8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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)	December 11, 2013 (December 11, 2013)

Brookdale Senior Living Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-32641	20-3068069
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)
111 Westwood Place, Suite 400, Brentwood, Tennessee		37027
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code		(615) 221-2250
(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))

Section 8 — Other Events

Item 8.01Other Events.

Brookdale Senior Living Inc. (the "Company") is filing this Current Report on Form 8-K to update certain historical information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 ("2012 Form 10-K"). Specifically, the Company is updating the presentation of historical results to reflect the adoption of a recently issued accounting standards update.  The impact of the adoption of the update on the Company's quarterly and year-to-date periods for 2013 and 2012 was previously reported in the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013.

In July 2012, the Financial Accounting Standards Board issued ASU 2012-01, Continuing Care Retirement Communities — Refundable Advance Fees ("ASU 2012-01").  ASU 2012-01 amends the situations in which recognition of deferred revenue for refundable advance fees is appropriate.  Under this amendment, refundable advance fees that are contingent upon reoccupancy by a subsequent resident but are not limited to the proceeds of reoccupancy should be accounted for and reported as a liability.  The guidance in ASU 2012-01 is effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2012.  The Company adopted the provisions of this update as of January 1, 2013 and incorporated the provisions of this update to its consolidated financial statements through retrospective application to all periods presented and a cumulative effect adjustment to the Company's accumulated deficit as of January 1, 2010.

The effect of this change in accounting was not material to the consolidated results of operations or financial position for any year, including the years ending December 31, 2012, 2011 and 2010, and did not impact cash flows from operations in any year.  The Company increased its accumulated deficit by $3.0 million to reflect the net cumulative effect of the adoption of ASU 2012-01.

Exhibits 99.1, 99.2 and 99.3 hereto contain the revised and updated historical information.

The following items of the 2012 Form 10-K are being adjusted retrospectively to reflect the adoption of the recently issued accounting standards update:

• Selected Financial Data (Part II, Item 6), a revised and updated version of which is filed herewith as Exhibit 99.1;

• Management's Discussion and Analysis of Financial Condition and Results of Operations (Part II, Item 7), a revised and updated version of which is filed herewith as Exhibit 99.2; and

• Financial Statements and Supplementary Data (Part II, Item 8), a revised and updated version of which is filed herewith as Exhibit 99.3.

Included in Exhibit 99.3 is the Report of Independent Registered Public Accounting Firm dated February 19, 2013, except with respect to their opinion on the consolidated financial statements as it relates to the effects of the adoption of ASU 2012-01, as to which the date is December 11, 2013.

Revisions to the 2012 Form 10-K included in this Current Report on Form 8-K as noted above and in Note 24 to the consolidated financial statements included in Exhibit 99.3 supersede the corresponding portions of the 2012 Form 10-K. All other information in the 2012 Form 10-K remains unchanged. This Current Report on Form 8-K does not modify or update the disclosures therein in any way, nor does it reflect any subsequent information or events, other than as required to reflect the reporting change as described above and in Note 24 to the consolidated financial statements. This Current Report on Form 8-K, including the exhibits hereto, which are incorporated herein by reference, should be read in conjunction with the 2012 Form 10-K.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements in the accompanying revised and updated portions of the 2012 Form 10-K and other information we provide from time to time may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements relating to the consummation of the restructuring of the management agreements with Chartwell Seniors Housing Real Estate Investment Trust; statements relating to our operational initiatives and our expectations regarding their effect on our results; our expectations regarding the economy, occupancy, revenue, cash flow, expenses, capital expenditures, Program Max opportunities, cost savings, the demand for senior housing, the home resale market, expansion and development activity, acquisition opportunities, asset dispositions, our share repurchase program, capital deployment, returns on invested capital and taxes; our expectations regarding returns to shareholders and our growth prospects; our expectations concerning the future performance of recently acquired communities and the effects of acquisitions on our financial results; our ability to secure financing or repay, replace or extend existing debt at or prior to maturity; our ability to remain in compliance with all of our debt and lease agreements (including the financial covenants contained therein); our expectations regarding liquidity and leverage; our expectations regarding financings and refinancings of assets (including the timing thereof) and their effect on our results; our expectations regarding changes in government reimbursement programs and their effect on our results; our plans to generate growth organically through occupancy improvements, increases in annual rental rates and the achievement of operating efficiencies and cost savings; our plans to expand our offering of ancillary services (therapy, home health and hospice); our plans to expand, redevelop and reposition existing communities; our plans to acquire additional communities, asset portfolios, operating companies and home health agencies; the expected project costs for our expansion, redevelopment and repositioning program; our expected levels of expenditures and reimbursements (and the timing thereof); our expectations regarding our sales, marketing and branding initiatives; our expectations for the performance of our entrance fee communities; our ability to anticipate,

manage and address industry trends and their effect on our business; our expectations regarding the payment of dividends; and our ability to increase revenues, earnings, Adjusted EBITDA, Cash From Facility Operations, and/or Facility Operating Income (as such terms are defined in the 2012 Form 10-K). Words such as "anticipate(s)", "expect(s)", "intend(s)", "plan(s)", "target(s)", "project(s)", "predict(s)", "believe(s)", "may", "will", "would", "could", "should", "seek(s)", "estimate(s)" and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to, the risk that we may not be able to satisfy the conditions and successfully complete the Chartwell management agreement restructuring; the risk associated with the current global economic situtation and its impact upon capital markets and liquidity; changes in governmental reimbursement programs; our inability to extend (or refinance) debt (including our credit and letter of credit facilities) as it matures; the risk that we may not be able to satisfy the conditions precedent to exercising the extension options associated with certain of our debt agreements; events which adversely affect the ability of seniors to afford our monthly resident fees or entrance fees; the conditions of housing markets in certain geographic areas; our ability to generate sufficient cash flow to cover required interest and long-term operating lease payments; the effect of our indebtedness and long-term operating leases on our liquidity; the risk of loss of property pursuant to our mortgage debt and long-term lease obligations; the possibilities that changes in the capital markets, including changes in interest rates and/or credit spreads, or other factors could make financing more expensive or unavailable to us; our determination from time to time to purchase any shares under the repurchase program; our ability to fund any repurchases; our ability to effectively manage our growth; our ability to maintain consistent quality control; delays in obtaining regulatory approvals; the risk that we may not be able to expand, redevelop and reposition our communities in accordance with our plans; our ability to complete acquisitions and integrate them into our operations; competition for the acquisition of assets; our ability to obtain additional capital on terms acceptable to us; a decrease in the overall demand for senior housing; our vulnerability to economic downturns; acts of nature in certain geographic areas; terminations of our resident agreements and vacancies in the living spaces we lease; early terminations or non-renewal of management agreements; increased competition for skilled personnel; increased union activity; departure of our key officers; increases in market interest rates; environmental contamination at any of our facilities; failure to comply with existing environmental laws; an adverse determination or resolution of complaints filed against us; the cost and difficulty of complying with increasing and evolving regulation; and other risks detailed from time to time in our filings with the Securities and Exchange Commission, press releases and other communications, including those set forth under "Risk Factors" included elsewhere in the 2012 Form 10-K. Such forward-looking statements speak only as of the date they were made. We expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

Section 9 — Financial Statements and Exhibits

Item 9.01Financial Statements and Exhibits.

(d)	Exhibits
23	Consent of Ernst & Young LLP, independent registered public accounting firm
99.1	Selected Financial Data, revised only to reflect the adoption of a recently issued accounting standards update
99.2	Management's Discussion and Analysis of Financial Condition and Results of Operations, revised only to reflect the adoption of a recently issued accounting standards update
99.3	Financial Statements and Supplementary Data, revised only to reflect the adoption of a recently issued accounting standards update
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURE

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.

		BROOKDALE SENIOR LIVING INC.
Date:	December 11, 2013	By:	/s/ Mark W. Ohlendorf
		Name:	Mark W. Ohlendorf
		Title:	President and Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Exhibit
23	Consent of Ernst & Young LLP, independent registered public accounting firm.
99.1	Selected Financial Data, revised only to reflect the adoption of a recently issued accounting standards update.
99.2	Management's Discussion and Analysis of Financial Condition and Results of Operations, revised only to reflect the adoption of a recently issued accounting standards update.
99.3	Financial Statements and Supplementary Data, revised only to reflect the adoption of a recently issued accounting standards update.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-3, No. 333-174766; and Forms S-8, No. 333-129877, No. 333-151969, No. 333-153126, No. 333-160164, No. 333-160354 and No. 333-186358) of Brookdale Senior Living Inc. of our report dated February 19, 2013, except for Notes 2, 18, 22, and 24, as to which the date is December 11, 2013, with respect to the consolidated financial statements and schedule of Brookdale Senior Living Inc., included in this Current Report on Form 8-K.

/s/ Ernst & Young LLP

Chicago, Illinois

11 December 2013

EX-99.1

Item 6.Selected Financial Data.

The selected financial data should be read in conjunction with the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and our historical consolidated financial statements and the related notes included elsewhere herein.  Our historical statement of operations data and balance sheet data as of and for each of the years in the five-year period ended December 31, 2012 have been derived from our audited financial statements.

	For the Years Ended December 31,
	2012			2011			2010			2009			2008
Fiscal Year ended December 31, (in thousands, except per share and other operating data)
Total revenue	$	2,768,738		$	2,456,483		$	2,278,920		$	2,098,605		$	1,997,975
Facility operating expense		1,630,919			1,508,571			1,437,930			1,302,277			1,261,581
General and administrative expense		178,829			148,327			131,709			134,864			140,919
Facility lease expense		284,025			274,858			270,905			272,096			269,469
Depreciation and amortization		252,281			268,506			292,341			271,935			276,202
(Gain) loss on facility lease termination		(11,584	)		―			4,608			―			―
(Gain) loss on sale of communities, net		―			―			(3,298	)		2,043			―
Loss (gain) on acquisition		636			(1,982	)		―			―			―
Goodwill and asset impairment		27,677			16,892			13,075			10,073			220,026
Costs incurred on behalf  of managed communities		325,016			152,566			67,271			77,206			73,250
Total operating expense		2,687,799			2,367,738			2,214,541			2,070,494			2,241,447
Income (loss) from operations		80,939			88,745			64,379			28,111			(243,472	)
Interest income		4,012			3,538			2,238			2,354			7,618
Interest expense:
Debt		(128,338	)		(124,873	)		(132,641	)		(128,869	)		(147,389	)
Amortization of deferred financing costs and debt discount		(18,081	)		(13,427	)		(8,963	)		(9,505	)		(9,707	)
Change in fair value of derivatives and amortization		(364	)		(3,878	)		(4,118	)		3,765			(68,146	)
Loss on extinguishment of debt, net		(221	)		(18,863	)		(1,557	)		(1,292	)		(3,052	)
Equity in (loss) earnings of unconsolidated ventures		(3,488	)		1,432			168			440			(861	)
Other non-operating income (expense)		593			56			(1,454	)		4,146			1,708
Loss before income taxes		(64,948	)		(67,270	)		(81,948	)		(100,850	)		(463,301	)
(Provision) benefit for income taxes		(1,519	)		(1,780	)		32,062			33,577			88,029
Net loss	$	(66,467	)	$	(69,050	)	$	(49,886	)	$	(67,273	)	$	(375,272	)
Basic and diluted net loss per share	$	(0.54	)	$	(0.57	)	$	(0.42	)	$	(0.60	)	$	(3.69	)
Weighted average shares of common stock used in computing basic and diluted loss per share		121,991			121,161			120,010			111,288			101,667
Dividends declared per share of common stock	$	―		$	―		$	―		$	―		$	0.75
Other Operating Data:
Total number of communities (at end of period)		647			647			559			565			548
Total units operated(1)
Period end		65,936			66,183			50,521			51,021			49,145
Weighted average		66,102			55,548			50,870			49,536			49,165
Owned/leased communities occupancy rate (weighted average)		88.0	%		87.3	%		87.1	%		86.5	%		87.6	%
Senior Housing average monthly revenue per unit(2)	$	4,271		$	4,193		$	4,053		$	3,946		$	3,823

