8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) May 6, 2008

Capital Senior Living Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

1-13445	75-2678809
(Commission File Number)	(IRS Employer Identification No.)

14160 Dallas Parkway Suite 300 Dallas, Texas	75254
(Address of Principal Executive Offices)	(Zip Code)

(972) 770-5600

(Registrant’s Telephone Number, Including Area Code)

 
(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     On May 6, 2008, Capital Senior Living Corporation (the “Company”) announced its financial results for the quarter ended March 31, 2008 by issuing a press release. The full text of the press release issued in connection with the announcement is attached hereto as Exhibit No. 99.1. This information being furnished under this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The press release contains, and may implicate, forward-looking statements regarding the Company and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

     In the press release, the Company’s management utilized non-GAAP financial measures to describe the Company’s adjusted EBITDAR, cash earnings, cash earnings per share and other items. These non-GAAP financial measures are used by management to evaluate financial performance and resource allocation for its facilities and for the Company as a whole. These measures are commonly used as an analytical indicator within the senior housing industry, and also serve as a measure of leverage capacity and debt service ability. The Company has provided this information in order to enhance investors overall understanding of the Company’s financial performance and prospects. In addition, because the Company has historically provided this type of information to the investment community, the Company believes that including this information provides consistency in its financial reporting.

     These non-GAAP financial measures should not be considered as measures of financial performance under generally accepted accounting principles, and items excluded from them are significant components in understanding and assessing financial performance. These measures should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing, or financing activities, earnings per share or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. Because these measures are not measurements determined in accordance with generally accepted accounting principles and are thus susceptible to varying calculations, these measures as presented may not be comparable to other similarly titled measures of other companies.

Item 7.01 Regulation FD Disclosure.

     Attached hereto as Exhibit 99.2 is an updated slideshow presentation of the Company.

     By filing this Current Report on Form 8-K, the Company does not acknowledge that disclosure of this information is required by Regulation FD or that the information was material or non-public before the disclosure. The Company assumes no obligation to update or supplement forward-looking statements in this slideshow that become untrue because of new information, subsequent events or otherwise.

Item 9.01 Financial Statements and Exhibits.

     (a) Not applicable.

     (b) Not applicable.

     (c) Not applicable.

     (d) Exhibits.

     The following exhibits to this current report on Form 8-K are not being filed by are being furnished pursuant to Item 2.02 and Item 7.01:

          99.1 Press Release dated May 6, 2008.

          99.2 Capital Senior Living Corporation updated slideshow presentation.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 6, 2008	Capital Senior Living Corporation
	By:	/s/ Ralph A. Beattie
	Name:	Ralph A. Beattie
	Title:	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

     The following exhibits to this current report on Form 8-K are not being filed by are being furnished pursuant to Item 2.02 and Item 7.01:

          99.1 Press Release dated May 6, 2008.

          99.2 Capital Senior Living Corporation updated slideshow presentation.

EX-99.1

Exhibit 99.1

For Immediate Release	Contact:	Ralph A. Beattie
		972/770-5600

CAPITAL SENIOR LIVING CORPORATION
REPORTS FIRST QUARTER 2008 RESULTS

DALLAS — (BUSINESS WIRE) — May 6, 2008 — Capital Senior Living Corporation (NYSE:CSU), one of the country’s largest operators of senior living communities, today announced operating results for the first quarter of 2008. Company highlights for the first quarter include:

Financial Highlights

• Revenues of $48.5 million increased $2.3 million or approximately 5 percent from the first quarter of 2007.

• First quarter 2008 net income was $1.5 million or $0.06 per diluted share versus $0.9 million or $0.03 per diluted share in the first quarter of the prior year.

• Adjusted EBITDAR (income from operations plus depreciation and amortization and facility lease expense) of $14.4 million increased approximately 9 percent from the prior year period.

• Adjusted EBITDAR margin of 29.6 percent improved 110 basis points from the first quarter of 2007.

