2011 Fourth Quarter Same Community Results

As of December 31, 2011, the consolidated Emeritus portfolio consisted of 328 communities, of which 262 communities are included in the Company’s definition of same communities. Total same community revenue increased $2.2 million to $232.5 million in the fourth quarter of 2011, with $1.4 million coming from rate increases and the balance from occupancy improvements. Average monthly revenue per occupied unit increased 0.6% to $3,831 in the fourth quarter of 2011 from $3,807 in the corresponding period in 2010. Average occupancy increased 30 basis points to 88.0% in the fourth quarter of 2011 from 87.7% in the comparative period last year.

The Company’s same community operating expenses increased $5.4 million to $153.4 million in the fourth quarter of 2011. Operating expenses reflected a $0.3 million, or 0.5%, increase in salary and wages as well as increases in health insurance, workers’ compensation insurance, professional liability insurance, and repairs and maintenance expenses, offset by reductions in certain other categories. On a per resident day basis, same community salaries and wages decreased by 0.1%.

Same community operating income decreased $3.3 million to $79.1 million with a 34.0% operating margin in the fourth quarter of 2011.

Fourth Quarter 2011 Transactions and Refinancings

Dispositions

In December 2011, the Company sold five communities and paid off the related mortgage debt totaling $19.6 million.

Debt Refinancings

In October 2011, the Company entered into a loan agreement with KeyBank in the amount of $112.0 million to refinance the existing mortgage debt on 16 communities. The loan agreement has a three-year term and interest accrues at a rate equal to the one-month LIBOR plus a margin, which ranges from 4.75% to 6.75%, depending upon the loan-to-value ratio of the communities each month. The Company is required to make monthly principal payments of $500,000, decreasing to $250,000 per month beginning December 1, 2012.

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