1

	As of December 31,
	2012		2011		2010		2009		2008
(in thousands)
Cash and cash equivalents	$	69,240	$	30,836	$	81,827	$	66,370	$	53,973
Total assets	$	4,665,978	$	4,466,061	$	4,530,470	$	4,649,879	$	4,449,258
Total debt	$	2,679,369	$	2,463,625	$	2,570,296	$	2,625,526	$	2,552,929
Total stockholders' equity	$	996,986	$	1,035,299	$	1,055,963	$	1,083,533	$	958,570

(1) Period end units operated excludes equity homes.  Weighted average units operated represents the average units operated during the period, excluding equity homes.

(2) Senior Housing average monthly revenue per unit represents the average of the total monthly resident fee revenues, excluding amortization of entrance fees and ISC segment revenue, divided by average occupied units.

2

EX-99.2

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with our "Selected Financial Data" and our consolidated  financial statements and related notes, included elsewhere in this Annual Report on Form 10-K.   In addition to historical information, this discussion and analysis may contain forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management's expectations.  Please see additional risks and uncertainties described in "Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995" for more information. Factors that could cause such differences include those described in "Risk Factors" which appears elsewhere in this Annual Report on Form 10-K.

Executive Overview

During 2012, we continued to make progress in implementing our long-term growth strategy, integrating previous acquisitions, and building a platform for future growth.  Our primary long-term growth objectives are to grow our revenues, Adjusted EBITDA, Cash From Facility Operations and Facility Operating Income primarily through a combination of: (i) organic growth in our core business, including expense control and the realization of economies of scale; (ii) expansion, redevelopment and repositioning of existing communities; (iii) acquisition and consolidation of asset portfolios and other senior living companies; and (iv) continued expansion of our ancillary services programs (including therapy, home health and hospice services).

The table below presents a summary of our operating results and certain other financial metrics for the years ended December 31, 2012 and 2011 and the amount and percentage of increase or decrease of each applicable item (dollars in millions).

	Years Ended December 31,						Increase (Decrease)
	2012			2011			Amount			Percent
Total revenue	$	2,768.7		$	2,456.5		$	312.3			12.7	%
Net loss(1)	$	(66.5	)	$	(69.1	)	$	(2.6	)		(3.7	)%
Adjusted EBITDA	$	409.9		$	402.7		$	7.2			1.8	%
Cash From Facility Operations	$	239.0		$	239.9		$	(0.9	)		(0.4	)%
Facility Operating Income	$	758.8		$	757.8		$	1.0			0.1	%

(1) Net loss for 2012 and 2011 includes non-cash impairment charges of $27.7 million and $16.9 million, respectively.

Adjusted EBITDA and Facility Operating Income are non-GAAP financial measures we use in evaluating our operating performance. Cash From Facility Operations is a non-GAAP financial measure we use in evaluating our liquidity. See "Non-GAAP Financial Measures" below for an explanation of how we define each of these measures, a detailed description of why we believe such measures are useful and the limitations of each measure, a reconciliation of net loss to each of Adjusted EBITDA and Facility Operating Income and a reconciliation of net cash provided by operating activities to Cash From Facility Operations.

1

During the year ended December 31, 2012, we experienced an increase in our total revenues, primarily due to the addition of leased and managed communities from the Horizon Bay and HCP transactions in the third quarter of 2011, along with increases in occupancy and average monthly revenue per unit, including an increase in our ancillary services revenue.  Total revenues for the year ended December 31, 2012 increased to $2.8 billion, an increase of $312.3 million, or 12.7%, over our total revenues for the year ended December 31, 2011.  Resident fees for the year ended December 31, 2012, increased $122.6 million, or 5.4% from the prior year, and management fees, net of costs incurred on behalf of managed communities, increased $17.2 million.  Total management fees increased $189.6 million, of which $172.4 million consisted of reimbursed costs incurred on behalf of managed communities.   The increase was primarily due to the management agreements entered into or acquired in conjunction with the Horizon Bay and HCP transactions during the third quarter of 2011.  In connection with these transactions, we added to our portfolio 12 leased communities and 78 managed communities (after giving effect to our subsequent acquisition of one of the managed communities in the fourth quarter of 2011).

The increase in resident fees during the year ended December 31, 2012 was primarily a result of a 1.9% increase in the average monthly revenue per unit compared to the prior year, including growing revenues from our ancillary services programs, a 70 basis points increase in average occupancy and a 2.2% increase in consolidated units operated.  Our weighted average occupancy rate for the year ended December 31, 2012 and 2011 was 88.0% and 87.3%, respectively.  The increases in occupancy rates were a result of improving fundamentals, execution by our field organization and sales and marketing team and the benefit of the capital we have invested and continue to spend on our communities.

Beginning October 1, 2011, we were impacted by a reduction in the reimbursement rates for Medicare skilled nursing patients and home health patients, as well as a negative change in the allowable method for delivering therapy services to skilled nursing patients (resulting in increased therapy labor expense).  The cumulative negative financial impact of these changes increased our expense and decreased our revenue, Facility Operating Income, Adjusted EBITDA and Cash From Facility Operations for the year ended December 31, 2012.

During the year ended December 31, 2012, our Adjusted EBITDA and Facility Operating Income increased by 1.8% and 0.1%, respectively, and Cash From Facility Operations decreased by 0.4%, when compared to the prior year.

During the second quarter of 2012, we changed the composition of our operating segments from four reportable segments to six reportable segments (Retirement Centers, Assisted Living, CCRCs - Rental, CCRCs - Entry Fee, ISC and Management Services) (Note 22).  This change was made to align operating segments with the basis that the chief operating decision maker uses to review financial information to make operating decisions, assess performance, develop strategy and allocate capital resources.  All prior period disclosures below have been recast to present results on a comparable basis.

During the year ended December 31, 2012, we acquired the underlying real estate associated with 21 Retirement Center and Assisted Living communities that were previously leased for an aggregate purchase price of $283.4 million.  During the year, we also acquired four home health agencies and an existing skilled nursing facility for an aggregate purchase price of approximately $7.0 million.

During the year ended December 31, 2012, we continued to expand our ancillary services offerings.  As of December 31, 2012, we offered therapy services to approximately 51,000 of our units and home health services to over 46,000 of our units (approximately 38,000 and 32,000 of these units, respectively, are in our consolidated portfolio).   We expect to continue to expand our ancillary services programs to additional units and to open or acquire additional home health agencies.

Consolidated Results of Operations

Year Ended December 31, 2012 and 2011

The following table sets forth, for the periods indicated, statement of operations items and the amount and percentage of change of these items. The results of operations for any particular period are not necessarily indicative of results for any future period. The following data should be read in conjunction with our consolidated financial statements and the notes thereto, which are included herein. Our results reflect the inclusion of acquisitions that occurred during the respective reporting periods.

2

Certain prior period amounts have been reclassified to conform to the current year presentation.

(dollars in thousands, except average monthly revenue per unit)	Years Ended December 31,						Increase (Decrease)
	2012			2011			Amount			Percent
Statement of Operations Data:
Revenue
Resident fees
Retirement Centers	$	503,902		$	473,842		$	30,060			6.3	%
Assisted Living		1,013,337			964,585			48,752			5.1	%
CCRCs - Rental		385,479			364,095			21,384			5.9	%
CCRCs - Entry Fee		285,701			282,020			3,681			1.3	%
ISC		224,517			205,780			18,737			9.1	%
Total resident fees		2,412,936			2,290,322			122,614			5.4	%
Management services(1)		355,802			166,161			189,641			114.1	%
Total revenue		2,768,738			2,456,483			312,255			12.7	%
Expense
Facility operating expense
Retirement Centers		298,317			275,403			22,914			8.3	%
Assisted Living		652,153			624,657			27,496			4.4	%
CCRCs - Rental		279,416			247,246			32,170			13.0	%
CCRCs - Entry Fee		224,296			213,470			10,826			5.1	%
ISC		176,737			147,795			28,942			19.6	%
Total facility operating expense		1,630,919			1,508,571			122,348			8.1	%
General and administrative expense		178,829			148,327			30,502			20.6	%
Facility lease expense		284,025			274,858			9,167			3.3	%
Depreciation and amortization		252,281			268,506			(16,225	)		(6.0	%)
Asset impairment		27,677			16,892			10,785			63.8	%
Loss (gain) on acquisition		636			(1,982	)		2,618			132.1	%
Gain on facility lease termination		(11,584	)		—			11,584			100.0	%
Costs incurred on behalf of managed communities		325,016			152,566			172,450			113.0	%
Total operating expense		2,687,799			2,367,738			320,061			13.5	%
Income from operations		80,939			88,745			(7,806	)		(8.8	%)
Interest income		4,012			3,538			474			13.4	%
Interest expense:
Debt		(128,338	)		(124,873	)		3,465			2.8	%
Amortization of deferred financing costs and debt discount		(18,081	)		(13,427	)		4,654			34.7	%
Change in fair value of derivatives and amortization		(364	)		(3,878	)		(3,514	)		(90.6	%)
Loss on extinguishment of debt, net		(221	)		(18,863	)		(18,642	)		(98.8	%)
Equity in (loss) earnings of unconsolidated ventures		(3,488	)		1,432			4,920			343.6	%
Other non-operating income		593			56			537			958.9	%
Loss before income taxes		(64,948	)		(67,270	)		(2,322	)		(3.5	%)
Provision for income taxes		(1,519	)		(1,780	)		(261	)		(14.7	%)
Net loss	$	(66,467	)	$	(69,050	)	$	(2,583	)		(3.7	%)
Selected Operating and Other Data:
Total number of communities (period end)		647			647			―			―
Total units operated(2)
Period end		65,936			66,183			(247	)		(0.4	%)
Weighted average		66,102			55,548			10,554			19.0	%
Owned/leased communities units(2)
Period end		47,938			47,895			43			0.1	%
Weighted average		47,947			46,912			1,035			2.2	%
Owned/leased communities occupancy rate (weighted average)		88.0	%		87.3	%		0.7	%		0.8	%
Senior Housing average monthly revenue per unit(3)	$	4,271		$	4,193		$	78			1.9	%