• Adjusted net income was $1.5 million or $0.06 per diluted share in the first quarter of 2008 compared to adjusted net income of $1.0 million or $0.04 per diluted share in the first quarter of 2007. Adjusted net income for the first quarter of 2008 excludes the write-off of due diligence costs related to a potential acquisition that the Company terminated in the first quarter, legal and proxy expenses associated with a negotiated settlement to avoid a proxy contest and also excludes gains on the sale of two parcels of land and an adjustment to the carrying value of a third parcel which is held for sale. The combined net effect of these adjustments is less than $0.1 million. Adjusted net income for the first quarter of 2007 excludes a gain of less than $0.1 million on the sale of a parcel of land and approximately $0.1 million of deferred loan costs and exit fees as a result of refinancing a community to reduce the interest rate on its mortgage.

• Adjusted cash earnings (net income plus depreciation and amortization) for the first quarter of 2008 were $4.5 million or $0.17 per diluted share versus $3.7 million or $0.14 per diluted share for the first quarter of 2007, with the adjustments noted above.

Operational Highlights

• Average physical occupancy rate for the 60 stabilized communities was 89 percent.

• Operating margins (before property taxes, insurance and management fees) were 48.5 percent in stabilized independent and assisted living communities.

• At communities under management, same-store revenue increased 3.3 percent versus the first quarter of 2007 as a result of a 4.4 percent increase in average

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monthly rent. Same-community expenses increased 2.5 percent and net income increased 4.6 percent from the comparable period of the prior year. Incremental EBITDAR margin on same-store revenue increases was approximately 54 percent.

Significant Transactions

In February of 2008, the Company entered into a lease on the Whitley Place community located in Keller, Texas. This 47-unit assisted living community has capacity for 65 seniors and is expected to produce annual revenues of approximately $1.4 million.

Whitley Place was purchased by a publicly traded healthcare REIT from a third party for approximately $5 million. The Company has leased this community on a ten-year term with two five-year renewal options. The initial lease rate of 7.75 percent is subject to conditional escalation provisions.

“We remain committed to increasing shareholder value by executing our 2008 Business Plan,” said James A. Stroud, Chairman of the Company. “The successful execution of this plan is evident in the same-store results for the first quarter of 2008. Average monthly rent increased 4.4 percent while expenses increased 2.5 percent resulting in a 4.6 percent increase in net income. Our incremental EBITDAR margin of approximately 54 percent was also positive in the first quarter.”

OPERATING AND FINANCIAL RESULTS

For the first quarter of 2008, the Company reported revenue of $48.5 million, compared to revenue of $46.2 million in the first quarter of 2007, an increase of approximately $2.3 million or 5 percent. Resident and healthcare revenue increased from the first quarter of the prior year by approximately $1.5 million, or 4 percent. The number of consolidated communities increased from 48 in the first quarter of 2007 to 50 in the first quarter of 2008. Financial occupancy of the consolidated portfolio averaged 87.4 percent in the first quarter of 2008 with an average monthly rent of $2,415 per occupied unit. Affiliated management services revenue increased from $0.5 million in the first quarter of 2007 to $1.4 million in the first quarter of 2008, due to development fees earned on three communities in joint ventures.

Revenues under management increased approximately 2 percent to $55.0 million in the first quarter of 2008 from $54.0 million in the first quarter of 2007. Revenues under management includes revenue generated by the Company’s consolidated communities, communities owned in joint ventures and communities owned by third parties that are managed by the Company. There were 64 communities under management in both periods.

Operating expenses increased by $1.2 million from the first quarter of 2007. As a percentage of resident and healthcare revenues, operating expenses were 62.1 percent.

General and administrative expenses of $3.6 million exceeded the first quarter of the prior year by approximately $0.5 million. These expenses included approximately $0.3

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million of due diligence costs which were written off when a potential acquisition was terminated and approximately $0.2 million of costs incurred to avoid a proxy contest. As a percentage of revenues under management, general and administrative expenses declined from 5.8 percent in the first quarter of 2007 to 5.6 percent in the first quarter of 2008, excluding the due diligence and proxy expenses.

Facility lease expenses were $6.1 million in the first quarter of 2008, approximately $0.4 million higher than the first quarter of 2007, reflecting 25 leased communities this year versus 23 last year, along with increases in contingent rent. The Company has reclassified in both the current and prior year periods the amortization of deferred gains on sale leaseback transactions from gain on sale of assets to a reduction of facility lease expense to better conform with industry practice.

