain dividends) will be taken into account by them as
ordinary income (which will not be eligible for the dividends received deduction
for corporations). Distributions that are properly designated as capital gain
dividends will be taxed as long-term capital gains to the extent they do not
exceed the Company's actual net capital gain for the taxable year, without
regard to the period for which a shareholder has held his stock, although
corporate shareholders may be required to treat up to 20% of any such capital
gain dividend as ordinary income. For purposes of computing the Company's
earnings and profits, depreciation on real estate will be computed on a
straight-line basis over a 40 year recovery period. Distributions (not
designated as capital gain dividends) in excess of current or accumulated
earnings and profits will not be taxable to a shareholder to the extent that
they do not exceed the adjusted basis of the shareholder's shares of stock, but
rather will reduce the adjusted basis of such shares of stock (but not below
zero). To the extent that such distributions exceed the adjusted basis of a
shareholder's shares of stock they will be included in income as long-term or
short-term capital gain assuming the shares are held as a capital asset in the
hands of the shareholder. The Company will notify shareholders at the end of
each year as to the portions of the distributions which constitute ordinary
income, net capital gain or return of capital.

In addition, any dividend declared by the Company in October, November or
December of any year payable to a shareholder of record on a specified date in
any such month shall be treated as both paid by the Company and received by the
shareholder on December 31 of such year, provided that the dividend is actually
paid by the Company on or before January 31 of the following calendar year.
Shareholders may not include in their individual income tax returns any net
operating losses or capital losses of the Company.

In general, any gain or loss upon a sale or exchange of stock by a
shareholder who has held such stock as a capital asset will be long-term or
short-term depending on whether the stock was held for more than one year;
provided, however, any loss on the sale or exchange of stock that have been held
by such shareholder for six months or less will be treated as a long-term
capital loss to the extent of distributions from the Company required to be
treated by such shareholder as long-term capital gain.

TAXATION OF TAX-EXEMPT SHAREHOLDERS

The IRS has ruled that amounts distributed as dividends by a qualified REIT
do not constitute unrelated business taxable income ("UBTI") when received by a
tax-exempt entity. Based on that ruling the dividend income from the Company
should not, subject to certain exceptions described below, be UBTI to a
qualified plan, IRA or other tax-exempt entity (a "Tax-Exempt Shareholder")
provided the Tax-Exempt Shareholder has not held its shares as "debt financed
property" within the meaning of the Code and the shares are not otherwise used
in an unrelated trade or business of the Tax-Exempt Shareholder. Similarly,
income from the sale of Series A Preferred Stock should not, subject to certain
exceptions described below, constitute UBTI unless the Tax-Exempt Shareholder
has held such stock as a dealer (under Section 512(b)(5)(B) of the Code) or as
"debt financed property" within the meaning of the Code or has used the stock in
a trade or business.

For Tax-Exempt Shareholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from federal income taxation under Sections
501(c)(7), (c)(9), (c)(17) and (c)(20) of the Code respectively, income from an
investment in the Company will constitute UBTI unless the organization is able
to properly deduct amounts set aside or placed in reserve for certain purposes
so as to offset the income generated by its investment in the Company. Such
prospective investors should consult their tax advisors concerning these
"set-aside" and reserve requirements. Capital gain dividends received by a
Tax-Exempt Shareholder that is a private

S-31

foundation appear to be subject to a 2% excise tax under Section 4940 of the
Code but are not included in adjusted net income for purposes of determining
under Section 4942 the amount which the private foundation must distribute.

Notwithstanding the above, however, the recently enacted Omnibus Budget
Reconciliation Act of 1993 (the "1993 Act") provides that, effective for taxable
years beginning in 1994, a portion of the dividends paid by a "pension held
REIT" shall be treated as UBTI as to any trust which (i) is described in Section
401 (a) of the Code, (ii) is tax-exempt under Section 501(a) of the Code, and
(iii) holds more than 10% (by value) of the interests in the REIT. Tax-exempt
pension funds that are described in Section 401(a) of the Code are referred to
below as "qualified trusts."

A REIT is a "pension held REIT" if (i) it would not have qualified as a
REIT but for the fact that Section 856(h)(3) of the Code (added by the 1993 Act)
provides that stock owned by qualified trusts shall be treated, for purposes of
the "not closely held" requirement, as owned by the beneficiaries of the trust
(rather than by the trust itself), and (ii) either (a) at least one such
qualified trust holds more than 25% (by value) of the interests in the REIT, or
(b) one or more such qualified trusts, each of whom owns more than 10% (by
value) of the interests in the REIT, hold in the aggregate more than 50% (by
value) of the interests in the REIT. The Company believes that it is not
currently a "pension held REIT" within the meaning of the Code.

TAXATION OF NON-U.S. SHAREHOLDERS

The rules governing United States federal income taxation of the ownership
and disposition of stock by persons that are, for purposes of such taxation,
nonresident alien individuals, foreign corporations, foreign partnerships or
foreign estates or trusts (collectively, "Non-U.S. Shareholders") are complex,
and no attempt is made herein to provide more than a brief summary of such
rules. Accordingly, the discussion does not address all aspects of United States
federal income tax and does not address state, local or foreign tax consequences
that may be relevant to a Non-U.S. Shareholder in light of its particular
circumstances. In addition, this discussion is based on current law, which is
subject to change, and assumes that the Company qualifies for taxation as a
REIT. Prospective Non-U.S. Shareholders should consult with their own tax
advisers to determine the impact of federal, state, local and foreign income tax
laws with regard to an investment in Common Stock, including any reporting
requirements.

Distributions. Distributions by the Company to a Non-U.S. Shareholder that
are neither attributable to gain from sales or exchanges by the Company of
United States real property interests nor designated by the Company as capital
gains dividends will be treated as dividends of ordinary income to the extent
that they are made out of current or accumulated earnings and profits of the
Company. Such distributions ordinarily will be subject to withholding of United
States federal income tax on a gross basis (that is, without allowance of
deductions) at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty, unless the dividends are treated as effectively
connected with the conduct by the Non-U.S. Shareholder of a United States trade
or business. Dividends that are effectively connected with such a trade or
business will be subject to tax on a net basis (that is, after allowance of
deductions) at graduated rates, in the same manner as domestic shareholders are
taxed with respect to such dividends and are generally not subject to
withholding. Any such dividends received by a Non-U.S. Shareholder that is a
corporation may also be subject to an additional branch profits tax at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.

Pursuant to current Treasury Regulations, dividends paid to an address in a
country outside the United States are generally presumed to be paid to a
resident of such country for purposes of determining the applicability of
withholding discussed above and the applicability of a tax treaty rate. Under
proposed Treasury Regulations, not currently in effect, however, a Non-U.S.
Shareholder who wished to claim the benefit of an applicable treaty rate would
be required to satisfy certain certification and other requirements. Under
certain treaties, lower withholding rates generally applicable to dividends do
not apply to dividends from a REIT, such as the Company. Certain certification
and disclosure requirements must be satisfied to be exempt from withholding
under the effectively connected income exemption discussed above.

S-32

Distributions in excess of current or accumulated earnings and profits of
the Company will not be taxable to a Non-U.S. Shareholder to the extent that
they do not exceed the adjusted basis of the shareholder's stock, but rather
will reduce the adjusted basis of such stock. To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Shareholder's stock, they
will give rise to gain from the sale or exchange of his stock, the tax treatment
of which is described below. If it cannot be determined at the time a
distribution is made whether or not such distribution will be in excess of
current or accumulated earnings and profits, the distribution will generally be
treated as a dividend for withholding purposes. However, amounts thus withheld
are generally refundable if it is subsequently determined that such distribution
was, in fact, in excess of current or accumulated earnings and profits of the
Company.

Distributions to a Non-U.S. Shareholder that are designated by the Company
at the time of distribution as capital gains dividends (other than those arising
from the disposition of a United States real property interest) generally will
not be subject to United States federal income taxation, unless (i) investment
in the Series A Preferred Stock is effectively connected with the Non-U.S.
Shareholder's United States trade or business, in which case the Non-U.S.
Shareholder will be subject to the same treatment as domestic shareholders with
respect to such gain (except that a shareholder that is a foreign corporation
may also be subject to the 30% branch profits tax, as discussed above), or (ii)
the Non-U.S. Shareholder is a nonresident alien individual who is present in the
United States for 183 days or more during the taxable year and has a "tax home"
in the United States, in which case the nonresident alien individual will be
subject to a 30% tax on the individual's capital gains.