 

3

Selected Segment Operating and Other Data:
Retirement Centers
Number of communities (period end)		76			76			―		―
Total units(2)
Period end		14,433			14,468			(35	)	(0.2	%)
Weighted average		14,445			14,188			257		1.8	%
Occupancy rate (weighted average)		89.1	%		88.0	%		1.1	%	1.3	%
Senior Housing average monthly revenue per unit(3)	$	3,263		$	3,163		$	100		3.2	%
Assisted Living
Number of communities (period end)		433			434			(1	)	(0.2	%)
Total units(2)
Period end		21,551			21,630			(79	)	(0.4	%)
Weighted average		21,625			21,323			302		1.4	%
Occupancy rate (weighted average)		88.9	%		88.2	%		0.7	%	0.8	%
Senior Housing average monthly revenue per unit(3)	$	4,390		$	4,275		$	115		2.7	%
CCRCs - Rental
Number of communities (period end)		27			26			1		3.8	%
Total units(2)
Period end		6,691			6,634			57		0.9	%
Weighted average		6,667			6,253			414		6.6	%
Occupancy rate (weighted average)		86.3	%		86.5	%		(0.2	%)	(0.2	%)
Senior Housing average monthly revenue per unit(3)	$	5,588		$	5,612		$	(24	)	(0.4	%)
CCRCs - Entry Fee
Number of communities (period end)		14			14			―		―
Total units(2)
Period end		5,263			5,163			100		1.9	%
Weighted average		5,210			5,148			62		1.2	%
Occupancy rate (weighted average)		83.7	%		82.7	%		1.0	%	1.2	%
Senior Housing average monthly revenue per unit(3)	$	4,978		$	5,052		$	(74	)	(1.5	%)
Other Entry Fee Data
Non-refundable entrance fees sales	$	40,105		$	38,378		$	1,727		4.5	%
Refundable entrance fees sales(4)		42,600			29,611			12,989		43.9	%
Total entrance fee receipts		82,705			67,989			14,716		21.6	%
Refunds		(27,356	)		(25,754	)		1,602		6.2	%
Net entrance fees(5)	$	55,349		$	42,235		$	13,114		31.1	%
Management Services
Number of communities (period end)		97			97			―		―
Total units(2)
Period end		17,998			18,288			(290	)	(1.6	%)
Weighted average		18,155			8,636			9,519		110.2	%
Occupancy rate (weighted average)		84.5	%		84.5	%		0.0	%	―
ISC
Outpatient Therapy treatment codes		3,566,654			3,349,854			216,800		6.5	%
Home Health average census		3,710			3,330			380		11.4	%

__________

4

(1) Management services segment revenue includes reimbursements for which we are the primary obligor of costs incurred on behalf of managed communities.

(2) Period end units operated excludes equity homes.  Weighted average units operated represents the average units operated during the period, excluding equity homes.

(3) Senior Housing average monthly revenue per unit represents the average of the total monthly resident fee revenues, excluding amortization of entrance fees and ISC segment revenue, divided by average occupied units.

(4) Refundable entrance fee sales for the years ended December 31, 2012 and 2011 include amounts received from residents participating in the MyChoice program, which allows new and existing residents the option to pay additional refundable entrance fee amounts in return for a reduced monthly service fee.  MyChoice amounts received from residents totaled $13.3 million and $9.0 million for the years ended December 31, 2012 and 2011.

(5) Includes $3.6 million and $12.6 million of first generation net entrance fee receipts (which represent initial entrance fees received from the sale of units, net of first generation entrance fee refunds not replaced by second generation entrance fee receipts, at a recently opened entrance fee CCRC) during the year ended December 31, 2012 and 2011, respectively.

As of December 31, 2012, our total operations included 647 communities with a capacity to serve 66,734 residents.

Resident Fees

Resident fees increased over the prior year primarily as a result of an increase in the average monthly revenue per unit compared to the prior year period, including growing revenues from our ancillary services programs, an increase in occupancy and a 2.2% increase in consolidated units operated.  During the current year, revenues grew 2.4% at the 531 communities we operated during both periods with a 1.6% increase in the average monthly revenue per unit (excluding amortization of entrance fees in both instances).  Occupancy increased 0.7% in these communities period over period.

Retirement Centers revenue increased $30.1 million, or 6.3%, primarily due to the inclusion of revenue from communities acquired during the prior year and increases in occupancy and average monthly revenue per unit at the communities we operated during both years.

Assisted Living revenue increased $48.8 million, or 5.1%, primarily due to the inclusion of revenue from communities acquired during the prior year and increases in occupancy and average monthly revenue per unit at the communities we operated during both years.

CCRCs - Rental revenue increased $21.4 million, or 5.9%, primarily due to the inclusion of revenue from communities acquired during the prior year. The increase was partially offset by decreases in the average monthly revenue per unit and occupancy at the communities we operated during both years. Revenue for the CCRCs – Rental segment was also impacted by a reduction in the reimbursement rate for Medicare skilled nursing patients.

CCRCs - Entry Fee revenue increased $3.7 million, or 1.3%, primarily due to an increase in occupancy at the communities we operated during both periods. The increase was partially offset by a decrease in the average monthly revenue per unit at the communities we operated during both years. Revenue for the CCRCs – Entry Fee segment was also impacted by a reduction in the reimbursement rate for Medicare skilled nursing patients.

ISC revenue increased $18.7 million, or 9.1%, primarily due to the roll-out of our ancillary services programs to additional units subsequent to the prior year end.  The increase was partially offset by a reduction in Medicare reimbursement rates.

5

Management Services

Total management services revenue increased $189.6 million, or 114.1%, over the prior year.  Approximately $172.4 million of this increase is attributable to the increase in revenue from reimbursed costs incurred on behalf of managed communities and is primarily due to the management agreements entered into or acquired in conjunction with the Horizon Bay and HCP transactions that occurred during third quarter of 2011.

Facility Operating Expense

Facility operating expense increased over the prior-year primarily due to an increase in salaries and wages, additional current year expense incurred in connection with the continued expansion of our ancillary services programs during 2011 and 2012, increased payroll taxes and workers compensation expense, as well as the inclusion of expenses from communities acquired during the current year.  These increases were partially offset by decreases in utilities expense as a result of milder weather in the current year period and bad debt expense.

Retirement Centers operating expenses increased $22.9 million, or 8.3%, primarily due to the inclusion of expenses from communities acquired during the prior year, as well as increases in salaries and wages due to wage rate increases and an increase in hours worked year over year. These increases were partially offset by a decrease in utilities expense as a result of milder weather in the current year.

Assisted Living operating expenses increased $27.5 million, or 4.4%, primarily due to the inclusion of expenses from communities acquired during the prior year, as well as an increase in salaries and wages due to wage rate increases and an increase in hours worked year over year. These increases were partially offset by a decrease in utilities expense as a result of milder weather in the current year.

CCRCs - Rental operating expenses increased $32.2 million, or 13.0%, primarily due to the inclusion of expenses from communities acquired during the prior year, an increase in salaries and wages due to wage rate increases and an increase in hours worked year over year, and an increase in skilled therapy services expense due to an adverse change in the allowable method for delivering therapy services to skilled nursing patients.

CCRCs - Entry Fee operating expenses increased $10.8 million, or 5.1%, primarily due to an increase in salaries and wages due to wage rate increases and an increase in hours worked year over year, as well as an increase in skilled therapy services expense due to an adverse change in the allowable method for delivering therapy services to skilled nursing patients. These increases were partially offset by a decrease in bad debt expense.

ISC operating expenses increased $28.9 million, or 19.6%, primarily due to an increase in expenses incurred in connection with the continued expansion of our ancillary services programs and an increase in therapy direct labor expenses.

General and Administrative Expense

General and administrative expense increased $30.5 million, or 20.6%, primarily as the result of an increase in the number of employees in connection with the Horizon Bay and HCP transactions that occurred during the third quarter of 2011, an increase in integration, transaction-related  and electronic medical records ("EMR") roll-out costs, and an increase in non-cash stock-based compensation expense. General and administrative expense as a percentage of total revenue, including revenue generated by the communities we manage and excluding non-cash stock-based compensation expense and integration, transaction-related and EMR roll-out costs, was 4.3% and 4.4% for the years ended December 31, 2012 and 2011, respectively, calculated as follows (dollars in thousands):

	Year Ended December 31,
	2012				2011
Resident fee revenues	$	2,412,936	79.5	%	$	2,290,322	88.3	%
Resident fee revenues under management		623,613	20.5	%		304,717	11.7	%
Total	$	3,036,549	100.0	%	$	2,595,039	100.0	%

 

6

General and administrative expenses (excluding non-cash stock-based compensation expense and integration, transaction-related and EMR roll-out costs)	$	129,844	4.3	%	$	114,083	4.4	%
Non-cash stock-based compensation expense		25,520	0.8	%		19,856	0.8	%
Integration, transaction-related and EMR roll-out costs		23,465	0.8	%		14,388	0.6	%
General and administrative expenses (including non-cash stock-based compensation expense and integration, transaction-related and EMR roll-out costs)	$	178,829	5.9	%	$	148,327	5.7	%

Facility Lease Expense

Facility lease expense increased $9.2 million, or 3.3%, primarily as a result of the acquisition of 12 leased communities in connection with the Horizon Bay and HCP transactions that occurred in the third quarter of 2011, as well as increases due to normal rent escalators. These increases were partially offset by decreased lease expense as a result of the purchase of twelve previously leased communities in the current year period.

Depreciation and Amortization

Depreciation and amortization expense decreased by $16.2 million, or 6.0%, primarily as a result of the management contract and therapy services intangibles related to a 2006 acquisition reaching full amortization during 2011.

Asset Impairment

During 2012, we recognized $27.7 million of impairment charges related to asset impairments for property, plant and equipment and leasehold intangibles for certain communities within the Retirement Centers and Assisted Living segments primarily due to lower than expected performance of the underlying business and the amount by which the carrying values of the assets exceed the estimated fair value or estimated selling prices.  During 2011, we recognized $16.9 million of impairment charges related to asset impairments for property, plant and equipment and leasehold intangibles for certain communities within the Assisted Living and Retirement Center segments.  We compared the estimated fair value of the assets to their carrying value and recorded an impairment charge for the excess of carrying value over estimated fair value.