Depreciation and amortization expense increased $0.3 million from the first quarter of the prior year, as a result of capital improvements at certain of the Company’s owned and leased facilities along with depreciation incurred this quarter related to new information systems which became operational on January 1, 2008.

Adjusted EBITDAR for the first quarter of 2008 was approximately $14.4 million, an increase of 9 percent from $13.2 million in the first quarter of 2007. Adjusted EBITDAR margin was 29.6 percent for the period, a 110 basis point improvement from the comparable period of the prior year.

Interest income was $0.1 million in the current quarter as the Company earned interest on cash balances and lease deposits. Interest expense was $3.1 million in the first quarter of 2008, compared to $3.3 million in the first quarter of 2007, reflecting a combination of lower debt outstanding and a lower average interest rate.

Gain on sale of assets in the first quarter of 2008 represents gains of $0.7 million from the sales of two parcels of land, the reduction in carrying value of $0.1 million for a third parcel of land and the amortization of a deferred gain on the sale of the Richmond Heights land to a joint venture in which the Company has an equity interest.

The Company reported a pre-tax profit of approximately $2.4 million in the first quarter of 2008 compared to a pre-tax profit of approximately $1.5 million in the first quarter of 2007. Excluding approximately $0.3 million of write-offs for due diligence costs, approximately $0.2 million of unusual legal and proxy-related expenses and approximately $0.6 million of net gains on three parcels of land, adjusted pre-tax profit is $2.4 million for the first quarter of 2008. Adjusted pre-tax profit for the first quarter of 2007 was $1.6 million, excluding gains on the sale of land and the write-off of deferred loan costs and exit fees.

The Company reported net income of $1.5 million or $0.06 per diluted share in the first quarter of 2008 versus net income of $0.9 million or $0.03 per diluted share in the first quarter of 2007. Excluding the adjustments noted above, the net income of $0.06 per diluted share in the first quarter of 2008 compares to net income of $0.04 per diluted share in the first quarter of 2007.

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On this same basis, adjusted cash earnings (net income plus depreciation and amortization) were $4.5 million or $0.17 per diluted share in the first quarter of 2008, versus $3.7 million or $0.14 per diluted share in the first quarter of 2007.

“The first quarter of the year is typically the most challenging as we deal with higher levels of attrition and harsh weather conditions,” said Lawrence A. Cohen, Chief Executive Officer. “Despite these challenges, we continue to demonstrate positive results from leveraging our operating platform, increasing rents and tightly controlling expenses. Our 2008 Business Plan is focused on increasing capacity and levels of care through expansions, conversions, new developments and home health care to meet the needs of our residents who average 85 years of age. These investments typically produce excellent returns on invested capital and are expected to build shareholder value.”

CAPITAL OVERVIEW AND FINANCING

Capital expenditures in the first quarter of 2008 were approximately $1.7 million. Other investing activities for the quarter include net investments in joint ventures of $0.6 million, offset by proceeds of $1.4 million from the sale of two parcels of land. The Company ended the quarter with approximately $24.6 million of cash and cash equivalents and approximately $188.3 million of mortgage debt at fixed interest rates averaging approximately 6.1 percent.

Other investing activities for the quarter include net investments in joint ventures of $0.6 million, offset by proceeds of $1.4 million from the sale of two parcels of land. The Company ended the quarter with approximately $188.3 million of mortgage debt at fixed interest rates averaging approximately 6.1 percent.

1Q08 CONFERENCE CALL INFORMATION

The Company will host a conference call with senior management to discuss the Company’s first quarter 2008 financial results. The call will be held on Wednesday, May 7, 2008 at 11:00 a.m. Eastern daylight time.

The call-in number is 913-312-1463, confirmation code 1462187. A link to a simultaneous webcast of the teleconference will be available at www.capitalsenior.com through Windows Media Player or RealPlayer.

For the convenience of the Company’s shareholders and the public, the conference call will be recorded and available for replay starting May 7, 2008 at 2:00 pm Eastern Time, until May 16, 2008 at 8:00 pm Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 1462187. The conference call will also be made available for playback via the Company’s corporate website, www.capitalsenior.com, and will be available until the next earnings release date.