Distributions to a Non-U.S. Shareholder that are attributable to gain from
sales or exchanges by the Company of United States real property interests will
cause the Non-U.S. Shareholder to be treated as recognizing such gain as income
effectively connected with a United States trade or business. Non-U.S.
Shareholders would thus generally be taxed at the same rates applicable to
domestic shareholders (subject to a special alternative minimum tax in the case
of nonresident alien individuals). Also, such gain may be subject to a 30%
branch profits tax in the hands of a Non-U.S. Shareholder that is a corporation,
as discussed above. The Company is required to withhold 35% of any such
distribution. That amount is creditable against the Non-U.S. Shareholder's
United States federal income tax liability.

Sales of Series A Preferred Stock. Gain recognized by a Non-U.S.
Shareholder upon a sale or other disposition of Series A Preferred Stock
generally will not be subject to United States federal income tax, unless (i)
the Company is not a "domestically controlled REIT" or (ii) investment in the
Series A Preferred Stock is effectively connected with the Non-Shareholder's
United States trade or business or (iii) in the case of a Non-U.S. Shareholder
who is a nonresident alien individual, the individual is present in the United
States for 183 days or more during the taxable year and has a "tax home" in the
United States. A domestically controlled REIT is defined generally as a REIT in
which at all times during a specified testing period less than 50% in value of
the stock was held directly or indirectly by foreign persons. The Company
believes that it is a domestically controlled REIT. In the circumstances
described above in clauses (i) and (ii), the Non-U.S. Shareholders will
generally be subject to the same treatment as domestic shareholders with respect
to such gain (subject to a special alternative minimum tax in the case of
nonresident alien individuals in the circumstances described above in clause (i)
and, in the case of foreign corporations, subject to the possible applications
of the 30% branch profits tax, as discussed above). In the circumstances
described above in clause (iii), the nonresident alien individual will be
subject to a 30% tax on the individual's capital gain. However, gain recognized
by a Non-U.S. Shareholder upon a sale or other disposition of Series A Preferred
Stock will be subject to United States Federal Income Tax if (i) the Trust is a
"domestically-controlled REIT", (ii) at any time during the calendar year of the
sale or other disposition, any class of stock of the Trust is regularly traded
on an established securities market (as is expected), and (iii) the selling
Non-U.S. Shareholder held more than 5% of the fair market value of the Series A
Preferred Stock at any time during a specified testing period.

Backup Withholding Tax and Information Reporting. Backup withholding tax
(which generally is a withholding tax imposed at the rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States reporting requirements) and information reporting will generally not
apply to distributions paid to Non-U.S. Shareholders outside the United States
that are treated as

S-33

(i) dividends subject to the 30% (or lower treaty rate) withholding tax
discussed above, or (ii) capital gains dividends or (iii) distributions
attributable to gain from the sale or exchange by the Company of United States
real property interest. As a general matter, backup withholding and information
reporting will not apply to a payment of the proceeds of a sale of Series A
Preferred Stock by or through a foreign office of a foreign broker. Information
reporting (but not backup withholding) will apply, however, to a payment of the
proceeds of a sale of Series A Preferred Stock by a foreign office of a broker
that (a) is a United States person, or (b) derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States or (c) is a "controlled foreign corporation" (generally, a foreign
corporation controlled by United States shareholders) for United States tax
purposes, unless the broker has documentary evidence in its records that the
holder is a Non-U.S. Shareholder and certain other conditions are met, or the
shareholder otherwise establishes an exemption. Payment to or through a United
States office of a broker of the proceeds of sale of Series A Preferred Stock is
subject to both backup withholding and information reporting unless the
shareholder certifies under penalties of perjury that the shareholder is a
Non-U.S. Shareholder, or otherwise establishes an exemption. A Non-U.S.
Shareholder may obtain a refund of any amounts withheld under the backup
withholding rules by filing the appropriate claim for refund with the IRS.

The backup withholding and information reporting rules are under review by
the United States Treasury, and their application to the Common Stock could be
changed prospectively by future Treasury Regulations.

BACKUP WITHHOLDING

The Company will report to its domestic shareholders and the IRS the amount
of dividends paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a shareholder may be subject to backup
withholding at the rate of 31% with respect to dividends paid unless such holder
(a) is a corporation or comes within certain other exempt categories and when
required, demonstrates this fact, or (b) provides a correct tax payor
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A shareholder that does not provide the Company with his
correct tax payor identification number may also be subject to penalties imposed
by the IRS. Any amount paid as backup withholding will be creditable against the
shareholder's income tax liability. In addition, the Company may be required to
withhold a portion of capital gain distributions to any shareholders who fail to
certify their non-foreign status to the Company.

OTHER TAX CONSEQUENCES

The Company and its investors may be subject to state or local taxation in
various state or local jurisdictions, including those in which it or they
transact business or reside. There may be other federal, state, local or foreign
tax considerations applicable to the circumstances of a particular investor.
Prospective investors are urged to consult their own tax advisors with respect
to such matters.

Certain employee benefit plans and individual retirement accounts and
individual retirement annuities ("IRAs") (collectively, "Plans"), are subject to
various provisions of the Employee Retirement Income Security Act 1974, as
amended ("ERISA") and the Code. Before investing in the Series A Preferred Stock
of the Company, a Plan fiduciary should ensure that such investment is in
accordance with ERISA's general fiduciary standards. In making such a
determination, a Plan fiduciary should ensure that the investment is in
accordance with the governing instruments and the overall policy of the Plan,
and that the investment will comply with the diversification and composition
requirements of ERISA. In addition, provisions of ERISA and the Code prohibit
certain transactions using Plan assets that involve persons who have specified
relationships with a Plan. The consequences of such prohibited transactions
include excise taxes, disqualifications of IRAs and other liabilities. A Plan
fiduciary should ensure that any investment in the Securities will not
constitute such a prohibited transaction.

S-34

UNDERWRITING

The Underwriters named below have severally agreed with the Company,
subject to the terms and conditions of the Underwriting Agreement, to purchase
the respective numbers of shares of Series A Preferred Stock set forth opposite
their names below:



UNDERWRITERS NUMBER OF SHARES
------------ ----------------

A.G. Edwards & Sons, Inc. .................................. 666,668
Cowen & Company ............................................ 666,666
EVEREN Securities, Inc. .................................... 666,666
---------
Total.................................................. 2,000,000
=========


The Underwriting Agreement provides that the Underwriters are obligated to
purchase all of the shares of Series A Preferred Stock, if any are purchased.

The Company has been advised by A.G. Edwards & Sons, Inc., the
representative of the Underwriters (the "Representative"), that the Underwriters
propose to offer the Series A Preferred Stock to the public at the offering
price set forth on the cover page of this Prospectus Supplement and to certain
dealers at such price less a concession not in excess of $.50 per share and that
the Underwriters and such dealers may reallow a discount of not in excess of
$.25 per share to other dealers. The public offering price and the concession
and discount to dealers may be changed by the Representatives after the
Offering.

The Company has granted the Underwriters an option, expiring at the close
of business on the 30th day subsequent to the date of the Underwriting
Agreement, to purchase up to 300,000 additional shares of Series A Preferred
Stock at the public offering price, less the underwriting discount set forth on
the cover page of this Prospectus Supplement. The Underwriters may exercise such
option solely to cover over-allotments, if any, in the sale of the shares. To
the extent the Underwriters exercise such option, each of the Underwriters will
have a firm commitment, subject to certain conditions, to purchase approximately
the same percentage of the option shares as the number of shares set forth
opposite each Underwriters' name in the preceding table bears to 2,000,000, and
the Company will be obligated to sell such shares to the Underwriters.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.

The Representatives have advised the Company that they do not intend to
confirm sales to any account over which they exercise discretionary authority.

