SecProbe.io

CORRESP
1
filename1.htm

corresp

[Windrose Medical Properties Trust Letterhead]

June 16, 2005

VIA EDGAR

Ms. Linda van Doorn

Senior Assistant Chief Accountant

United States Securities and Exchange Commission

Division of Corporate Finance

Mail Stop 0409

450 Fifth Street, N.W.

Washington, D.C. 20549

    RE:

    Windrose Medical Properties Trust

    Form 10-K for the year ended December 31, 2004

    Filed March 14, 2005

    File No. 1-31375

Dear Ms. van Doorn:

     We are submitting this response to your letter dated June 2, 2005 with respect to the comments
of the Staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange
Commission (the “Commission”) to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 (the “Form 10-K”).

     For convenience of reference, each Staff comment contained in your letter is reprinted below
in italics, numbered to correspond with the paragraph numbers assigned in your June 2, 2005 comment
letter, and is followed by our corresponding response.

Form 10-K for the year ended December 31, 2004

Note 2 Summary of Significant Accounting Policies

Real Estate Investments, page F-9

    1.

    Please expand upon your response to comment 2 in our letter dated May 9, 2005 to clarify how
your input-based approach to recognizing contract revenues using the percentage of completion
method is a reasonable surrogate for an output-based approach. In your response, please
address the following:

    •

    whether upon termination of the contract you are entitled to collect fees based on
hours incurred;

    •

    whether there are significant start-up costs; and

    •

    your realization and loss experience under these types of contracts.

Ms. Linda van Doorn

June 16, 2005

Page 2

Response: We believe that the Company’s input-based approach to recognizing contract
revenues using the percentage of completion method is a reasonable surrogate for an output-based
approach because in the Company’s case there are no valid units of output for measuring progress
other than hours expended. Our typical project management contract utilizes a milestone billing
approach which has the Company collecting a portion of the fee as follows:

    •

    at contract signing;

    •

    upon plan and design completion;

    •

    upon funding; and

    •

    progress payments during each month of actual construction.

This billing approach reduces the Company’s risk because we are in essence prepaid for our
services.

Contracts cannot be terminated without penalty. If contracts are terminated, the contracts
require clients to pay a termination fee that is based on actual labor costs (multiplied by a
factor, which is typically 2.85) and expenses incurred through the termination date. Depending
on the reason for termination, there can be an additional termination fee of 50% of the
outstanding balance of the remainder of the fee. We have had only one contract terminated before
its completion in the past 5 years. In this situation, we recovered all costs based on hours
incurred and expenses through the termination and our service company did not have a resulting
loss.

Start-up costs are not significant. By design we expend very little effort until the contract is
executed, and all start-up costs are expensed as incurred. We have not experienced any losses
under these types of contracts. Furthermore, because we are project managers and not general
contractors, based on the information above, we believe that the most reasonable measure of
measuring revenue earned by our service operations is based on labor hours incurred.

Ms. Linda van Doorn

June 16, 2005

Page 3

     If you have any questions or comments regarding the foregoing, or have additional questions or
comments, please contact the undersigned at 317-860-8855.

Very truly yours,

/s/ C. Douglas
Hanson

C. Douglas
Hanson,

Chief Financial Officer

    cc:

    Mr. Eric McPhee

    Mr. Fred S. Klipsch

    Mr. Frederick L. Farrar

    Mr. David C. Wright