ABOUT THE COMPANY

Capital Senior Living Corporation is one of the nation’s largest operators of residential communities for senior adults. The Company’s operating philosophy emphasizes a continuum of care, which integrates independent living, assisted living and home care services, to provide residents the opportunity to age in place.

The Company currently operates 64 senior living communities in 23 states with an aggregate capacity of approximately 9,400 residents, including 37 senior living

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communities which the Company owns or in which the Company has an ownership interest, 25 leased communities and 2 communities it manages for third parties. In the communities operated by the Company, 69 percent of residents live independently, 24 percent of residents require assistance with activities of daily living and 7 percent of residents live in continuing care retirement communities.

The forward-looking statements in this release are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company’s ability to find suitable acquisition properties at favorable terms, financing, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing conditions such as those pertaining to licensure, availability of insurance at commercially reasonable rates, and changes in accounting principles and interpretations among others, and other risks and factors identified from time to time in our reports filed with the Securities and Exchange Commission.

This release contains certain financial information not derived in accordance with generally accepted accounting principles (GAAP), including adjusted EBITDAR, cash earnings, cash earnings per share and other items. The Company believes this information is useful to investors and other interested parties. Such information should not be considered as a substitute for any measures derived in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an attachment to this release.

Contact Ralph A. Beattie, Chief Financial Officer, at 972-770-5600 or Cameron Donahue or Brett Maas, Hayden Communications, Inc., at 646-653-1854 for more information.

CAPITAL/Page 6

CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

	March 31,		December 31,
	2008		2007
ASSETS
Current assets:
Cash and cash equivalents	$	24,603	$	23,359
Accounts receivable, net		4,112		3,232
Accounts receivable from affiliates		1,238		846
Federal and state income taxes receivable		1,570		2,084
Deferred taxes		844		996
Assets held for sale		354		1,011
Property tax and insurance deposits		6,118		7,860
Prepaid expenses and other		2,619		4,526
Total current assets		41,458		43,914
Property and equipment, net		308,894		310,442
Deferred taxes		12,609		12,824
Investments in limited partnerships		6,848		6,199
Other assets, net		16,778		16,674
Total assets	$	386,587	$	390,053
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,669	$	1,201
Accrued expenses		10,912		13,561
Current portion of notes payable		7,633		9,035
Current portion of deferred income		5,426		5,174
Customer deposits		1,932		2,024
Total current liabilities		27,572		30,995
Deferred income		22,291		23,168
Notes payable, net of current portion		184,848		185,733
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $.01 par value:
Authorized shares — 15,000; no shares issued or outstanding		—		—
Common stock, $.01 par value:
Authorized shares — 65,000; issued and outstanding shares 26,597 and 26,596 in 2008 and 2007, respectively		266		266
Additional paid-in capital		129,388		129,159
Retained earnings		22,222		20,732
Total shareholders’ equity		151,876		150,157
Total liabilities and shareholders’ equity	$	386,587	$	390,053

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CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31,
	2008			2007
Revenues:
Resident and health care revenue	$	42,844		$	41,305
Unaffiliated management services revenue		42			88
Affiliated management services revenue		1,433			539
Community reimbursement revenue		4,198			4,294
Total revenues		48,517			46,226
Expenses:
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)		26,606			25,385
General and administrative expenses		3,618			3,135
Facility lease expense		6,136			5,720
Stock-based compensation expense		229			251
Depreciation and amortization		3,033			2,745
Community reimbursement expense		4,198			4,294
Total expenses		43,820			41,530
Income from operations		4,697			4,696
Other income (expense):
Interest income		127			151
Interest expense		(3,065	)		(3,285	)
Gain on sale of properties		600			67
Write-off of deferred loan costs		—			(187	)
Other income		53			55
Income before income taxes		2,412			1,497
Provision for income taxes		(922	)		(577	)
Net income		1,490		$	920
Per share data:
Basic income per share	$	0.06		$	0.04
Diluted income per share	$	0.06		$	0.03
Weighted average shares outstanding — basic		26,341			26,149
Weighted average shares outstanding — diluted		26,623			26,636

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CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS

	Three Months Ended March 31,
	2008			2007
Adjusted EBITDAR
Income from operations	$	4,697		$	4,696
Depreciation and amortization expense		3,033			2,745
Facility lease expense		6,136			5,720
Unusual legal/proxy costs		176			—
Write-off of Hearthstone acquisition costs		337			—
Adjusted EBITDAR	$	14,379		$	13,161
Adjusted EBITDAR Margin
Adjusted EBITDAR	$	14,379		$	13,161
Total revenues		48,517			46,226
Adjusted EBITDAR margin		29.6	%		28.5	%
Adjusted net income and net income per share
Net income	$	1,490		$	920
Unusual legal/proxy costs, net of tax		109			—
Write-off of Hearthstone acquisition costs, net of tax		208			—
Asset held for sale impairment, net of tax		83			—
Gain on sale of land parcels, net of tax		(423	)		(41	)
Write-off deferred loan costs, net of tax		—			115
Adjust net income	$	1,467		$	994
Adjusted net income per share	$	0.06		$	0.04
Diluted shares outstanding		26,623			26,636
Adjusted cash earnings and cash earnings per share
Net income	$	1,490		$	920
Depreciation and amortization expense		3,033			2,745
Unusual legal/proxy costs, net of tax		109			—
Write-off of Hearthstone acquisition costs, net of tax		208			—
Asset held for sale impairment, net of tax		83			—
Gain on sale of land parcels, net of tax		(423	)		(41	)
Write-off deferred loan costs, net of tax		—			115
Adjusted cash earnings	$	4,500		$	3,739
Adjusted cash earnings per share	$	0.17		$	0.14
Diluted shares outstanding		26,623			26,636
Adjusted income before income taxes
Income before income taxes	$	2,412		$	1,497
Unusual legal/proxy costs		176		$	—
Write-off of Hearthstone acquisition costs		337			—
Asset held for sale impairment		134			—
Gain on sale of land parcels, net of tax		(684	)		(66	)
Write-off deferred loan costs, net of tax		—			187
Adjusted income before income taxes	$	2,375		$	1,618

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Capital Senior Living Corporation

Supplemental Information

	Communities						Resident Capacity						Units
	Q1 08			Q1 07			Q1 08			Q1 07			Q1 08			Q1 07
Portfolio Data
I. Community Ownership / Management
Consolidated communities
Owned		25			25			3,926			3,926			3,503			3,503
Leased		25			23			3,775			3,625			3,152			3,025
Joint Venture communities (equity method)		12			12			1,406			1,406			1,221			1,221
Third party communities managed		2			4			294			587			239			488
Total		64			64			9,401			9,544			8,115			8,237
Independent living								6,505			6,713			5,569			5,738
Assisted living								2,241			2,176			1,928			1,881
Continuing Care Retirement Communities								655			655			618			618
Total								9,401			9,544			8,115			8,237
II. Percentage of Operating Portfolio
Consolidated communities
Owned		39.1	%		39.1	%		41.8	%		41.1	%		43.2	%		42.5	%
Leased		39.1	%		35.9	%		40.2	%		38.0	%		38.8	%		36.7	%
Joint venture communities (equity method)		18.8	%		18.8	%		15.0	%		14.7	%		15.0	%		14.8	%
Third party communities managed		3.1	%		6.3	%		3.1	%		6.2	%		2.9	%		5.9	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Independent living								69.2	%		70.3	%		68.6	%		69.7	%
Assisted living								23.8	%		22.8	%		23.8	%		22.8	%
Continuing Care Retirement Communities								7.0	%		6.9	%		7.6	%		7.5	%
Total								100.0	%		100.0	%		100.0	%		100.0	%
Selected Operating Results
I. Consolidated communities
Number of communities		50			48
Resident capacity		7,701			7,551
Unit capacity		6,655			6,528
Financial occupancy (1)		87.4	%		89.4	%
Revenue (in millions)		42.5			41.2
Operating expenses (in millions) (2)		23.8			22.7
Operating margin		44	%		45	%
Average monthly rent		2,415			2,326
II. Waterford / Wellington communities
Number of communities		17			17
Resident capacity		2,426			2,426
Unit capacity		2,132			2,132
Financial occupancy (1)		89.8	%		91.6	%
Revenue (in millions)		11.7			11.4
Operating expenses (in millions) (2)		6.5			6.3
Operating margin		44	%		45	%
Average monthly rent		2,044			1,962
III. Communities under management
Number of communities		64			64
Resident capacity		9,401			9,544
Unit capacity		8,115			8,237
Financial occupancy (1)		87.6	%		88.7	%
Revenue (in millions)		55.0			54.0
Operating expenses (in millions) (2)		30.0			29.4
Operating margin		45	%		46	%
Average monthly rent		2,559			2,441
IV. Same Store communities under management
Number of communities		63			63
Resident capacity		9,336			9,336
Unit capacity		8,068			8,068
Financial occupancy (1)		87.6	%		88.5	%
Revenue (in millions)		55.0			53.2
Operating expenses (in millions) (2)		30.0			29.0
Operating margin		45	%		45	%
Average monthly rent		2,568			2,460
V. General and Administrative expenses as a percent of Total Revenues under Management
First Quarter (3)		5.6	%		5.8	%