In order to facilitate the offering of the Series A Preferred Stock, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Series A Preferred Stock. Specifically, the Underwriters
may overallot in connection with the offering, or create, a short position in
the Series A Preferred Stock for their own account. In addition, to cover
overallotments or to stabilize the price of the Series A Preferred Stock, the
Underwriters may bid for, and purchase, the Series A Preferred Stock in the open
market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an underwriter or a dealer for distributing the Series A Preferred
Stock in the offering, if the syndicate repurchases previously distributed
Series A Preferred Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Series A Preferred Stock above independent
market levels. The Underwriters are not required to engage in these activities,
and may end any of these activities at any time.

The Company has applied to the NYSE for listing of the Series A Preferred
Stock under the symbol "OHI PrA." Trading of the Series A Preferred Stock on the
NYSE is expected to commence within 30 days of initial delivery of the Series A
Preferred Stock. Prior to the Offering, there has been no public market for the
Series A Preferred Stock. While the Underwriters have advised the Company that
they intend to make a market in the Series A Preferred Stock prior to
commencement of trading on the NYSE, they are under no

S-35

obligation to do so and may discontinue market making at any time without
notice. No assurance can be given that a market for the Series A Preferred Stock
will exist prior to commencement of trading or at any other time.

LEGAL MATTERS

The validity of the Series A Preferred Stock offered hereby will be passed
upon for the Company by Venable, Baetjer and Howard, LLP in Baltimore, Maryland.
Certain legal matters are being passed upon for the Company by Argue Pearson
Harbison & Myers, LLP in Los Angeles, California and for the Underwriters by
Bryan Cave LLP in St. Louis, Missouri.

S-36

PROSPECTUS

OMEGA HEALTHCARE INVESTORS, INC.

COMMON STOCK, PREFERRED STOCK,
DEBT SECURITIES AND SECURITIES WARRANTS

Omega Healthcare Investors, Inc. (the "Company") may from time to time
offer in one or more series (i) shares of its common stock, par value $.10 per
share (the "Common Stock"); (ii) shares of its preferred stock, par value $1.00
per share (the "Preferred Stock"); (iii) its unsecured debt securities (the
"Debt Securities"); or (iv) warrants to purchase Common Stock (the "Common Stock
Warrants"), warrants to purchase Debt Securities (the "Debt Securities
Warrants"), and warrants to purchase Preferred Stock (the "Preferred Stock
Warrants"), with an aggregate public offering price of up to $150,000,000, on
terms to be determined at the time of offering. The Common Stock Warrants, the
Debt Securities Warrants and the Preferred Stock Warrants shall be referred to
herein collectively as the "Securities Warrants." The Common Stock, Preferred
Stock, Debt Securities, and Securities Warrants (collectively, the "Securities")
may be offered, separately or together, in separate series amounts, at prices
and on terms to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
(continued on next page)

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

------------------------

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.

------------------------

THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.

------------------------

THE DATE OF THIS PROSPECTUS IS FEBRUARY 14, 1997

The terms of the Preferred Stock, including specific designation and stated
value per share, any dividend, liquidation, redemption, conversion, voting and
other rights, and all other specific terms of the Preferred Stock will be set
forth in the applicable Prospectus Supplement. In the case of the Debt
Securities, the specific title, aggregate principal amount, form (which may be
registered or bearer, or certified or global), maturity, rate (or manner of
calculation thereof) and time of payment of interest, terms for redemption at
the option of the Company or repayment at the option of the Holder, any sinking
fund provisions and any conversion provisions will be set forth in the
applicable Prospectus Supplement. In the case of the Securities Warrants, the
duration, offering price, exercise price and detachability, if applicable, will
be set forth in the applicable Prospectus Supplement. In addition, such specific
terms may include limitations on direct or beneficial ownership and restrictions
on transfer of the Securities or redemption or conversion terms, in each case as
may be appropriate to preserve the status of the Company as a real estate
investment trust ("REIT") for United States federal income tax purposes. The
applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.

In the case of Securities Warrants, the duration, offering price, exercise
price and detachability, if applicable, will be set forth in the applicable
Prospectus Supplement. In addition, such specific terms may include limitations
on direct or beneficial ownership and restrictions on transfer of the
Securities, in each case as may be appropriate to preserve the status of the
Company as a real estate investment trust ("REIT") for United States federal
income tax purposes. The applicable Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Securities covered by such Prospectus Supplement.

Securities may be offered directly, through agents designated from time to
time by the Company, or to or through underwriters or dealers. If any agents or
underwriters are involved in the sale of any of the Securities, their names, and
any applicable purchase price, fee, commission or discount arrangement between
or among them, will be set forth, or will be calculable from the information set
forth, in the applicable Prospectus Supplement. See "Plan of Distribution." No
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of such series of Securities.
The net proceeds to the Company from the sale of any of the Securities will be
set forth in the applicable Prospectus Supplement.

2

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission in Washington, D.C. (Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549), and at the Commission's Regional Offices in Chicago
(500 West Madison Street, Suite 1400, Chicago, Illinois 60665) and New York City
(7 World Trade Center, 13th Floor, New York, New York 10048). Copies of such
material can be obtained from the Commission's Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The common stock
of the Company is listed on the New York Stock Exchange and reports, proxy
statements and other information concerning Omega Healthcare Investors, Inc. can
be inspected at 20 Broad Street, New York, New York. The Company has filed with
the Commission a Registration Statement on Form S-3 with respect to the
securities offered hereby. This Prospectus and any accompanying Prospectus
Supplement do not contain all information set forth in the Registration
Statement, in accordance with the rules and regulations of the Commission, and
exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933 and to which reference is hereto made.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents previously filed with the Commission are
incorporated in this Prospectus by reference:

- Annual Report of the Company on Form 10-K for the year ended December 31,
1995;

- Quarterly Reports of the Company on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996, and September 30, 1996;

- Current Reports of the Company on Form 8-K dated June 10, 1996, and
January 19, 1996; and

- The description of the Company's Common Stock, $.10 par value, contained
in its Initial Registration Statement on Form 8-A, filed under Section 12
of the Securities Exchange Act of 1934, and declared effective by the
Commission on August 7, 1992.

All documents filed by Omega Healthcare Investors, Inc. pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 subsequent to
the date hereof and prior to the termination of the offering made hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing such documents. All information appearing in this
Prospectus is qualified in its entirety by the detailed information and
financial statements (including the notes thereto) appearing in the documents
incorporated by reference. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.

Omega Healthcare Investors, Inc. will provide without charge to each person
to whom this Prospectus is delivered, on written or oral request of such person,
a copy (without exhibits other than exhibits specifically incorporated by
reference therein) of any or all documents incorporated by reference into this
Prospectus within the meaning of Section 10(a) of the Securities Act of 1933.
Requests for such copies should be directed to Essel W. Bailey, Jr., President
and Secretary of the Company, at the Company's principal executive offices at
905 West Eisenhower Circle, Suite 110, Ann Arbor, Michigan 48103, telephone
(313) 747-9790.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OF THE
COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

3

THE COMPANY

Omega Healthcare Investors, Inc. (the "Company") was incorporated in the
State of Maryland on March 31, 1992. It is a self administered real estate
investment trust ("REIT") which invests in income producing healthcare
facilities, principally long-term care facilities located primarily in the
United States.

As of December 31, 1996, the Company's portfolio of domestic investments
consisted of 214 long-term care facilities and 3 medical office buildings. The
Company owns and leases 132 long-term care facilities and 3 medical office
buildings, and provides mortgages, including participating and convertible
mortgages, on 82 long-term care facilities. The facilities are located in 24
states and operated by 34 unaffiliated operators. The Company is also an owner
of and provides management/advisory services to Principal Healthcare Finance
Limited which owns and leases 42 nursing homes in the United Kingdom. The
Company's gross investments at December 31, 1996 totaled $643.3 million.

The Company anticipates providing lease or mortgage financing in the future
for healthcare facilities to qualified operators, and also anticipates acquiring
additional healthcare facility types, including assisted living and acute care
facilities.

The investment objectives of the Company are: To pay regular cash dividends
to shareholders; to provide the opportunity for increased dividends from annual
increases in rental and interest income from revenue participations and from
portfolio growth; to preserve and protect shareholders' capital; and to provide
the opportunity to realize capital growth resulting from appreciation.