Loss (Gain) on Acquisition

During 2011, we recognized $2.0 million as a gain on acquisition related to the acquisition of Horizon Bay.  The loss on acquisition recognized during the year ended December 31, 2012 relates to the reduction of the prior-year gain for adjustments to pre-acquisition self-insurance reserves.  See Note 4 to the consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference, for further detail.

Gain on Facility Lease Termination

During 2012, we recognized an $11.6 million net gain on facility lease termination from the reversal of deferred lease liabilities associated with twelve previously-leased communities that were acquired during the current year.

Costs Incurred on Behalf of Managed Communities

Costs incurred on behalf of managed communities increased $172.4 million, or 113.0%, primarily due to a full year of results related to management agreements entered into or acquired in conjunction with the Horizon Bay and HCP transactions in September 2011.  We added 78 new managed communities in connection with these transactions.

Interest Income

Interest income increased $0.5 million, or 13.4%, primarily due to realized gains from the liquidation of the marketable securities – restricted in the current year.

7

Interest Expense

Interest expense increased $4.6 million, or 3.2%, primarily due to increased interest expense from the amortization of our debt discount on our convertible notes issued during 2011 and increased interest expense on our line of credit, which had a higher average outstanding balance drawn year over year. These increases were partially offset by a decrease in interest expense recorded from the change in fair value of interest rate swaps due to fewer instruments in place during the current year.

Loss on Extinguishment of Debt, net

During 2011, we recognized an $18.9 million as a loss on extinguishment of debt, related to costs incurred in connection with the early repayment of first and second mortgage notes.

Income Taxes

The increase in the effective tax rate to (2.3)% in 2012 from (2.6)% in 2011 is primarily due to a decrease in our loss before income taxes in 2012.  We recorded a valuation allowance against deferred tax benefits generated during the current year.

Year Ended December 31, 2011 and 2010

The following table sets forth, for the periods indicated, statement of operations items and the amount and percentage of change of these items. The results of operations for any particular period are not necessarily indicative of results for any future period. The following data should be read in conjunction with our consolidated financial statements and the notes thereto, which are included herein. Our results reflect the inclusion of acquisitions that occurred during the respective reporting periods.

Certain prior period amounts have been reclassified to conform to the current year presentation.

(dollars in thousands, except average monthly revenue per unit)	Years Ended December 31,						Increase (Decrease)
	2011			2010			Amount			Percent
Statement of Operations Data:
Revenue
Resident fees
Retirement Centers	$	473,842		$	463,260		$	10,582			2.3	%
Assisted Living		964,585			945,469			19,116			2.0	%
CCRCs – Rental		364,095			339,920			24,175			7.1	%
CCRCs – Entry Fee		282,020			267,441			14,579			5.5	%
ISC		205,780			189,968			15,812			8.3	%
Total resident fees		2,290,322			2,206,058			84,264			3.8	%
Management services(1)		166,161			72,862			93,299			128.0	%
Total revenue		2,456,483			2,278,920			177,563			7.8	%
Expense
Facility operating expense
Retirement Centers		275,403			266,613			8,790			3.3	%
Assisted Living		624,657			614,249			10,408			1.7	%
CCRCs - Rental		247,246			230,991			16,255			7.0	%
CCRCs - Entry Fee		213,470			202,971			10,499			5.2	%
ISC		147,795			123,106			24,689			20.1	%
Total facility operating expense		1,508,571			1,437,930			70,641			4.9	%
General and administrative expense		148,327			131,709			16,618			12.6	%
Facility lease expense		274,858			270,905			3,953			1.5	%
Depreciation and amortization		268,506			292,341			(23,835	)		(8.2	%)
Gain on sale of communities, net		—			(3,298	)		3,298			100.0	%
Asset impairment		16,892			13,075			3,817			29.2	%
Gain on acquisition		(1,982	)		―			1,982			100.0	%
Facility lease termination expense		—			4,608			(4,608	)		(100.0	%)

 

8

Costs incurred on behalf of managed communities		152,566			67,271			85,295			126.8	%
Total operating expense		2,367,738			2,214,541			153,197			6.9	%
Income from operations		88,745			64,379			24,366			37.8	%
Interest income		3,538			2,238			1,300			58.1	%
Interest expense:
Debt		(124,873	)		(132,641	)		(7,768	)		(5.9	%)
Amortization of deferred financing costs and debt discount		(13,427	)		(8,963	)		4,464			49.8	%
Change in fair value of derivatives and amortization		(3,878	)		(4,118	)		(240	)		(5.8	%)
Loss on extinguishment of debt, net		(18,863	)		(1,557	)		17,306		NM
Equity in earnings of unconsolidated ventures		1,432			168			1,264			752.4	%
Other non-operating income (expense)		56			(1,454	)		1,510			103.9	%
Loss before income taxes		(67,270	)		(81,948	)		(14,678	)		(17.9	%)
(Provision) benefit for income taxes		(1,780	)		32,062			(33,842	)		(105.6	%)
Net loss	$	(69,050	)	$	(49,886	)	$	19,164			38.4	%
Selected Operating and Other Data:
Total number of communities (period end)		647			559			88			15.7	%
Total units operated(2)
Period end		66,183			50,521			15,662			31.0	%
Weighted average		55,548			50,870			4,678			9.2	%
Owned/leased communities units(2)
Period end		47,895			46,735			1,160			2.5	%
Weighted average		46,912			47,083			(171	)		(0.4	%)
Owned/leased communities occupancy rate (weighted average)		87.3	%		87.1	%		0.2	%		0.2	%
Senior Housing average monthly revenue per unit(3)	$	4,193		$	4,053		$	140			3.5	%
Selected Segment Operating and Other Data:
Retirement Centers
Number of communities (period end)		76			75			1			1.3	%
Total units(2)
Period end		14,468			14,104			364			2.6	%
Weighted average		14,188			14,277			(89	)		(0.6	%)
Occupancy rate (weighted average)		88.0	%		87.3	%		0.7	%		0.8	%
Senior Housing average monthly revenue per unit(3)	$	3,163		$	3,096		$	67			2.2	%
Assisted Living
Number of communities (period end)		434			429			5			1.2	%
Total units(2)
Period end		21,630			21,277			353			1.7	%
Weighted average		21,323			21,445			(122	)		(0.6	%)
Occupancy rate (weighted average)		88.2	%		88.2	%		―			―
Senior Housing average monthly revenue per unit(3)	$	4,275		$	4,163		$	112			2.7	%
CCRCs - Rental
Number of communities (period end)		26			22			4			18.2	%
Total units(2)
Period end		6,634			6,212			422			6.8	%
Weighted average		6,253			6,215			38			0.6	%
Occupancy rate (weighted average)		86.5	%		86.2	%		0.3	%		0.3	%
Senior Housing average monthly revenue per unit(3)	$	5,612		$	5,276		$	336			6.4	%
CCRCs - Entry Fee
Number of communities (period end)		14			14			―			―
Total units(2)

9

Period end		5,163			5,142			21		0.4	%
Weighted average		5,148			5,146			2		―
Occupancy rate (weighted average)		82.7	%		82.3	%		0.4	%	0.5	%
Senior Housing average monthly revenue per unit(3)	$	5,052		$	4,830		$	222		4.6	%
Other Entry Fee Data
Non-refundable entrance fees sales	$	38,378		$	37,486		$	892		2.4	%
Refundable entrance fees sales(4)		29,611			36,420			(6,809	)	(18.7	%)
Total entrance fee receipts		67,989			73,906			(5,917	)	(8.0	%)
Refunds		(25,754	)		(21,060	)		4,694		22.3	%
Net entrance fees(5)	$	42,235		$	52,846		$	(10,611	)	(20.1	%)
Management Services
Number of communities (period end)		97			19			78		410.5	%
Total units(2)
Period end		18,288			3,786			14,502		383.0	%
Weighted average		8,636			3,787			4,849		128.0	%
Occupancy rate (weighted average)		84.5	%		83.8	%		0.7	%	0.8	%
ISC
Outpatient Therapy treatment codes		3,349,854			3,255,850			94,004		2.9	%
Home Health average census		3,330			2,420			910		37.6	%

__________

(1) Management services segment revenue includes reimbursements for which we are the primary obligor of costs incurred on behalf of managed communities.

(2) Period end units operated excludes equity homes.  Weighted average units operated represents the average units operated during the period, excluding equity homes.

(3) Senior Housing average monthly revenue per unit represents the average of the total monthly resident fee revenues, excluding amortization of entrance fees and ISC segment revenue, divided by average occupied units.

(4) Refundable entrance fee sales for the years ended December 31, 2011 and 2010 include amounts received from residents participating in the MyChoice program, which allows new and existing residents the option to pay additional refundable entrance fee amounts in return for a reduced monthly service fee.  MyChoice amounts received from residents totaled $9.0 million and $10.6 million for the years ended December 31, 2011 and 2010.

(5) Includes $12.6 million and $18.5 million of first generation net entrance fee receipts (which represent initial entrance fees received from the sale of units, net of first generation entrance fee refunds not replaced by second generation entrance fee receipts, at a recently opened entrance fee CCRC) during the year ended December 31, 2011 and 2010, respectively.

As of December 31, 2011, our total operations included 647 communities with a capacity to serve 67,107 residents.

Resident Fees

Resident fees increased over the prior-year principally due to an increase in average monthly revenue per unit during the current year, including an increase in our ancillary services revenue as we continued to roll out therapy and home health services to many of our communities, as well as the inclusion of revenue from recent acquisitions.  During the current year, revenues grew 3.1% at the 531 consolidated communities we operated during both periods with a 3.3% increase in the average monthly revenue per unit (excluding amortization of entrance fees in both instances).  Occupancy decreased 0.2% in these communities year over year.

10

Retirement Centers revenue increased $10.6 million, or 2.3%, primarily due to increases in average monthly revenue per unit and occupancy at the communities we operated during both years, as well as the inclusion of revenue from three communities acquired in the current year.  The increase in revenue was partially offset by the sale of two communities during the current year.

Assisted Living revenue increased $19.1 million, or 2.0%, primarily due to an increase in the average monthly revenue per unit and the inclusion of revenue from seven communities acquired in the current year.  This increase was partially offset by a decrease in occupancy at the communities we operated during both years and the impact of the disposition of two communities during the current year.

CCRCs - Rental revenue increased $24.2 million, or 7.1%, primarily due to an increase in the average monthly revenue per unit and occupancy at the communities we operated during both years, as well as the inclusion of revenue from four communities acquired in the current year.

CCRCs - Entry Fee revenue increased $14.6 million, or 5.5%, primarily due to an increase in the average monthly revenue per unit and additional revenue from a community opened late in the third quarter of 2009.