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VI. Consolidated Debt Information (in thousands, except for interest rates) Excludes insurance premium financing
Fixed rate debt	188,269		161,260
Variable rate debt, with a cap	—		32,716
Variable rate debt, no cap or floor	—		—
Total debt	188,269		193,976
Fixed rate debt — weighted average rate	6.1	%	6.1	%
Variable rate debt — weighted average rate	0.0	%	7.6	%
Total debt — weighted average rate	6.1	%	6.4	%

(1)	- Financial occupancy represents actual days occupied divided by total number of available days during the month of the quarter.
(2)	- Excludes management fees, insurance and property taxes.
(3)	- Excludes due diligence costs which were written off when a potential acquisition was terminated and costs incurred to avoid a proxy contest.

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EX-99.2

Exhibit 99.2

Capital Senior Living Corporation Capital Senior Living Corporation

Forward-Looking Statements The forward-looking statements in this presentation are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company's ability to complete the refinancing of certain of our wholly owned communities, realize the anticipated savings related to such financing, find suitable acquisition properties at favorable terms, financing, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing conditions such as those pertaining to licensures, availability of insurance at commercially reasonable rates and changes in accounting principles and interpretations among others, and other risks and factors identified from time to time in our reports filed with the Securities and Exchange Commission The Company assumes no obligation to update or supplement forward- looking statements in this presentation that become untrue because of new information, subsequent events or otherwise.

Company Overview Capital Senior Living owns and/or operates 64 communities in 23 states with the ability to serve 9,401 residents 50 of these communities are owned or leased with resident capacity of 7,701 Achieved 94% approval rating in 2007 residents' satisfaction survey Owned Leased Joint Venture Managed 0.43 0.39 0.15 0.03 Independent living Assisted living CCRC 0.6505 0.2241 0.0686 Units by Ownership Type Resident Capacity Mix

The Capital Advantage: Senior Living Options Average 131 units per IL community with large common areas and amenities Wide array of social, recreational, and educational events Average monthly rate of $2,200 100% private pay Average length of resident stay is 34 months Independent Living - 69% of Portfolio

The Capital Advantage: Senior Living Options Average 64 units per AL community Assistance with activities of daily living such as medication reminders, bathing, dressing and grooming Average monthly rate of $3,100 96% private pay Average length of resident stay is 26 months Assisted Living - 24% of Portfolio

Resident Demographics at CSU Communities Average age of resident: 85 years Average age of resident moving in: 82 years Average stay period: 2-3 years Percent of female residents: 80% Resident turnover is primarily attributed to death or need for higher care

? Wholly Owned (25) ? JV Ownership/Managed (12) ? Leased (25) ? Management Only (2) ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? The Capital Advantage: Established National Platform (Parenthetical indicates years of experience in industry) ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Western Region Lesley Tejada (29) Gary Fernandez (10) Central Plains Region Kevin Wilbur (10) Marla Rhoads (15) Dallas Region Carole Burnell (10) Tammy Pannell (12) Texas Region Greg Boemer (15) Rob Goodpaster (31) (Interim) Southwest Region Duane Ness (14) Linda McAlister (11) Midwest Region Charlie Schott (22) Donna Monroe (10) Eastern Region Gary Vasquez (27) Tina Tedford (19)