The Company intends to make and manage its investments (including the sale
or disposition of property or other investments) in such a manner as to be
consistent with the requirements of the Code (or regulations thereunder) to
qualify as a real estate investment trust ("REIT"), unless, because of changes
in circumstances or changes in the Code (or regulations thereunder), the Board
of Directors determines that it is no longer in the best interests of the
Company to qualify as a REIT.

The executive offices of the Company are located at 905 West Eisenhower
Circle, Suite 110, Ann Arbor, Michigan 48103. Its telephone number is (313)
747-9790.

INVESTMENT STRATEGIES AND POLICIES

The Company maintains a diversified portfolio of income-producing health
care facilities or mortgages thereon, with a primary focus on long-term care
facilities located primarily in the United States. In evaluating potential
investments, the Company considers such factors as: (i) the quality and
experience of management and the creditworthiness of the operator of the
facility; (ii) the facility's historical, current and forecasted cash flow and
its adequacy to meet operational needs, capital expenditures and lease or debt
service obligations, while providing a competitive return on investment to the
Company; (iii) the construction quality, condition and design of the facility;
(iv) the geographic area and type of facility; (v) the tax, growth, regulatory
and reimbursement environment of the community in which the facility is located;
(vi) the occupancy and demand for similar health care facilities in the same or
nearby communities; and (vii) the payor mix of private, Medicare and Medicaid
patients.

In making investments, the Company generally seeks established,
creditworthy, "middle market" health care operators which meet the Company's
standards for quality and experience of management. Although the Company has
emphasized long-term care investments, it will diversify prudently into other
types of health care investments. The Company actively seeks to diversify its
investments in terms of geographic location, operators and facility types.

A fundamental investment strategy of the Company is to obtain contractual
rent escalations under long-term, non-cancelable "triple net" leases and revenue
participations through participating mortgage loans, and to obtain substantial
security deposits. The Company may participate in mortgage loans through
ownership of collateralized mortgage obligations or other securitization of
mortgages.

The Company may determine to finance acquisitions through the exchange of
properties or the issuance of shares of its capital stock to others, if such
transactions otherwise satisfy the Company's investment criteria.

4

The Company also has authority to repurchase or otherwise reacquire its Common
Stock or any other securities and may determine to do so in the future.

To the extent that the Company's Board of Directors determines to obtain
additional capital, the Company may raise such capital through additional equity
offerings, debt financings or retention of cash flow (subject to provisions of
the Internal Revenue Code of 1986, as amended concerning the taxability of
undistributed income of "real estate investment trusts"), or a combination of
these methods.

The Bylaws of the Company permit the Board of Directors, without the
approval of the shareholders, to alter the Company's investment policies if they
determine in the future that such a change is in the best interests of the
Company and its shareholders. The methods of implementing the Company's
investment policies may vary as new investments and financing techniques are
developed or otherwise employed.

BORROWING POLICIES

The Company may incur additional indebtedness, and intends to eventually
attain and then maintain a long-term debt-to-capitalization ratio of
approximately 40%. The Company intends to review periodically its policy with
respect to its debt-to-capitalization ratio and to adapt such policy as its
management deems prudent in light of prevailing market conditions. The Company's
strategy generally has been to match the maturity of its indebtedness with the
maturity of its assets, and to employ long term, fixed rate debt to the extent
practicable.

The Company will use the proceeds of any additional indebtedness to provide
permanent financing for investments in additional health care facilities. The
Company may obtain either secured or unsecured indebtedness, which may be
convertible into capital stock or accompanied by warrants to purchase capital
stock. Where debt financing is present on terms deemed favorable, the Company
may invest in properties subject to existing loans, secured by mortgages, deeds
of trust or similar liens on the properties.

RATIO OF EARNINGS TO FIXED CHARGES

The ratio of earnings to fixed charges are as follows:



YEAR ENDED
AUGUST 14, 1992 DECEMBER 31,
(INCEPTION) TO ----------------------------
DECEMBER 31, 1992(1) 1993 1994 1995 1996
-------------------- ---- ---- ---- ----

Ratio of Earnings to Fixed Charges(2)......... 15.45x 3.51x 2.69x 2.92x 2.67x


- ---------------

(1) Operations of the Company commenced on August 14, 1992.

(2) For purposes of calculating the ratio of earnings to fixed charges, net
earnings (before extraordinary charge from prepayment of debt in 1995) has
been added to fixed charges and that sum has been divided by such fixed
charges. Fixed charges consist of interest expense and amortization of
deferred financing costs.

USE OF PROCEEDS

Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities offered from
time to time hereby will be used for the repayment of short term bank lines of
credit and general corporate purposes, including additional investments in
health care properties.

DESCRIPTION OF SECURITIES

The Company may offer under this Prospectus one or more of the following
categories of its Securities: (i) shares of its Common Stock, par value $0.10
per share; (ii) shares of its Preferred Stock, par value $1.00 per share, in one
or more series; (iii) Debt Securities, in one or more series; (iv) Common Stock
Warrants;

5

(v) Preferred Stock Warrants; (vi) Debt Warrants; and (vii) any combination of
the foregoing, either individually or as units consisting of one or more of the
types of Securities described in clauses (i) through (vi). The terms of any
specific offering of Securities, including the terms of any units offered, will
be set forth in a Prospectus Supplement relating to such offering.

The authorized capital stock of the Company currently consists of
50,000,000 shares of Common Stock, par value $0.10 per share, and 10,000,000
shares of Preferred Stock, par value $1.00 per share. As of December 31, 1996,
the Company had 18,175,268 shares of its Common Stock issued and outstanding.
The Common Stock is listed on the New York Stock Exchange. The Company intends
to list any additional shares of its Common Stock which are issued and sold
hereunder. No shares of the Company's Preferred Stock are outstanding. The
Company may list any Preferred Stock which is offered and sold hereunder, as
described in the Prospectus Supplement relating to such Preferred Stock.

COMMON STOCK

All shares of Common Stock participate equally in dividends payable to
stockholders of Common Stock when and as declared by the Board of Directors and
in net assets available for distribution to stockholders of Common Stock on
liquidation or dissolution, have one vote per share on all matters submitted to
a vote of the stockholders and do not have cumulative voting rights in the
election of directors. All issued and outstanding shares of Common Stock are,
and the Common Stock offered hereby will be upon issuance, validly issued, fully
paid and nonassessable. Holders of the Common Stock do not have preference,
conversion, exchange or preemptive rights. The Common Stock is listed on the New
York Stock Exchange (NYSE Symbol "OHI").

REDEMPTION AND BUSINESS COMBINATION PROVISIONS

If the Board of Directors shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of at least 9.9% or more of the voting
shares of capital stock has or may become concentrated in the hands of one
beneficial owner, the Board of Directors shall have the power (i) by lot or
other means deemed equitable by it to call for the purchase from any stockholder
of the Company a number of voting shares sufficient, in the opinion of the Board
of Directors, to maintain or bring the direct or indirect ownership of voting
shares of capital stock of such beneficial owner to a level of no more than 9.9%
of the outstanding voting shares of the Company's capital stock, and (ii) to
refuse to transfer or issue voting shares of capital stock to any person whose
acquisition of such voting shares would, in the opinion of the Board of
Directors, result in the direct or indirect ownership by that person of more
than 9.9% of the outstanding voting shares of capital stock of the Company.
Further, any transfer of shares, options, warrants, or other securities
convertible into voting shares that would create a beneficial owner of more than
9.9% of the outstanding voting shares shall be deemed void ab initio and the
intended transferee shall be deemed never to have had an interest therein. The
purchase price for any voting shares of capital stock so redeemed shall be equal
to the fair market value of the shares reflected in the closing sales prices for
the shares, if then listed on a national securities exchange, or the average of
the closing sales prices for the shares if then listed on more than one national
securities exchange, or if the shares are not then listed on a national
securities exchange, the latest bid quotation for the shares if then traded
over-the-counter, on the last business day immediately preceding the day on
which notices of such acquisitions are sent by the Company, or, if no such
closing sales prices or quotations are available, then the purchase price shall
be equal to the net asset value of such stock as determined by the Board of
Directors in accordance with the provisions of applicable law. From and after
the date fixed for purchase by the Board of Directors, the holder of any shares
so called for purchase shall cease to be entitled to distributions, voting
rights and other benefits with respect to such shares, except the right to
payment of the purchase price for the shares.