ISC revenue increased $15.8 million, or 8.3%, primarily due to the roll-out of our ancillary services programs to additional units subsequent to the prior year period.  The increase was partially offset by a reduction in Medicare reimbursement rates.

Management Services

Management services revenue, including reimbursed costs incurred on behalf of managed communities, increased $93.3 million, or 128.0%, primarily due to the management agreements entered into or acquired in conjunction with the Horizon Bay and HCP transactions.  In the current year, we added 78 new managed communities in connection with these transactions.

Facility Operating Expense

Facility operating expense increased over the prior-year primarily due to an increase in salaries and wages, additional current year expense incurred in connection with the continued expansion of our ancillary services programs during 2010 and 2011, increased payroll taxes and workers compensation expense, as well as the inclusion of expenses from communities acquired during the current year.  These increases were partially offset by decreases in real estate tax expense related to changes in estimates, bad debt expense and lighting retrofit costs.

Retirement Centers operating expenses increased $8.8 million, or 3.3%, primarily due to increases in salaries and wages due to wage rate increases and an increase in hours worked year over year, the inclusion of expenses from communities acquired in the current year, and increases in food expenses.  These increases were partially offset by a decrease in lighting retrofit costs and decreases in real estate taxes related to changes in estimates.

Assisted Living operating expenses increased $10.4 million, or 1.7%, primarily due to increases in salaries and wages due to wage rate increases and an increase in hours worked year over year, as well as increases in payroll taxes and workers compensation.  These increases were partially offset by decreases in real estate tax expense.

CCRCs - Rental operating expenses increased $16.3 million, or 7.0%, primarily due to the inclusion of expenses from communities acquired in the current year, an increase in salaries and wages due to wage rate increases and an increase in hours worked year over year, and an increase in skilled therapy services expense.  These increases were partially offset by decreases in bad debt expense and lighting retrofit costs.

CCRCs - Entry Fee operating expenses increased $10.5 million, or 5.2%, primarily due to an increase in salaries and wages due to wage rate increases and an increase in hours worked year over year, additional expenses from a community opened late in the third quarter of 2009, and an increase in skilled therapy expenses.  These increases were partially offset by reduced deferred community fee expense recognition during the year.

ISC operating expenses increased $24.7 million, or 20.1%, primarily due to an increase in expenses incurred in connection with the continued expansion of our ancillary services programs, an increase in home health management salaries, and increases in therapy and home health direct labor.

11

General and Administrative Expense

General and administrative expense increased $16.6 million, or 12.6%, primarily as a result of increased salaries and wages, payroll taxes, employee benefits, travel expenses and integration and transaction-related costs, partially offset by a decrease in corporate expense allocations.  General and administrative expense as a percentage of total revenue, including revenue generated by the communities we manage and excluding non-cash stock-based compensation expense and integration and transaction-related costs, was 4.4% and 4.7% for the years ended December 31, 2011 and 2010, respectively, calculated as follows (dollars in thousands):

	Year Ended December 31,
	2011				2010
Resident fee revenues	$	2,290,322	88.3	%	$	2,206,058	94.1	%
Resident fee revenues under management		304,717	11.7	%		139,478	5.9	%
Total	$	2,595,039	100	%	$	2,345,536	100	%
General and administrative expenses (excluding non-cash stock-based compensation expense and integration and transaction-related costs)	$	114,083	4.4	%	$	110,950	4.7	%
Non-cash stock-based compensation expense		19,856	0.8	%		20,759	0.9	%
Integration and transaction-related costs		14,388	0.5	%		―	0.0	%
General and administrative expenses (including non-cash stock-based compensation expense and integration and transaction-related costs)	$	148,327	5.7	%	$	131,709	5.6	%

Facility Lease Expense

Facility lease expense increased $4.0 million, or 1.5%, primarily due to normal operating lease expense escalations and the acquisition of 12 leased properties in conjunction with the Horizon Bay and HCP transactions.  The increase was partially offset by the purchase of four leased communities and the non-renewal of two leased communities that occurred late in the prior year.

Depreciation and Amortization

Depreciation and amortization expense decreased by $23.8 million, or 8.2%, primarily as a result of the management contract and therapy services intangibles related to a 2006 acquisition becoming fully amortized during the current year, as well as in-place lease intangibles from prior acquisitions and furniture and equipment becoming fully amortized during the current year.

Asset Impairment

During 2011 and 2010, we recognized $16.9 million and $13.1 million, respectively, of impairment charges related to asset impairments for property, plant and equipment and leasehold intangibles for certain communities within the Assisted Living and Retirement Center segments.  We compared the estimated fair value of the assets to their carrying value and recorded an impairment charge for the excess of carrying value over estimated fair value.

Gain on Acquisition

During 2011, we recognized $2.0 million as a gain on acquisition related to the acquisition of Horizon Bay.  See Note 4 to the consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference, for further detail.

Costs Incurred on Behalf of Managed Communities

Costs incurred on behalf of managed communities increased $85.3 million, or 126.8%, primarily due to management agreements entered into or acquired in conjunction with the Horizon Bay and HCP transactions.  We added 78 new

12

managed communities in connection with these transactions.

Interest Income

Interest income increased $1.3 million, or 58.1%, primarily due to increased interest income earned on our restricted marketable securities.

Interest Expense

Interest expense decreased $3.5 million, or 2.4%, primarily due to a decrease in interest expense on our mortgage debt due to lower average outstanding debt year over year.  The decrease was partially offset by additional expense from the amortization of our debt discount primarily on our convertible notes issued during 2011 and higher interest cost related to our line of credit which had a higher average outstanding balance drawn year over year.

Loss on Extinguishment of Debt, net

During 2011, we recognized $18.9 million as a loss on extinguishment of debt, related to costs incurred in connection with the early repayment of first and second mortgage notes.

Income Taxes

The reduction in the income tax benefit over the prior year is due to a decrease in the effective tax rate from 39.1% in 2010 to (2.6)% in 2011.  This decrease is primarily due to the impact of our decision to record a valuation allowance against the deferred tax benefit generated during 2011.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States, or GAAP, requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses. We consider an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate, or different estimates that could have been selected, could have a material impact on our consolidated results of operations or financial condition. We have identified the following critical accounting policies that affect significant estimates and judgments.

Revenue Recognition and Assumptions at Entrance Fee Communities

Our entrance fee communities provide housing and healthcare services through entrance fee agreements with residents. Under certain of these agreements, residents pay an entrance fee upon entering into the contract and are contractually guaranteed certain limited lifecare benefits in the form of healthcare discounts. The recognition of entrance fee income requires the use of various actuarial estimates. We recognize this revenue by recording the non-refundable portion of the residents' entrance fees as deferred entrance fee income and amortizing it into revenue using the straight-line method over the estimated remaining life expectancy of each resident or couple, adjusted annually. We periodically assess the reasonableness of these mortality tables and other actuarial assumptions, and measurement of future service obligations.

Self-Insurance Liability Accruals

We are subject to various legal proceedings and claims that arise in the ordinary course of our business. Although we maintain general liability and professional liability insurance policies for our owned, leased and managed communities under a master insurance program, our current policies provide for deductibles for each and every claim.  

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As a result, we are effectively self-insured for claims that are less than the deductible amounts.  In addition, we maintain a large-deductible workers compensation program and a self-insured employee medical program. We have secured our obligations related to general liability, professional liability and workers compensation programs with cash aggregating $16.1 million and letters of credit aggregating $40.7 million as of December 31, 2012.  We operate a wholly-owned captive insurance company, Senior Services Insurance Limited ("SSIL") for the purpose of insuring certain portions of the risk retention under our general liability and professional liability insurance program, but SSIL's coverage is currently limited to claims made prior to 2010.  Third-party insurers are responsible for claim costs above program deductibles and retentions.

The cost of our employee health and dental benefits, net of employee contributions, is shared by us and our communities based on the respective number of participants working directly either at our corporate offices or at the communities. Cash received is used to pay the actual costs of administering the program which include paid claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by us.  Claims are paid as they are submitted to the plan administrator.

Outstanding losses and expenses for general liability and professional liability and workers compensation are estimated based on the recommendations of independent actuaries and management's estimates.  Outstanding losses and expenses for our self-insured medical program are estimated based on the recommendation of our third party administrator.

We review the adequacy of our accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third-party administrator estimates, consultants, advice from legal counsel and industry data, and adjust accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Income Taxes

We account for income taxes under the provisions of ASC 740 Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are expected to be realized. As of December 31, 2012 and 2011, we have a valuation allowance against deferred tax assets of approximately $65.3 million and $40.8 million, respectively. When we determine that it is more likely than not that we will be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax asset would be made and reflected in income.  This determination will be made by considering various factors, including the reversal of existing temporary differences, tax planning strategies and estimates of future taxable income exclusive of the reversal of temporary differences.

We have elected the "with-and-without approach" regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year.  Under this approach, the windfall tax benefits would be recognized in additional paid-in capital only if an incremental tax benefit is realized after considering all other tax benefits presently available to us.

Lease Accounting

We determine whether to account for our leases as either operating or capital leases depending on the underlying terms. As of December 31, 2012, we operated 329 communities under long-term leases with operating, capital and financing lease obligations. The determination of this classification is complex and in certain situations requires a significant level of judgment. Our classification criteria is based on estimates regarding the fair value of the leased communities, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements as stated in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Communities under operating leases are accounted for in our consolidated statements of operations as lease expenses for actual rent paid plus or minus straight-line adjustments for fixed or estimated minimum lease escalators and amortization of deferred gains. For communities under capital lease and lease

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financing obligation arrangements, a liability is established on our balance sheets and a corresponding long-term asset is recorded. Lease payments are allocated between principal and interest on the remaining base lease obligations and the lease asset is depreciated over the shorter of its useful life or the term of the lease. In addition, we amortize leasehold improvements purchased during the term of the lease over the shorter of their economic life or the lease term. Sale-leaseback transactions are recorded as lease financing obligations when the transactions include a form of continuing involvement, such as purchase options.

One of our leases provides for various additional lease payments based on changes in the interest rates on the debt underlying the lease. All of our leases contain fixed or formula based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, we recognize all rent-free or rent holiday periods in operating leases on a straight-line basis over the lease term, including the rent holiday period.

For leases in which we are involved with the construction of the building, we account for the lease during the construction period under the provisions of ASC 840.  If we conclude that we have substantively all of the risks of ownership during construction of a leased property and therefore we are deemed the owner of the project for accounting purposes, we record an asset and related financing obligation for the amount of total project costs related to construction in progress and the pre-existing asset.  Once construction is complete, we consider the requirements under ASC 840-40 – Leases – Sale-Leaseback Transactions.  If the arrangement does not qualify for sale-leaseback accounting, we continue to amortize the financing obligation and depreciate the building over the lease term.