Favorable Demographics US population 75+ years old is estimated to grow by 3.8 million through 2015 Only 1.8 million units serving a population of 18.6 million seniors Current 9.6% penetration rate implies demand growth of 45,000 units per year 2007 2015 East 18.6 22.4 Population (MM) Source: Centers for Medicare & Medicaid Services, Office of the Actuary US Seniors Population Trends (75+ years old) Implied demand growth of 45,000 units per year

Favorable Supply Trends Source: National Investment Center / American Seniors Housing Association Seniors Housing Construction Trends Report, 2006 & NIC Key Financial Indicators * Including independent living, assisted living and continuing care retirement communities 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Units * 42800 47800 62100 32800 22700 16900 19800 23500 23300 18200 15400 Seniors Housing Construction Activity and Industry Occupancy Percentages CAGR of 1.3%

The Capital Advantage: Proven Track Record Stabilized Operating Results Capital Senior Living Industry Averages Industry Averages Capital Senior Living Independent Living Assisted Living Occupancy 1 89.0% 91.5% 88.5% Operating Margins 2,3 48.5% 52.6% 44.4% First Quarter 2008 CSU and Fourth Quarter NIC Key Financial Indicators Before property taxes, insurance and management fees First Quarter 2008 CSU and from The State of Seniors Housing 2007 by the American Seniors Housing Association (ASHA)

The Capital Advantage: Proven Track Record Same Store Analysis for Communities Under Management Same Store Average Revenue growth of 6.1%, with 13.7% Average Net Operating Income growth since 2003 2004 2005 2006 2007 Revenue 0.069 0.063 0.073 0.04 Net Operating Income 0.148 0.162 0.152 0.086

Industry Median Increases in Resident Revenue 2000 2001 2002 2003 2004 2005 2006 Existing IL Residents 0.045 0.04 0.04 0.04 0.04 0.04 0.045 New IL Residents 0.05 0.05 0.05 0.04 0.04 0.046 0.047 Source: ASHA The State of seniors Housing 2007 2000 2001 2002 2003 2004 2005 2006 Existing AL Residents 0.05 0.05 0.04 0.05 0.05 0.05 0.06 New AL Residents 0.055 0.05 0.05 0.05 0.05 0.05 0.04

2008 Business Plan Increase levels of care and capacity through expansions, conversions and new developments Acquire home care agency in clustered markets to provide home health and ancillary services Organic growth from rate increases, cost savings and occupancy growth Accretive acquisitions in highly fragmented industry to enhance geographic clustering

Growth Initiatives: Expansions, Conversions and Developments Intend to add additional levels of care at eleven communities Expected EBITDAR of $8.1 million, resulting in a 28% ROI Three new joint venture developments are currently underway that will add 434 units (299 IL, 135 AL) Units Estimated Cost Expected Revenues (1) Incremental EBITDAR Margin % 8 AL Conversions (2) 256 $2,000,000 $4,300,000 60% 3 Expansions (3) 270 $27,000,000 $9,100,000 60% Upon stabilization Conversions are expected to be complete in 2008 Expansions are expected to be complete in the first half of 2009

Growth Initiatives: Expansions IL IL AL AL Total Total Units Occ% Units Occ% Units Occ% Annual Revenue Pre-expansion 65 100% - - 65 100% $1.3M 2007 114 98% 48 96% 162 98% $4.6M Added 49 IL units and 48 AL units $6.8 million total cost Annual revenues increased 3.5 times since expansion Cottonwood case study

Growth Initiatives: Conversions IL IL AL AL Total Total Units Occ% Units Occ% Units Occ% Annual Revenue 2003 105 48% 45 100% 150 60% $2.0M 2007 118 94% 29 97% 147 95% $3.5M Relocated AL units to a new wing $800,000 total cost Annual revenues increased 75%, with an increase of over 50% in occupancy Sedgwick case study

Growth Initiatives : Operating Leverage in Consolidated Communities $2.0 million incremental revenue for every 1.0% of financial occupancy gain $8.5 million incremental revenue from a 5% increase in average monthly rent 80% incremental EBITDAR margin on same store revenue increases