The Articles of Incorporation require that, except in certain
circumstances, Business Combinations (as defined) between the Company and a
beneficial holder of 10% or more of the Company's outstanding voting stock (a
"Related Person") be approved by the affirmative vote of at least 90% of the
outstanding voting shares of the Company.

6

A Business Combination is defined in the Articles of Incorporation as (a)
any merger or consolidation of the Company with or into a Related Person, (b)
any sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or any other security device, of all or any "Substantial
Part" (as defined) of the assets of the Company (including without limitation
any voting securities of a subsidiary) to a Related Person, (c) any merger or
consolidation of a Related Person with or into the Company, (d) any sale, lease,
exchange, transfer or other disposition of all or any Substantial Part of the
assets of a Related Person to the Company, (e) the issuance of any securities
(other than by way of pro rata distribution to all stockholders) of the Company
to a Related Person, and (f) any agreement, contract or other arrangement
providing for any of the transactions described in the definition of Business
Combination. The term "Substantial Part" shall mean more than 10% of the book
value of the total assets of the Company as of the end of its most recent fiscal
year ending prior to the time the determination is being made.

Pursuant to the Articles of Incorporation, the Company's Board of Directors
is classified into three classes. Each class of directors serves for a term of
three years, with one class being elected each year. As of the date of this
Prospectus, there are seven directors, two in each of two classes of directors,
and three in one class.

The foregoing provisions of the Articles of Incorporation and certain other
matters may not be amended without the affirmative vote of at least 90% of the
outstanding voting shares of the Company.

The foregoing provisions may have the effect of discouraging unilateral
tender offers or other takeover proposals which certain stockholders might deem
in their interests or in which they might receive a substantial premium. The
Board of Directors' authority to issue and establish the terms of currently
authorized Preferred Stock, without stockholder approval, may also have the
effect of discouraging takeover attempts. See "Preferred Stock." The provisions
could also have the effect of insulating current management against the
possibility of removal and could, by possibly reducing temporary fluctuations in
market price caused by accumulation of shares, deprive stockholders of
opportunities to sell at a temporarily higher market price. However, the Board
of Directors believes that inclusion of the Business Combination provisions in
the Articles of Incorporation may help assure fair treatment of stockholders and
preserve the assets of the Company.

The foregoing summary of certain provisions of the Articles of
Incorporation does not purport to be complete or to give effect to provisions of
statutory or common law. The foregoing summary is subject to, and qualified in
its entirety by reference to, the provisions of applicable law and the Articles
of Incorporation, a copy of which is incorporated by reference as an exhibit to
the Registration Statement of which this Prospectus is a part.

TRANSFER AGENT AND REGISTRAR

First Chicago Trust Company of New York is the transfer agent and registrar
of the Common Stock.

PREFERRED STOCK

The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Articles of Incorporation (the "Articles of Incorporation"), and the
Board of Directors' resolution or articles supplementary (the "Articles
Supplementary") relating to each series of the Preferred Stock which will be
filed with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of the Preferred Stock.

7

GENERAL

The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, $0.10 par value per share, and 10,000,000 shares of preferred
stock, $1.00 par value per share ("preferred stock of the Company," which term,
as used herein, includes the Preferred Stock offered hereby).

Under the Articles of Incorporation, the Board of Directors of the Company
is authorized without further stockholder action to provide for the issuance of
up to 10,000,000 shares of preferred stock of the Company, in one or more
series, with such designations, preferences, powers and relative participating,
optional or other special rights and qualifications, limitations or restrictions
thereon, including, but not limited to, dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences as shall be stated in the resolution providing for the issue of a
series of such stock, adopted, at any time or from time to time, by the Board of
Directors of the Company.

The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number of
shares offered; (ii) the amount of liquidation preference per share; (iii) the
initial public offering price at which such Preferred Stock will be issued; (iv)
the dividend rate (or method of calculation), the dates on which dividends shall
be payable and the dates from which dividends shall commence to cumulate, if
any; (v) any redemption or sinking fund provisions; (vi) any conversion rights;
(vii) any additional voting, dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions.

The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION

See "Common Stock -- Redemption and Business Combination Provisions" for a
description of certain provisions of the Articles of Incorporation, including
provisions relating to redemption rights and provisions which may have certain
anti-takeover effects.

DIVIDEND RIGHTS

Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of funds
of the Company legally available therefor, cash dividends on such dates and at
such rates as will be set forth in, or as are determined by, the method
described in the Prospectus Supplement relating to such series of the Preferred
Stock. Such rate may be fixed or variable or both. Each such dividend will be
payable to the holders of record as they appear on the stock books of the
Company on such record dates, fixed by the Board of Directors of the Company, as
specified in the Prospectus Supplement relating to such series of Preferred
Stock.

Dividends on any series of Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the holders of such series of Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company shall have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment dates. Dividends on the shares
of each series of Preferred Stock for which dividends are cumulative will accrue
from the date on which the Company initially issues shares of such series.

8

So long as the shares of any series of the Preferred Stock shall be
outstanding, unless (i) full dividends (including if such Preferred Stock is
cumulative, dividends for prior dividend periods) shall have been paid or
declared and set apart for payment on all outstanding shares of the Preferred
Stock of such series and all other classes and series of preferred stock of the
Company (other than Junior Stock as defined below) and (ii) the Company is not
in default or in arrears with respect to the mandatory or optional redemption or
mandatory repurchase or other mandatory retirement of, or with respect to any
sinking or other analogous fund for, any shares of Preferred Stock of such
series or any shares of any other preferred stock of the Company of any class or
series (other than Junior Stock), the Company may not declare any dividends on
any shares of Common Stock of the Company or any other stock of the Company
ranking as to dividends or distributions of assets junior to such series of
Preferred Stock (the Common Stock and any such other stock being herein referred
to as "Junior Stock"), or make any payment on account of, or set apart money
for, the purchase, redemption or other retirement of, or for a sinking or other
analogous fund for, any shares of Junior Stock or make any distribution in
respect thereof, whether in cash or property or in obligations or stock of the
Company, other than Junior Stock which is neither convertible into, nor
exchangeable or exercisable for, any securities of the Company other than Junior
Stock.

LIQUIDATION PREFERENCE

In the event of any liquidation, dissolution or winding up of the Company,
voluntary or involuntary, the holders of each series of the Preferred Stock will
be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to the
holders of Common Stock or any other shares of stock of the Company ranking
junior as to such distribution to such series of Preferred Stock, the amount set
forth in the Prospectus Supplement relating to such series of the Preferred
Stock. If, upon any voluntary or involuntary liquidation, dissolution or winding
up of the Company, the amounts payable with respect to the Preferred Stock of
any series and any other shares of preferred stock of the Company (including any
other series of the Preferred Stock) ranking as to any such distribution on a
parity with such series of the Preferred Stock are not paid in full, the holders
of the Preferred Stock of such series and of such other shares of preferred
stock of the Company will share ratably in any such distribution of assets of
the Company in proportion to the full respective preferential amounts to which
they are entitled. After payment of the holders of the Preferred Stock of each
series of the full preferential amounts of the liquidating distribution to which
they are entitled, the holders of each such series of the Preferred Stock will
be entitled to no further participation in any distribution of assets by the
Company.

If liquidating distributions shall have been made in full to all holders of
shares of Preferred Stock, the remaining assets of the Company shall be
distributed among the holders of Junior Stock, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.

REDEMPTION

A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Stock redeemed by the Company
will be restored to the status of authorized but unissued shares of preferred
stock of the Company.

In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) as may be determined by
the Company or by any other method as may be determined by the Company in its
sole discretion to be equitable. From and after the redemption date (unless
default shall be made by the Company in providing for the payment of the
redemption price plus accumulated and unpaid dividends, if any), dividends shall
cease to

9

accumulate on the shares of the Preferred Stock called for redemption and all
rights of the holders thereof (except the right to receive the redemption price
plus accumulated and unpaid dividends, if any) shall cease.

