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Eight analysts and top management from eight sector firms examine the healthcare facilities sector in this special 73-page Healthcare Facilities issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info547.htm

TWST: How would you differentiate among the three major nursing home companies — Beverly Enterprises (NYSE:BEV), Manor Care (NYSE:HCR) and Kindred Healthcare (Nasdaq:KIND) — as investments at this time?

Mr. Doctrow: We actually rate four nursing home companies. There’s Genesis, in addition to those you mentioned. Manor Care is certainly the traditional leader in that group. Beverly, historically, is the largest. It is much more dependent on Medicaid, which is a lower priced payor, and less on Medicare. Beverly came through the downturn without a bankruptcy filing, which is a plus for them. It has a new management team that’s been in there probably two years now and, I think, is making some impressive changes. They, however, have much higher debt levels than Manor Care, so that’s a key distinction.

TWST: Where do the healthcare REITs belong? Do they belong in a healthcare portfolio or a REIT portfolio?

Mr. Doctrow: I think one of the problems that healthcare REITs have had is that everyone asks themselves that question on a regular basis. I started in the business as an analyst on the REIT side and focused on the healthcare REITs, and in my mind they are probably more a real estate investment than they are a healthcare investment. Now that they’ve been among the best performing sectors in the REIT space for two years, there is discussion about changing the Morgan Stanley REIT Index, which has historically excluded health care, to include these stocks, and I think that would be a positive move. I think it’s appropriate to do so. And that would really signal a more complete acceptance of these stocks by the real estate community. Because they are affected by reimbursement issues, many dedicated REIT investors have been reluctant to get into health care. REIT investors who have purchased healthcare REITs have profited from them — certainly in the last couple of years — quite substantially, but some REIT investors have been reluctant. In healthcare portfolios we do find some institutional investors making that crossover to healthcare REITs — some just because they found them a good alternative way to play the rebound in the nursing home space; others, I think, are increasingly looking at healthcare REITs as an interesting way to balance volatility in a healthcare portfolio. For example, some of our clients who may be biotech-oriented are adding some healthcare REITs because they can reduce the overall volatility in their portfolios and still stay within their investment parameters of being in the healthcare sector. They can anchor volatility with some healthcare REITs and, perhaps, go after some biotech stocks that are on the more volatile side of their portfolio.

This special issue includes:

1) Healthcare Facilities - In an in-depth (13,700 words) Analyst Roundtable, B. Kemp Dolliver, Managing Director at SG Cowen Securities Corp., Adam Feinstein, Vice President in Equity Research at Lehman Brothers, John Hindelong, Managing Director of Credit Suisse First Boston, Frank G. Morgan, Managing Director at Jefferies & Company, Inc. and Michael Yellen, Senior Portfolio Manager at AIM Capital Management Group, examine the outlook for the sector including earnings guidance, stock performance and share specific stock recommendations.

2) Hospitals & Healthcare Facilities - In an in-depth (3,500 words) Analyst Interview, Gary Taylor, Vice President, Equity Research at Banc of America Securities LLC, examines the outlook for the sector and shares specific stock recommendations.

3) Assisted Living & Healthcare REITs - In an in-depth (5,200 words) Analyst Interview, Jerry L. Doctrow, Managing Director, Equity Research at Legg Mason Wood Walker, Inc., examines the outlook for the sector and shares specific stock recommendations.

4) Long-Term Care & Specialized Service Providers - In an in-depth (6,700 words) Analyst Interview, Matthew Ripperger, Vice President and Equity Research Analyst at JP Morgan, examines the outlook for the sector and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of eight sector firms examine the outlook for their firm and the sector.