Allowance for Doubtful Accounts and Contractual Adjustments

Accounts receivable are reported net of an allowance for doubtful accounts, and represent our estimate of the amount that ultimately will be realized in cash. The allowance for doubtful accounts was $15.3 million and $17.0 million as of December 31, 2012 and 2011, respectively.  The adequacy of our allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance as necessary. Recent changes in legislation are not expected to have a material impact on the collectability of our accounts receivable; however, changes in economic conditions could have an impact on the collection of existing receivable balances or future allowance calculations.

Approximately 80.1% and 79.5% of our resident fee revenues for the years ended December 31, 2012 and 2011, respectively, were derived from private pay customers and 19.9% and 20.5% of our resident fee revenues for the years ended December 31, 2012 and 2011, respectively, were derived from services covered by various third-party payor programs, including Medicare and Medicaid.  Billings for services under third-party payor programs are recorded net of estimated retroactive adjustments, if any, under reimbursement programs. Revenue related to these billings is recorded on an estimated basis in the period the related services are rendered and adjusted in future periods or as final settlements are determined. We accrue contractual or cost related adjustments from Medicare or Medicaid when assessed (without regard to when the assessment is paid or withheld), even if we have not agreed to or are appealing the assessment. Subsequent positive or negative adjustments to these accrued amounts are recorded in net revenues when known.

Long-Lived Assets, Goodwill and Purchase Accounting

As of December 31, 2012 and 2011, our long-lived assets were comprised primarily of $3.9 billion and $3.7 billion, respectively, of net property, plant and equipment and leasehold intangibles. In accounting for our long-lived assets, other than goodwill, we apply the provisions of ASC 360 Property, Plant and Equipment.  In connection with our formation transactions, for financial reporting purposes we recorded the non-controlling stockholders' interest at fair value. Acquisitions are accounted for using the purchase method of accounting and the purchase prices are allocated to acquired assets and liabilities based on their estimated fair values. Goodwill associated with our acquisition of ARC and our formation transactions was allocated to the respective reporting unit and included in our application of the provisions of ASC 350 Intangibles – Goodwill and Other ("ASC 350").  We account for goodwill under the provisions of ASC 350.  As of December 31, 2012 and 2011, we had $109.6 million of goodwill.

We test long-lived assets other than goodwill and indefinite-lived intangible assets for recoverability annually during our fourth quarter or whenever changes in circumstances indicate the carrying value may not be recoverable. Recoverability of an asset (group) is estimated by comparing its carrying value to the future net undiscounted cash

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flows expected to be generated by the asset (group). If this comparison indicates that the carrying value of an asset (group) is not recoverable, we are required to recognize an impairment loss. The impairment loss is measured by the amount by which the carrying amount of the asset (group) exceeds its estimated fair value. When an impairment loss is recognized for assets to be held and used, the carrying amount of those assets is permanently adjusted and depreciated over its remaining useful life.  During the years ended December 31, 2012 and 2011, we evaluated long-lived depreciable assets and determined that the undiscounted cash flows exceeded the carrying value of these assets for all except a small number of communities.  Estimated fair values were determined and non-cash asset impairment charges of $27.7 million and $16.9 million were taken for the years ended December 31, 2012 and 2011, respectively.  These impairment charges are primarily due to lower than expected performance of the underlying communities and the amount by which the carrying values of the assets exceed the estimated fair value or estimated selling prices.

Goodwill is not amortized, but is subject to annual or more frequent impairment testing.  We test goodwill for impairment annually during our fourth quarter, or whenever indicators exist that our goodwill may not be recoverable.  The recoverability of goodwill is required to be assessed using a two-step process. The first step requires a comparison of the estimated fair value of a reporting unit with its carrying value. If the carrying value of the reporting unit exceeds its estimated fair value, the second step requires a comparison of the implied fair value of goodwill (based on a putative purchase price allocation methodology) with its carrying value. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess.

In 2012, we adopted the guidance within Accounting Standards Update  2011-08, Intangibles — Goodwill and Other ("ASU 2011-08"), which allows us to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  In 2012, we assessed qualitative factors and determined that it was not necessary to perform the two-step quantitative goodwill impairment test.

Indefinite-lived intangible assets are tested for impairment annually during our fourth quarter or more frequently as required.  The impairment test consists of a comparison of the estimated fair value of the indefinite-lived intangible asset with its carrying value.  If the carrying amount exceeds its fair value, an impairment loss is recognized for that difference.

In estimating the fair value of long-lived assets (groups) and reporting units for purposes of our goodwill impairment test, we generally use the income approach.  The income approach utilizes future cash flow projections that are developed internally.  Any estimates of future cash flow projections necessarily involve predicting an unknown future and require significant management judgments and estimates.   In arriving at our cash flow projections, we consider our historic operating results, approved budgets and business plans, future demographic factors, expected growth rates, and other factors.  Future events may indicate differences from management's current judgments and estimates, which could, in turn, result in future impairments.  Future events that may result in impairment charges include increases in interest rates, which could impact discount rates, differences in the projected occupancy rates and changes in the cost structure of existing communities.

In using the income approach to estimate the fair value of long-lived assets (groups) and reporting units for purposes of our goodwill impairment test, we make certain key assumptions.  Those assumptions include future revenues and future facility operating expenses, and future cash flows that we would receive upon a sale of the communities using estimated capitalization rates. We corroborate the capitalization rates we use in these calculations with capitalization rates observable from recent market transactions.

Where required, future cash flows are discounted at a rate that is consistent with a weighted average cost of capital from a market participant perspective. The weighted average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise.

Although we make every reasonable effort to ensure the accuracy of our estimate of the fair value of our reporting units, future changes in the assumptions used to make these estimates could result in the recording of an impairment loss.

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Stock-Based Compensation

We adopted ASC 718 Compensation – Stock Compensation ("ASC 718") in connection with initial grants of restricted stock effective August 2005, which were converted into shares of our restricted stock on September 30, 2005 in connection with our formation transaction. ASC 718 requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred.

Certain of our employee stock awards vest only upon the achievement of performance targets.  ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, our determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Additionally, we must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Litigation

Litigation is inherently uncertain and the outcome of individual litigation matters is not predictable with assurance.  As described in Note 21 to the consolidated financial statements, we are involved in various legal actions and claims incidental to the conduct of our business which are comparable to other companies in the senior living and healthcare industries.  We have established loss provisions for matters in which losses are probable and can be reasonably estimated. In other instances, we may not be able to make a reasonable estimate of any liability because of uncertainties related to the outcome and/or the amount or range of losses. Changes in our current estimates, due to unanticipated events or otherwise, could have a material impact on our financial condition and results of operations.

New Accounting Pronouncements

The information required by this Item is provided in Note 2 of the notes to the consolidated financial statements contained in "Item 8. Financial Statements and Supplementary Data".

Liquidity and Capital Resources

The following is a summary of cash flows from operating, investing and financing activities, as reflected in the Consolidated Statements of Cash Flows (dollars in thousands):

	Year Ended December 31,
	2012			2011
Cash provided by operating activities	$	290,969		$	268,427
Cash used in investing activities		(455,334	)		(203,899	)
Cash provided by (used in) financing activities		202,769			(115,519	)
Net increase (decrease) in cash and cash equivalents		38,404			(50,991	)
Cash and cash equivalents at beginning of year		30,836			81,827
Cash and cash equivalents at end of year	$	69,240		$	30,836

The increase in cash provided by operating activities was attributable primarily to increased cash provided by changes in working capital and, to a lesser extent, improved operating results.

The increase in cash used in investing activities was primarily attributable to an increase in cash paid for acquisitions and spending on property, plant, equipment, and leasehold intangibles. The increase was partially offset by the sale of restricted marketable securities. Additionally, the prior year includes cash received from restricted cash and escrow deposits related to the release of escrows on a recently opened entrance fee CCRC and from the sale of assets.

The change in cash related to financing activities year over year was primarily attributable to an increase in the proceeds from debt related to the financing of current year acquisitions and a decrease in repayments of debt, as the prior year included both the repayment of debt on a recently opened entrance fee CCRC when entrance fees

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originally escrowed were released in accordance with state regulations, as well as repayments of debt from proceeds received in connection with the convertible debt offering in June 2011.  Additionally, there was an increase in the cash portion of the loss on extinguishment of debt and we repurchased 1,217,100 shares of our common stock at an aggregate cost of $17.6 million in the prior year.

Our principal sources of liquidity have historically been from:

· cash balances on hand;

· cash flows from operations;

· proceeds from our credit facilities;

· proceeds from mortgage financing or refinancing of various assets;

· funds generated through joint venture arrangements or sale-leaseback transactions; and

· with somewhat lesser frequency, funds raised in the debt or equity markets and proceeds from the selective disposition of underperforming and/or non-core assets.

Over the longer-term, we expect to continue to fund our business through these principal sources of liquidity.

Our liquidity requirements have historically arisen from:

· working capital;

· operating costs such as employee compensation and related benefits, general and administrative expense and supply costs;

· debt service and lease payments;

· acquisition consideration and transaction costs;

· cash collateral required to be posted in connection with our interest rate swaps and related financial instruments;

· capital expenditures and improvements, including the expansion of our current communities and the development of new communities;

· dividend payments;

· purchases of common stock under our share repurchase authorizations; and

· other corporate initiatives (including integration and branding).

Over the near-term, we expect that our liquidity requirements will primarily arise from:

· working capital;

· operating costs such as employee compensation and related benefits, general and administrative expense and supply costs;

· debt service and lease payments;

· capital expenditures and improvements, including the expansion, redevelopment and repositioning of our current communities and the development of new communities;

· other corporate initiatives (including information systems and branding);

· acquisition consideration and transaction costs; and

· purchases of common stock under our share repurchase authorization.

We are highly leveraged and have significant debt and lease obligations.  As of December 31, 2012, we have three principal corporate-level debt obligations:  our $230.0 million revolving credit facility, our $316.3 million convertible senior notes due 2018 and separate secured and unsecured letter of credit facilities providing for up to $92.5 million of letters of credit in the aggregate.  The remainder of our indebtedness is generally comprised of non-recourse property-level mortgage financings.

At December 31, 2012, we had $2.3 billion of debt outstanding, excluding capital lease obligations and our line of credit, at a weighted-average interest rate of 4.52% (calculated using an imputed interest rate of 7.5% for our $316.3 million convertible senior notes due 2018).  At December 31, 2012, we had $319.7 million of capital and financing lease obligations, $80.0 million was drawn on our revolving credit facility, and $78.1 million of letters of credit had been issued under our letter of credit facilities.  Approximately $509.5 million of our debt and capital lease obligations are due on or before December 31, 2013.  We also have substantial operating lease obligations and

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capital expenditure requirements.  For the year ending December 31, 2013, we will be required to make approximately $277.7 million of payments in connection with our existing operating leases.