So long as any dividends on shares of any series of the Preferred Stock or
any other series of preferred stock of the Company ranking on a parity as to
dividends and distribution of assets with such series of the Preferred Stock are
in arrears, no shares of any such series of the Preferred Stock or such other
series of preferred stock of the Company will be redeemed (whether by mandatory
or optional redemption) unless all such shares are simultaneously redeemed, and
the Company will not purchase or otherwise acquire any such shares; provided,
however, that the foregoing will not prevent the purchase or acquisition of such
shares pursuant to a purchase or exchange offer made on the same terms to
holders of all such shares outstanding.

CONVERSION RIGHTS

The terms and conditions, if any, upon which shares of any series of
Preferred Stock are convertible into Common Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of shares of Common Stock into which the Preferred Stock is convertible,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion.

VOTING RIGHTS

Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, the holders of the Preferred Stock will not be entitled to vote for any
purpose.

So long as any shares of the Preferred Stock of a series remain
outstanding, the consent or the affirmative vote of the holders of at least 80%
of the votes entitled to be cast with respect to the then outstanding shares of
such series of the Preferred Stock together with any Other Preferred Stock (as
defined below), voting as one class, either expressed in writing or at a meeting
called for that purpose, will be necessary (i) to permit, effect or validate the
authorization, or any increase in the authorized amount, of any class or series
of shares of the Company ranking prior to the Preferred Stock of such series as
to dividends, voting or upon distribution of assets and (ii) to repeal, amend or
otherwise change any of the provisions applicable to the Preferred Stock of such
series in any manner which adversely affects the powers, preferences, voting
power or other rights or privileges of such series of the Preferred Stock. In
case any series of the Preferred Stock would be so affected by any such action
referred to in clause (ii) above in a different manner than one or more series
of the Other Preferred Stock then outstanding, the holders of shares of the
Preferred Stock of such series, together with any series of the Other Preferred
Stock which will be similarly affected, will be entitled to vote as a class, and
the Company will not take such action without the consent or affirmative vote,
as above provided, of at least 80% of the total number of votes entitled to be
cast with respect to each such series of the Preferred Stock and the Other
Preferred Stock, then outstanding, in lieu of the consent or affirmative vote
hereinabove otherwise required.

With respect to any matter as to which the Preferred Stock of any series is
entitled to vote, holders of the Preferred Stock of such series and any other
series of preferred stock of the Company ranking on a parity with such series of
the Preferred Stock as to dividends and distributions of assets and which by its
terms provides for similar voting rights (the "Other Preferred Stock") will be
entitled to cast the number of votes set forth in the Prospectus Supplement with
respect to that series of Preferred Stock. As a result of the provisions
described in the preceding paragraph requiring the holders of shares of a series
of the Preferred Stock to vote together as a class with the holders of shares of
one or more series of Other Preferred Stock, it is possible that the holders of
such shares of Other Preferred Stock could approve action that would adversely
affect such series of Preferred Stock, including the creation of a class of
capital stock ranking prior to such series of Preferred Stock as to dividends,
voting or distributions of assets.

The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of the Preferred Stock shall

10

have been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.

TRANSFER AGENT AND REGISTRAR

Unless otherwise indicated in a Prospectus Supplement relating thereto,
First Chicago Trust Company of New York, will be the transfer agent, dividend
and redemption price disbursement agent and registrar for shares of each series
of the Preferred Stock.

DEBT SECURITIES

Debt Securities may be issued from time to time in series under an
Indenture (the "Indenture") dated January 24, 1997, between the Company and NBD
Bank, as Trustee (the "Trustee"). As used under this caption, unless the context
otherwise requires, Offered Debt Securities shall mean the Debt Securities
offered by this Prospectus and the accompanying Prospectus Supplement. The
statements under this caption are brief summaries of certain provisions
contained in the Indenture, do not purport to be complete and are qualified in
their entirety by reference to the Indenture, including the definition therein
of certain terms, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The following sets forth certain
general terms and provisions of the Debt Securities. Further terms of the
Offered Debt Securities will be set forth in the Prospectus Supplement.

GENERAL

The Indenture provides for the issuance of Debt Securities in series, and
does not limit the principal amount of Debt Securities which may be issued
thereunder.

Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (1) the specific title of the Offered Debt
Securities; (2) the aggregate principal amount of the Offered Debt Securities;
(3) the percentage of their principal amount at which the Offered Debt
Securities will be issued payable; (4) the date on which the Offered Debt
Securities will mature; (5) the rate or rates per annum or the method for
determining such rate or rates, if any, at which the Offered Debt Securities
will bear interest; (6) the times at which any such interest will be payable;
(7) any provisions relating to optional or mandatory redemption of the Offered
Debt Securities at the option of the Company or pursuant to sinking fund or
analogous provisions; (8) the denominations in which the Offered Debt Securities
are authorized to be issued if other than $100,000; (9) any provisions relating
to the conversion or exchange of the Offered Debt Securities into Common Stock
or into Debt Securities of another series; (10) the portion of the principal
amount, if less than the principal amount, payable on acceleration; (11) the
place or places at which the Company will make payments of principal (and
premiums, if any) and interest, if any, and the method of payment; (12) whether
the Offered Debt Securities will be issued in whole or in part in global form;
(13) any additional covenants and Events of Default and the remedies with
respect thereto not currently set forth in the Indenture; (14) the identity of
the Trustee for the Debt Securities, and if not the Trustee, the identity of
each paying agent and the Debt Securities Registrar; (15) the currency or
currencies other than United States Dollars in which any series of Debt
Securities will be issued; and (16) any other specific terms of the Offered Debt
Securities.

One or more series of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or bearing interest at a rate which at the time
of issuance is below market rates) to be sold at a substantial discount below
their stated principal amount. Tax and other special considerations applicable
to any such discounted Debt Securities will be described in the Prospectus
Supplement relating thereto.

STATUS OF DEBT SECURITIES

The Debt Securities will be unsecured obligations of the Company and may be
ranking on a parity with all other unsecured and unsubordinated indebtedness, or
may be subordinated to certain other indebtedness of the Company.

11

CONVERSION RIGHTS

The terms, if any, on which Debt Securities of a series may be exchanged
for or converted into shares of Common Stock or Debt Securities of another
series will be set forth in the Prospectus Supplement relating thereto. To
protect the Company's status as a REIT, a Holder may not convert any Debt
Security, and such Debt Security shall not be convertible by any Holder, if as a
result of such conversion any person would then be deemed to beneficially own,
directly or indirectly, 9.9% or more of the Company's shares of Common Stock.

ABSENCE OF RESTRICTIVE COVENANTS

Except as noted below under "Dividends, Distributions and Acquisitions of
Capital Stock," the Company is not restricted by the Indenture from paying
dividends or from incurring, assuming or becoming liable for any type of debt or
other obligations or from creating liens on its property for any purpose. The
Indenture does not require the maintenance of any financial ratios or specified
levels of net worth or liquidity. Except as may be set forth in the Prospectus
Supplement, there are no provisions of the Indenture which afford holders of the
Debt Securities protection in the event of a highly leveraged transaction
involving the Company.

OPTIONAL REDEMPTION

The Debt Securities will be subject to redemption, in whole or from time to
time in part, at any time for certain reasons intended to protect the Company's
status as a REIT, at the option of the Company in the manner specified in the
Indenture at a redemption price equal to 100% of the principal amount, plus
interest accrued to the date of redemption. The Indenture does not contain any
provision requiring the Company to repurchase the Debt Securities at the option
of the Holders thereof in the event of a leveraged buyout, recapitalization or
similar restructuring of the Company.

DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF CAPITAL STOCK

The Indenture provides that the Company will not (i) declare or pay any
dividend or make any distribution on its capital stock or to holders of its
capital stock (other than dividends or distributions payable in its capital
stock or other than as the Company determines is necessary to maintain its
status as a REIT) or (ii) purchase, redeem or otherwise acquire or retire for
value any of its capital stock, or any warrants, rights or options or other
securities to purchase or acquire any Shares of its capital stock (other than
the Debt Securities) or permit any subsidiary to do so, if at the time of such
action an Event of Default (as defined in the Indenture) has occurred and is
continuing or would exist immediately after giving effect to such action.