Growth Initiatives: Acquisition/Lease Transactions Year 1 Year 2 $ Increase % Increase Revenue $25,000,000 $26,500,000 $1,500,000 6.0% Operating Expense $15,000,000 $15,600,000 $600,000 4.0% EBITDAR $10,000,000 $10,900,000 $900,000 9.0% Lease Expense $7,800,000 $8,000,000 $200,000 2.5% EBITDA $2,200,000 $2,900,000 $700,000 32.0% Example of $100 million acquisition/lease transaction: Completed 21 acquisition/lease transactions for a total value of $249 million since Q4 2005

Growth Initiatives: Joint Venture Acquisitions and Developments Joint venture partners Blackstone Real Estate Advisors GE Healthcare Financial Services Prudential Real Estate Investors Twelve communities are owned with joint venture partners Three developments are underway with joint venture partner Co-invest with joint venture partners to participate in economics: 5% - 15% Capital Senior Living 95% - 85% JV Partners Earn management/development fees, return on equity investment and potential for additional incentives

Example of Joint Venture Economics Venture CSU Partner NOI $ 8,000,000 Cap Rate 8% Purchase Price $100,000,000 Debt $ 75,000,000 Equity $ 25,000,000 $2,500,000 $22,500,000 Revenues $ 25,000,000 Mgt. Fees (5%) $1,250,000 ROE (14.0%) $ 350,000 $ 3,150,000 Total First Year Return $1,600,000 $ 3,150,000 Total Return % 64% 14%

Capital Advantage: Financial Growth Revenue and Adjusted EBITDAR ($ in millions) Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Revenue 31.5 32.1 33.9 37.1 43 46.2 Adjusted EBITDAR 8.4 8.8 9.6 10.3 11.9 13.2 Adjusted EBITDAR Margin % 0.3 0.3 0.3 0.3 0.3 0.3 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Revenue 35.03 36.557 37.722 41.821 42.97 46.2 46.9 47.8 48.2 48.5 Adjusted EBITDAR Margin % 0.24 0.241 0.25 0.247 0.277 0.286 0.286 0.294 0.309 0.296 Adjusted EBITDAR 8.4 8.8 9.6 10.3 11.9 13.2 13.4 14 14.9 14.4

Income Statement: Q1 Comparison (in millions, except per share) 2008* 2007* %Change Resident & Health Care Revenue $42.8 $41.3 3.6% Other Revenue 5.7 4.9 16.3% Total Revenues $48.5 $46.2 5.0% Operating Expenses 30.8 29.6 4.1% General & Administrative Expenses 3.3 3.4 (2.9%) EBITDAR $14.4 $13.2 9.1% Lease Expense 6.1 5.7 7.0% Depreciation & Amortization 3.0 2.7 11.1% Income from Operations $5.3 $4.8 10.4% Other Income / (Expense) (2.9) (3.2) (9.4%) Taxes & Minority Interests (0.9) (0.6) 50.0% Net Income $1.5 $1.0 50.0% Earnings Per Share $0.06 $0.04 50.0% Cash Earnings Per Share $0.17 $0.14 21.4% * As adjusted per press releases

Since Q1 2006, CSU has significantly strengthened its balance sheet Reduced total mortgage debt by $51.6 million Refinanced or retired $162 million of variable rate debt Reduced average interest rate from 7.5% to 6.1% fixed Resulting in $8.3 million of annual interest expense savings Balance Sheet Strength

Balance Sheet ASSETS ASSETS Cash and Securities $ 24.6 Other Current Assets 19.7 Total Current Assets 44.3 Fixed Assets 308.9 Other Assets 33.4 TOTAL ASSETS $386.6 As of March 31, 2008 (in millions) LIABILITIES & EQUITY LIABILITIES & EQUITY Current Liabilities $ 27.6 Long-Term Debt 184.8 Other Liabilities 22.3 Total Liabilities 234.7 Stockholders' Equity 151.9 TOTAL LIABILITIES & EQUITY TOTAL LIABILITIES & EQUITY $386.6

Investment Highlights Favorable demographics and attractive industry fundamentals Expansion and conversion initiatives with significant revenue and margin growth Strong same-store community net income growth Acquisition opportunities in highly fragmented industry Existing infrastructure results in low marginal integration cost Predominately private pay with minimal federal regulation Financial leverage through joint venture partners and REITS Experienced management team with demonstrated ability to operate, acquire and develop

Capital Senior Living Corporation Capital Senior Living Corporation