We had $69.2 million of cash and cash equivalents at December 31, 2012, excluding cash and escrow deposits-restricted and lease security deposits of $144.4 million in the aggregate.  As of that date, we also had $191.4 million of availability on our revolving credit facility (of which $80.0 million had been drawn as of December 31, 2012).

At December 31, 2012, we had $821.9 million of negative working capital, which includes the classification of $465.6 million of mortgage notes payable and $260.9 million of refundable entrance fees as current liabilities.  Although the mortgage notes payable are scheduled to mature on or prior to December 31, 2013, we have the option, subject to the satisfaction of customary conditions (such as the absence of a material adverse change), to extend the maturity of approximately $205.5 million of certain mortgages payable included in such debt until 2018 or later, as the instruments associated with such mortgages payable provide that we can extend the respective maturity dates for terms of five to seven years from the existing maturity dates. We presently anticipate that we will either satisfy the conditions precedent for extending these obligations and will exercise the extension options or we will refinance or repay the $465.6 million of mortgage notes payable at or prior to maturity.  Based upon our historical operating experience, we anticipate that only 9.0% to 12.0% of the refundable entrance fee liabilities will actually come due, and be required to be settled in cash, during the next 12 months. We expect that any entrance fee liabilities due within the next 12 months will be fully offset by the proceeds generated by subsequent entrance fee sales.  Entrance fee sales, net of refunds paid, provided $55.3 million of cash for the year ended December 31, 2012.

For the year ending December 31, 2013, we anticipate that we will make investments of approximately $150.0 million to $165.0 million for net capital expenditures (excluding expenditures related to our Program Max initiative discussed below), comprised of approximately $40.0 million to $45.0 million of net recurring capital expenditures and approximately $110.0 million to $120.0 million of expenditures relating to other major projects (including corporate initiatives).  These major projects include unusual or non-recurring capital projects, projects which create new or enhanced economics, such as major renovations or repositioning projects at our communities, integration related expenditures (including the cost of developing information systems), and expenditures supporting the expansion of our ancillary services programs.  For the year ended December 31, 2012, we spent approximately $38.3 million for net recurring capital expenditures and approximately $110.5 million for expenditures relating to other major projects and corporate initiatives. 

In addition, we have increased our efforts with respect to the expansion, redevelopment and repositioning of our communities through our Program Max initiative.  We anticipate making net investments of approximately $75.0 million to $85.0 million over the next 12 months in connection with recently initiated or currently planned projects.  For the year ended December 31, 2012, we spent approximately $42.8 million in connection with our Program Max initiative.

During 2013, we anticipate that our capital expenditures will be funded from cash on hand, cash flows from operations, lessor reimbursement and amounts drawn on our credit facility.

As opportunities arise, we plan to continue to take advantage of the fragmented senior housing and care sectors by selectively purchasing existing operating companies, asset portfolios, home health agencies and communities. We may also seek to acquire the fee interest in communities that we currently lease or manage.

We expect to continue to assess our financing alternatives periodically and access the capital markets opportunistically.  If our existing resources are insufficient to satisfy our liquidity requirements, or if we enter into an acquisition or strategic arrangement with another company, we may need to sell additional equity or debt securities. Any such sale of additional equity securities will dilute the interests of our existing stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, if at all (particularly given current market conditions). If we are unable to obtain this additional financing, we may be required to delay, reduce the scope of, or eliminate one or more aspects of our business development activities, any of which could reduce the growth of our business.

We currently estimate that our existing cash flows from operations, together with existing working capital, amounts available under our credit facility and, to a lesser extent, proceeds from anticipated financings and refinancings of various assets, will be sufficient to fund our liquidity needs for at least the next 12 months, assuming that the overall

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economy does not substantially deteriorate.

Our actual liquidity and capital funding requirements depend on numerous factors, including our operating results, the actual level of capital expenditures, our expansion, development and acquisition activity, general economic conditions and the cost of capital.  Shortfalls in cash flows from operating results or other principal sources of liquidity may have an adverse impact on our ability to execute our business and growth strategies.  The current volatility in the credit and financial markets may also have an adverse impact on our liquidity by making it more difficult for us to obtain financing or refinancing.  As a result, this may impact our ability to grow our business, maintain capital spending levels, expand certain communities, or execute other aspects of our business strategy.  In order to continue some of these activities at historical or planned levels, we may incur additional indebtedness or lease financing to provide additional funding.  There can be no assurance that any such additional financing will be available or on terms that are acceptable to us.

As of December 31, 2012, we are in compliance with the financial covenants of our outstanding debt and lease agreements.

Credit Facilities

On January 31, 2011, we entered into an amended and restated credit agreement with General Electric Capital Corporation, as administrative agent and lender, and the other lenders from time to time parties thereto. The amended credit agreement amended and restated in its entirety our existing credit agreement dated as of February 23, 2010, as previously amended.  The amended credit agreement increased the commitment under the credit facility from $120.0 million to $200.0 million and extended the maturity date to January 31, 2016.  Effective February 23, 2011, the commitment under the amended and restated credit agreement was further increased to $230.0 million.

The revolving line of credit can be used to finance acquisitions and fund working capital and capital expenditures and for other general corporate purposes.

The facility is secured by a first priority lien on certain of our communities. The availability under the line will vary from time to time as it is based on borrowing base calculations related to the value and performance of the communities securing the facility.

Amounts drawn under the facility bear interest at 90-day LIBOR plus an applicable margin, as described below. For purposes of determining the interest rate, in no event will LIBOR be less than 2%. The applicable margin varies with the percentage of total commitment drawn, with a 4.5% margin at 35% or lower utilization, a 5.0% margin at utilization greater than 35% but less than or equal to 50% and a 5.5% margin at greater than 50% utilization. We are also required to pay a quarterly commitment fee of 1.0% per annum on the unused portion of the facility.

The credit agreement contains typical affirmative and negative covenants, including financial covenants with respect to minimum consolidated fixed charge coverage and minimum consolidated tangible net worth. A violation of any of these covenants could result in a default under the credit agreement, which would result in termination of all commitments under the credit agreement and all amounts owing under the credit agreement and certain other loan agreements becoming immediately due and payable.

As of December 31, 2012, we had an available secured line of credit with a $230.0 million commitment and $191.4 million of availability (of which $80.0 million had been drawn as of that date).  We also had secured and unsecured letter of credit facilities of up to $92.5 million in the aggregate as of December 31, 2012.  Letters of credit totaling $78.1 million had been issued under these facilities as of that date.

Convertible Debt Offering

In June 2011, we completed a registered offering of $316.3 million aggregate principal amount of 2.75% convertible senior notes (the "Notes"). We received net proceeds of approximately $308.2 million after the deduction of underwriting commissions and offering expenses.  We used a portion of the net proceeds to pay our cost of the convertible note hedge transactions described below, taking into account our proceeds from the warrant transactions described below, and used the balance of the net proceeds to repay existing outstanding debt.

The Notes are senior unsecured obligations and rank equally in right of payment to all of our other senior unsecured

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debt, if any. The Notes will be senior in right of payment to any of our debt which is subordinated by its terms to the Notes (if any). The Notes are also structurally subordinated to all debt and other liabilities and commitments (including trade payables) of our subsidiaries. The Notes are also effectively subordinated to our secured debt to the extent of the assets securing such debt.

The Notes bear interest at 2.75% per annum, payable semi-annually in cash.  The Notes are convertible at an initial conversion rate of 34.1006 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $29.325 per share), subject to adjustment. Holders may convert their Notes at their option prior to the close of business on the second trading day immediately preceding the stated maturity date only under the following circumstances:  (i) during any fiscal quarter commencing after the fiscal quarter ending September 30, 2011, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the "measurement period"), in which the trading price per $1,000 principal amount of notes for each trading day of that measurement period was less than 98% of the product of the last reported sale price of our common stock and the applicable conversion rate on each such day; or (iii) upon the occurrence of specified corporate events.  On and after March 15, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.  Unconverted Notes mature at par in June 2018.

Upon conversion, we will satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock at our election.  It is our current intent and policy to settle the principal amount of the Notes (or, if less, the amount of the conversion obligation) in cash upon conversion.

In addition, following certain corporate transactions, we will increase the conversion rate for a holder who elects to convert in connection with such transaction by a number of additional shares of common stock as set forth in the supplemental indenture governing the Notes.

In connection with the offering of the Notes, in June 2011, we entered into convertible note hedge transactions (the "Convertible Note Hedges") with certain financial institutions (the "Hedge Counterparties"). The Convertible Note Hedges cover, subject to customary anti-dilution adjustments, 10,784,315 shares of common stock.  We also entered into warrant transactions with the Hedge Counterparties whereby the Company sold to the Hedge Counterparties warrants to acquire, subject to customary anti-dilution adjustments, up to 10,784,315 shares of common stock (the "Sold Warrant Transactions").  The warrants have a strike price of $40.25 per share, subject to customary anti-dilution adjustments.

The Convertible Note Hedges are expected to reduce the potential dilution with respect to common stock upon conversion of the Notes in the event that the price per share of common stock at the time of exercise is greater than the strike price of the Convertible Note Hedges, which corresponds to the initial conversion price of the Notes and is similarly subject to customary anti-dilution adjustments. If, however, the price per share of common stock exceeds the strike price of the Sold Warrant Transactions when they expire, there would be additional dilution from the issuance of common stock pursuant to the warrants.

The Convertible Note Hedges and Sold Warrant Transactions are separate transactions (in each case entered into by us and the Hedge Counterparties), are not part of the terms of the Notes and will not affect the holders' rights under the Notes. Holders of the Notes do not have any rights with respect to the Convertible Note Hedges or the Sold Warrant Transactions.

These hedging transactions had a net cost of approximately $31.9 million, which was paid from the proceeds of the Notes and recorded as a reduction of additional paid-in capital.

Contractual Commitments

The following table presents a summary of our material indebtedness, including the related interest payments, lease and other contractual commitments, as of December 31, 2012.

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			Payments Due by Twelve Months Ending December 31,
	Total		2013		2014		2015		2016		2017		Thereafter
	(dollars in thousands)
Contractual Obligations:
Long-term debt obligations(1)	$	2,883,406	$	579,272	$	251,953	$	126,911	$	194,803	$	396,680	$	1,333,787
Capital lease obligations(1)		483,150		55,828		55,065		53,401		46,957		60,494		211,405
Operating lease obligations(2)		1,978,916		277,684		268,164		259,624		256,463		232,445		684,536
Refundable entrance fee obligations(3)		260,895		28,745		28,745		28,745		28,745		28,745		117,170
Total contractual obligations	$	5,606,367	$	941,529	$	603,927	$	468,681	$	526,968	$	718,364	$	2,346,898
Total commercial construction commitments	$	41,480	$	41,480	$	—	$	—	$	—	$	—	$	—

(1) Includes contractual interest for all fixed-rate obligations and assumes interest on variable rate instruments at the December 31, 2012 rate after giving effect to in-place interest rate swaps.