EVENTS OF DEFAULT

An Event of Default with respect to Debt Securities of any series is
defined in the Indenture as being (a) failure to pay principal of or any premium
on any Debt Security of that series when due; (b) failure to pay any interest on
any Debt Security of that series when due, continued for 30 days; (c) failure to
deposit any sinking fund payment when due, in respect of any Debt Security of
that series; (d) failure to perform any other covenant of the Company in the
Indenture (other than a covenant included in the Indenture solely for the
benefit of one or more series of Debt Securities other than that series),
continued for 60 days after written notice as provided in the Indenture; (e)
certain events of bankruptcy, insolvency, conservatorship, receivership or
reorganization; and (f) any other Event of Default provided with respect to the
Debt Securities of that series.

12

If an Event of Default with respect to the outstanding Debt Securities of
any series occurs and is continuing, either the Trustee or the Holders of at
least 25% in aggregate principal amount of the outstanding Debt Securities of
that series may declare the principal amount (or, if the Debt Securities of that
series are original issue discount Debt Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
outstanding Debt Securities of that series to be due and payable immediately. At
any time after the declaration of acceleration with respect to the Debt
Securities of any series has been made, but before a judgment or decree based on
acceleration has been obtained, the Holders of a majority in aggregate principal
amount of the outstanding Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration.

The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for the
indemnification of the Trustee and subject to certain limitations, the Holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of that series.

The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.

MODIFICATIONS AND WAIVER

Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holders to, among other things, (a)
evidence the succession of another corporation to the Company, (b) add to the
covenants of the Company or surrender any right or power conferred upon the
Company, (c) to establish the form or terms of Debt Securities, including any
subordination provisions, (d) cure any ambiguity, correct or supplement any
provision which may be defective or inconsistent or make any other provisions
with respect to matters or questions arising under the Indenture, provided that
such action does not adversely affect the interests of the Holders of Debt
Securities of any series in any material respect, (e) to add to, delete, or
revise conditions, limitations and restrictions on the authorized amounts, terms
or purpose of Debt Securities, as set forth in the Indenture, or (f) evidence
and provide for a successor Trustee.

Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of each series affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each outstanding Debt
Security affected thereby, (a) change the stated maturity date of the principal
of, or any installment of principal of or interest , if any, on any Debt
Security , (b) reduce the principal amount of, or premium or interest if any, on
any Debt Security, (c) reduce the amount of principal of an original issue
discount Debt Security payable upon acceleration of the maturity thereof, (d)
change the currency of payment of the principal of, or premium or interest, if
any, on any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, (f) modify
the conversion provisions, if any, of any Debt Security in a manner adverse to
the Holder of that Debt Security, or (g) reduce the percentage in principal
amount of the outstanding Debt Security of any series, the consent of whose
Holders is required for modification or amendment of that Indenture or for
waiver of compliance with certain provisions of that Indenture or for waiver of
certain defaults.

The Holders of a majority in aggregate principal amount of the outstanding
Debt Security of each series may, on behalf of all Holders of the Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the Indenture.
The Holders of a majority in aggregate principal amount of the outstanding Debt
Securities of each series may, on behalf of all Holders of the Debt Securities
of that series, waive any past default under the Indenture with respect to the
Debt Securities of that series, except a default in the payment of principal or
premium or interest, if any, or a default

13

in respect of a covenant or provision which under the terms of the Indenture
cannot be modified or amended without the consent of the Holder of each
outstanding Debt Security of the series affected.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Indenture provides that the Company, without the consent of the Holders
of any of the Debt Securities, may consolidate or merge with or into or transfer
its assets substantially as an entirety to, any entity organized under the laws
of the United States or any state, provided that the successor entity assumes
the Company's obligations under the Indenture, that after giving effect to the
transaction no Event of Default, and no event which, after notice or lapse of
time, would become an Event of Default, shall have occurred and be continuing,
and that certain other conditions are met.

GLOBAL SECURITIES

The Debt Securities of a series may be issued in whole or in part in global
form (the "Global Securities"). Except as set forth in a Prospectus Supplement,
the terms and provisions with respect to any Global Securities will be as set
forth in this Section captioned "Global Securities." The Global Securities will
be deposited with a depositary (the "Depositary"), or with a nominee for a
Depositary, identified in the Prospectus Supplement. In such case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive form, a Global Security may not be transferred except
as a whole by the Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.

The specific material terms of the depositary arrangement with respect to
any portion of a series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement. The Company anticipates
that the following provisions will apply to all depositary arrangements.

Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of persons that have accounts with such Depositary
("participants"). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in a Global Security will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests in such Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depositary for such Global Security (with respect to interests of
participants) or by participants or persons that hold through participants (with
respect to interests of persons other than participant). So long as the
Depositary for a Global Security, or its nominee, is the registered owner of
such Global Security, such Depositary or such nominee, as the case may be, will
be considered the sole owner or Holder of the Debt Securities represented by
such Global Security for all purposes under the Indenture; provided, however,
that the purposes of obtaining any consents or directions required to be given
by the Holders of the Debt Securities, the Company, the Trustee and its agents
will treat a person as the holder of such principal amount of Debt Securities as
specified in a written statement of the Depositary. Except as set forth herein
or otherwise provided in the Prospectus Supplement, owners of beneficial
interests in a Global Security will not be entitled to have the Debt Securities
represented by such Global Security registered in their names, will not receive
physical delivery of such Debt Securities in definitive form and will not be
considered the owners or Holders thereof under the Indenture.

Principal, premium, if any, and interest payments on Debt Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made to such Depositary or its nominee, as the case may be, as
the registered owner of such Global Security. None of the Company, the Trustee
or any Paying Agent for such Debt Securities will have any responsibility or
liability for any aspect of the records

14

relating to or payments made on account of beneficial ownership interests in
such Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

The Company expects that the Depositary for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium, if any,
or interest will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depositary. The
Company also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names" and will be the
responsibility of such participants.

If the Depositary for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days, the Company will
issue such Debt Securities in definitive form in exchange for such Global
Security. In addition, the Company may at any time and in its sole discretion
determine not to have any of the Debt Securities of a series represented by one
or more Global Securities and, in such event, will issue Debt Securities of such
series in definitive form in exchange for all of the Global Security or
Securities representing such Debt Securities.

The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in Debt Securities represented by
Global Securities.

SECURITIES WARRANTS

The Company may issue Securities Warrants for the purchase of Common Stock,
Preferred Stock or Debt Securities. Securities Warrants may be issued
independently or together with Common Stock, Preferred Stock or Debt Securities
offered by any Prospectus Supplement and may be attached to or separate from
such Common Stock, Preferred Stock, or Debt Securities. Each series of
Securities Warrants will be issued under a separate warrant agreement (a
"Securities Warrant Agreement") to be entered into between the Company and a
bank or trust company, as Securities Warrant agent, all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant agent will act solely as an agent of the
Company in connection with the Securities Warrants of such series and will not
assume any obligation or relationship of agency or trust for or with any holders
or beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Securities Warrant Agreement and Securities Warrants do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Securities Warrant Agreement and the
Securities Warrants relating to each series of Securities Warrants which will be
filed with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of Securities Warrants.

In the case of Securities Warrants for the purchase of Common Stock or
Preferred Stock, the applicable Prospectus Supplement will describe the terms of
such Securities Warrants, including the following where applicable: (i) the
offering price; (ii) the aggregate number of shares purchasable upon exercise of
such Securities Warrants, the exercise price, and in the case of Securities
Warrants for Preferred Stock the designation, aggregate number and terms of the
series of Preferred Stock purchasable upon exercise of such Securities Warrants,
(iii) the designation and terms of any series of Preferred Stock with which such
Securities Warrants are being offered and the number of such Securities Warrants
being offered with such Preferred Stock, (iv) the date, if any, on and after
which such Securities Warrants and the related series of Preferred Stock or
Common Stock will be transferable separately; (v) the date on which the right to
exercise such Securities Warrants shall commence and the Expiration Date; (vi)
any special United States Federal income tax consequences; and (vii) any other
terms of such Securities Warrants.

15

If Securities Warrants for the purchase of Debt Securities are offered, the
applicable Prospectus Supplement will describe the terms of such Securities
Warrants, including the following where applicable: (i) the offering price; (ii)
the denominations and terms of the series of Debt Securities purchasable upon
exercise of such Securities Warrants; (iii) the designation and terms of any
series of Debt Securities, with which such Securities Warrants are being offered
with each such Debt Securities; (iv) the date, if any, on and after which such
Securities Warrants and the related series of Debt Securities will be
transferable separately; (v) the principal amount of the series of Debt
Securities purchasable upon exercise of each such Securities Warrant and the
price at which such principal amount of Debt Securities of such series may be
purchased upon such exercise; (vi) the date on which the right shall expire (the
"Expiration Date"); (vii) whether the Securities Warrants will be issued in
registered or bearer form; (viii) any special United States Federal income tax
consequences; (ix) the terms, if any, on which the Company may accelerate the
date by which the Securities Warrants must be exercised; and (x) any other terms
of such Securities Warrants.

Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal or premium,
if any, or interest, if any, on such Debt Securities or to enforce covenants in
the applicable indenture. Prior to the exercise of any Securities Warrants to
purchase Common Stock or Preferred Stock, holders of such Securities Warrants
will not have any rights of holders of such Common Stock or Preferred Stock,
including the right to receive payments of dividends, if any, on such Common
Stock or Preferred Stock, or to exercise any applicable right to vote.

EXERCISE OF SECURITIES WARRANTS

Each Securities Warrant will entitle the holder thereof to purchase a
number of shares of Common Stock, Preferred Stock or such principal amount of
Debt Securities, as the case may be, at such exercise price as shall in each
case be set forth in, or calculable from, the Prospectus Supplement relating to
the offered Securities Warrants. After the close of business on the Expiration
Date (or such later date to which such Expiration Date may be extended by the
Company), unexercised Securities Warrants will become void.

Securities Warrants may be exercised by delivering to the Securities
Warrant agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Common Stock, Preferred Stock or Debt
Securities, as the case may be, purchasable upon such exercise together with
certain information set forth on the reverse side of the Securities Warrant
certificate. Securities Warrants will be deemed to have been exercised upon
receipt of payment of the exercise price, subject to the receipt within five (5)
business days, of the Securities Warrant certificate evidencing such Securities
Warrants. Upon receipt of such payment and the Securities Warrant certificate
properly completed and duly executed at the corporate trust office of the
Securities Warrant agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, issue and
deliver the Common Stock, Preferred Stock or Debt Securities, as the case may
be, purchasable upon such exercise. If fewer than all of the Securities Warrants
represented by such Securities Warrant certificate are exercised, a new
Securities Warrant certificate will be issued for the remaining amount of
Securities Warrants.

AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENT

The Securities Warrant Agreements may be amended or supplemented without
the consent of the holders of the Securities Warrants issued thereunder to
effect changes that are not inconsistent with the provisions of the Securities
Warrants and that do not adversely affect the interests of the holders of the
Securities Warrants.

16

COMMON STOCK WARRANT ADJUSTMENTS

Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by a Common
Stock Warrant are subject to adjustment in certain events, including (i) payment
of a dividend on the Common Stock payable in capital stock and stock splits,
combinations or reclassifications of the Common Stock, (ii) issuance to all
holders of Common Stock of rights or warrants to subscribe for or purchase
shares of Common Stock at less than their current market price (as defined in
the Securities Warrant Agreement for such series of Common Stock Warrants), and
(iii) certain distributions of evidences of indebtedness or assets (including
cash dividends or distributions paid out of consolidated earnings or retained
earnings or dividends payable in Common Stock) or of subscription rights and
warrants (excluding those referred to above).

No adjustment in the exercise price of, and the number of shares of Common
Stock covered by a Common Stock Warrant will be made for regular quarterly or
other periods or recurring cash dividends or distributions or for cash dividends
or distributions to the extent paid from consolidated earnings or retained
earnings. No adjustment will be required unless such adjustment would require a
change of at least 1% in the exercise price then in effect. Except as stated
above, the exercise price of, and the number of shares of Common Stock covered
by, a Common Stock Warrant will not be adjusted for the issuance of Common Stock
or any securities convertible into or exchangeable for Common Stock, or carrying
the right or option to purchase or otherwise acquire the foregoing in exchange
for cash, other property or services.

In the event of any (i) consolidation or merger of the Company with or into
any entity (other than a consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock), (ii) sale, transfer, lease or conveyance of all or substantially
all of the assets of the Company or (iii) reclassification, capital
reorganization or change of the Common Stock (other than solely a change in par
value or from par value to no par value), then any holder of a Common Stock
Warrant will be entitled, on or after the occurrence of any such event, to
receive on exercise of such Common Stock Warrant the kind and amount of shares
of stock or other securities, cash or other property (or any combination
thereof) that the holder would have received had such holder exercised such
holder's Common Stock Warrant immediately prior to the occurrence of such event.
If the consideration to be received upon exercise of the Common Stock Warrant
following any such event consists of common stock of the surviving entity, then
from and after the occurrence of such event, the exercise price of such Common
Stock Warrant will be subject to the same anti-dilution and other adjustments
described in the second preceding paragraph, applied as if such common stock
were Common Stock.

PLAN OF DISTRIBUTION

The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
Securities will be named in the applicable Prospectus Supplement. The Company
has reserved the right to sell Securities directly to investors on its own
behalf in those jurisdictions where and in such manner as it is authorized to do
so.

Underwriters may offer and sell Securities at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Company
also may, from time to time, authorize underwriters or dealers, acting as the
Company's agents, to offer and sell Securities upon the terms and conditions as
are set forth in the applicable Prospectus Supplement. In connection with the
sale of Securities, underwriters may be deemed to have received compensation
from the Company in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of the Securities for whom they may act
as agent. Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.

17

Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers, will be set forth
in the applicable Prospectus Supplement. Dealers and agents participating in the
distribution of Securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them on resale of
the Securities may be deemed to be underwriting discounts and commissions.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.

The net proceeds to the Company from the sale of the Securities will be the
purchase price of the Securities less any such discounts or commissions and the
other attributable expenses of issuance and distribution.

Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.

LEGAL MATTERS

Certain legal matters with respect to the Securities offered hereby will be
passed upon for the Company by Argue Pearson Harbison & Myers, LLP, Los Angeles,
California.

EXPERTS

The consolidated financial statements of Omega Healthcare Investors, Inc.
(the Company), incorporated by reference from the Company's Annual Report on
Form 10-K, for the year ended December 31, 1995, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report incorporated by
reference therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

18

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS AND RELATED PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS AND RELATED PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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TABLE OF CONTENTS



PAGE
----

PROSPECTUS SUPPLEMENT
Available Information.................... S-2
Prospectus Supplement Summary............ S-3
The Offering............................. S-5
Risk Factors............................. S-7
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends.............................. S-10
Use of Proceeds.......................... S-11
Capitalization........................... S-12
Selected Financial and Operating Data.... S-13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. S-14
Industry................................. S-16
Properties............................... S-17
Description of Series A Preferred
Stock.................................. S-18
Certain Federal Income Tax
Considerations......................... S-26
Underwriting............................. S-35
Legal Matters............................ S-36
PROSPECTUS
Available Information.................... 3
Documents Incorporated by Reference...... 3
The Company.............................. 4
Ratio of Earnings to Fixed Charges....... 5
Use of Proceeds.......................... 5
Description of Securities................ 5
Common Stock............................. 6
Preferred Stock.......................... 7
Debt Securities.......................... 11
Securities Warrants...................... 15
Plan of Distribution..................... 17
Legal Matters............................ 18
Experts.................................. 18


======================================================


2,000,000 SHARES

OMEGA HEALTHCARE INVESTORS, INC. LOGO

OMEGA HEALTHCARE
INVESTORS, INC.

9.25% SERIES A CUMULATIVE
PREFERRED STOCK

(LIQUIDATION PREFERENCE $25 PER SHARE)
--------------------

PROSPECTUS
SUPPLEMENT
--------------------
A.G. EDWARDS & SONS, INC.
COWEN & COMPANY
EVEREN SECURITIES, INC.
APRIL 25, 1997

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