(2) Reflects future cash payments after giving effect to non-contingent lease escalators and assumes payments on variable rate instruments at the December 31, 2012 rate.

(3) Future refunds of entrance fees are estimated based on historical payment trends. These refund obligations are generally offset by proceeds received from resale of the vacated apartment units. Historically, proceeds from resales of entrance fee units each year generally offset refunds paid and generate excess cash to us.

The foregoing amounts exclude outstanding letters of credit of $78.1 million as of December 31, 2012.

Company Indebtedness, Long-term Leases and Hedging Agreements

Indebtedness

As of December 31, 2012, we have three principal corporate-level debt obligations: our $230.0 million revolving credit facility, our $316.3 million convertible senior notes due 2018 and separate secured and unsecured letter of credit facilities providing for up to $92.5 million of letters of credit in the aggregate.  The remainder of our indebtedness is generally comprised of non-recourse property-level mortgage financings.

As of December 31, 2012 and 2011, our outstanding property-level secured debt and capital leases were $2.3 billion and $2.2 billion, respectively. In accordance with applicable accounting pronouncements, as of December 31, 2012, the current portion of long-term debt within our consolidated financial statements reflects approximately $465.6 million and $30.1 million of our mortgage notes payable and capital lease obligations, respectively, due within the next 12 months. Although the mortgage notes payable are scheduled to mature on or prior to December 31, 2013, we have the option, subject to the satisfaction of customary conditions (such as the absence of a material adverse change), to extend the maturity of approximately $205.5 million of certain mortgages payable included in such debt until 2018 or later, as the instruments associated with such mortgages payable provide that we can extend the respective maturity dates for terms of five to seven years from the existing maturity dates. We presently anticipate that we will either satisfy the conditions precedent for extending these obligations and will exercise the extension options or we will refinance or repay the $465.6 million of mortgage notes payable at or prior to maturity.

During 2012, we incurred $394.9 million of property-level debt primarily related to the financing of acquisitions, the expansion of certain communities, the refinancing of existing debt and the releveraging of certain assets.  Approximately $303.8 million of the new debt was issued at a variable interest rate and the remaining $91.1 million was issued at a fixed interest rate.  Refer to the notes to the consolidated financial statements for a detailed discussion of the new debt and related terms.

We have secured self-insured retention risk under workers' compensation and general liability and professional liability programs with cash and letters of credit.  Cash securing the programs aggregated $16.1 million and $17.3 million as of December 31, 2012 and 2011, respectively.  Letters of credit securing the programs aggregated $40.7 million as of December 31, 2012 and 2011.

As of December 31, 2012, we are in compliance with the financial covenants of our outstanding debt agreements.

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Long-Term Leases

As of December 31, 2012, we have 329 communities operated under long-term leases. The leases relating to these communities are generally fixed rate leases with annual escalators that are either fixed or tied to changes in leased property revenue or the consumer price index.

One portfolio lease has a floating-rate debt component built into the lease payments.  The lease includes $74.0 million of variable rate mortgages and/or tax exempt debt that is credit enhanced.

For the year ended December 31, 2012, our minimum annual cash lease payments for our capital/financing leases and operating leases were $56.6 million and $280.0 million, respectively.

As of December 31, 2012, we are in compliance with the financial covenants of our capital and operating leases.

Hedging

In the normal course of business, we use a variety of financial instruments to mitigate interest rate risk.  We have entered into certain interest rate protection and swap agreements to effectively cap or convert floating rate debt to a fixed rate basis.  As of December 31, 2012, we have $589.6 million in aggregate notional amount of interest rate caps, $27.4 million in aggregate notional amount of swaps and $236.5 million of variable rate debt, excluding our secured line of credit and capital lease obligations, that is not subject to any cap or swap agreements.

All derivative instruments are recognized as either assets or liabilities in the consolidated balance sheet at fair value.

The following table summarizes the Company's swap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	27,373
Highest possible notional	$	27,373
Lowest interest rate		5.49	%
Highest interest rate		5.49	%
Average fixed rate		5.49	%
Earliest maturity date		2016
Latest maturity date		2016
Weighted average original maturity	5.0 years
Estimated liability fair value (included in other liabilities at December 31, 2012)	$	(1,833	)
Estimated liability fair value (included in other liabilities at December 31, 2011)	$	(2,809	)

The following table summarizes the Company's cap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	589,568
Highest possible notional	$	589,568
Lowest interest cap rate		5.00	%
Highest interest cap rate		6.06	%
Average fixed cap rate		5.43	%
Earliest maturity date		2013
Latest maturity date		2018
Weighted average original maturity	3.5 years
Estimated asset fair value (included in other assets at December 31, 2012)	$	495
Estimated asset fair value (included in other assets at December 31, 2011)	$	—

Impacts of Inflation

Resident fees from the communities we own or lease and management fees from communities we manage for third parties are our primary sources of revenue. These revenues are affected by the amount of monthly resident fee rates

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and community occupancy rates. The rates charged are highly dependent on local market conditions and the competitive environment in which our communities operate. Substantially all of our retirement center, assisted living, and CCRC residency agreements allow for adjustments in the monthly fee payable not less frequently than every 12 or 13 months which enables us to seek increases in monthly fees due to inflation, increased levels of care or other factors. Any pricing increase would be subject to market and competitive conditions and could result in a decrease in occupancy in the communities. We believe, however, that our ability to periodically adjust the monthly fee serves to reduce the adverse effect of inflation. In addition, employee compensation expense is a principal element of facility operating costs and is also dependent upon local market conditions. There can be no assurance that resident fees will increase or that costs will not increase due to inflation or other causes.

At December 31, 2012, approximately $841.5 million of our indebtedness, excluding our line of credit, bears interest at floating rates. We have mitigated our exposure to floating rates by using interest rate swaps and interest rate caps under our debt/lease arrangements. Inflation, and its impact on floating interest rates, could affect the amount of interest payments due on our line of credit.

Off-Balance Sheet Arrangements

The equity method of accounting has been applied in the accompanying financial statements with respect to our investment in unconsolidated ventures that are not considered VIEs as we do not possess a controlling financial interest. We do not believe these off-balance sheet arrangements have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Non-GAAP Financial Measures

A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. In this report, we define and use the non-GAAP financial measures Adjusted EBITDA, Cash From Facility Operations and Facility Operating Income, as set forth below.

Adjusted EBITDA

Definition of Adjusted EBITDA

We define Adjusted EBITDA as follows:

Net income (loss) before:

· provision (benefit) for income taxes;

· non-operating (income) expense items;

· (gain) loss on sale or acquisition of communities (including gain (loss) on facility lease termination);

· depreciation and amortization (including non-cash impairment charges);

· straight-line lease expense (income);

· amortization of deferred gain;

· amortization of deferred entrance fees;

· non-cash stock-based compensation expense; and

· change in future service obligation;

and including:

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· entrance fee receipts and refunds (excluding (i) first generation entrance fee receipts from the sale of units at a recently opened entrance fee CCRC prior to stabilization and (ii) first generation entrance fee refunds not replaced by second generation entrance fee receipts at the recently opened community prior to stabilization).

In the first quarter of 2012, we revised the definition of Adjusted EBITDA to clarify the point at which first generation entrance fee receipts and refunds at recently opened entrance fee CCRCs will be included.  We determine the stabilization date of recently opened entrance fee communities to be the first day of the first full fiscal quarter occurring two years subsequent to the community's opening date for occupancy of all levels of care on the campus.

As a result of this change, beginning in the first quarter of 2012, we include all net entrance fee activity from a recently opened entrance fee CCRC in our non-GAAP financial measures.  For the year ended December 31, 2012, first generation net entrance fee receipts which would have been excluded under the previous definition of Adjusted EBITDA were $3.6 million.

Management's Use of Adjusted EBITDA

We use Adjusted EBITDA to assess our overall financial and operating performance.  We believe this non-GAAP measure, as we have defined it, is helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance on our day-to-day operations.  This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance.  It provides an indicator for management to determine if adjustments to current spending decisions are needed.

Adjusted EBITDA provides us with a measure of financial performance, independent of items that are beyond the control of management in the short-term, such as the change in the liability for the obligation to provide future services under existing lifecare contracts, depreciation and amortization (including non-cash impairment charges), straight-line lease expense (income), taxation and interest expense associated with our capital structure.  This metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization.  Adjusted EBITDA is one of the metrics used by senior management and the board of directors to review the financial performance of the business on a monthly basis.  Adjusted EBITDA is also used by research analysts and investors to evaluate the performance of and value companies in our industry.

Limitations of Adjusted EBITDA

Adjusted EBITDA has limitations as an analytical tool.  It should not be viewed in isolation or as a substitute for GAAP measures of earnings.  Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA, and using this non-GAAP financial measure as compared to GAAP net income (loss), include:

· the cash portion of interest expense, income tax (benefit) provision and non-recurring charges related to gain (loss) on sale of communities and extinguishment of debt activities generally represent charges (gains), which may significantly affect our financial results; and

· depreciation and amortization, though not directly affecting our current cash position, represent the wear and tear and/or reduction in value of our communities, which affects the services we provide to our residents and may be indicative of future needs for capital expenditures.

An investor or potential investor may find this item important in evaluating our performance, results of operations and financial position.  We use non-GAAP financial measures to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Adjusted EBITDA is not an alternative to net income, income from operations or cash flows provided by or used in operations as calculated and presented in accordance with GAAP.  You should not rely on Adjusted EBITDA as a substitute for any such GAAP financial measure.  We strongly urge you to review the reconciliation of Adjusted EBITDA to GAAP net income (loss), along with our consolidated financial statements included herein.  We also strongly urge you to not rely on any single financial measure to evaluate our business.  In addition, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations, the

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Adjusted EBITDA measure, as presented in this report, may differ from and may not be comparable to similarly titled measures used by other companies.

The table below shows the reconciliation of our net loss to Adjusted EBITDA for the years ended December 31, 2012, 2011, and 2010 (dollars in thousands):

	Years Ended December 31(1),
	2012			2011			2010
Net loss	$	(66,467	)	$	(69,050	)	$	(49,886	)
Provision (benefit) for income taxes		1,519			1,780			(32,062	)
Other non-operating (income) expense		(593	)		(56	)		1,454
Equity in loss (earnings) of unconsolidated ventures		3,488			(1,432	)		(168	)
Loss on extinguishment of debt, net		221			18,863			1,557
Interest expense:
Debt		98,183			93,229			102,245
Capitalized lease obligation		30,155			31,644			30,396
Amortization of deferred financing costs and debt discount		18,081			13,427			8,963
Change in fair value of derivatives and amortization		364			3,878			4,118
Interest income		(4,012	)		(3,538	)		(2,238	)
Income from operations		80,939			88,745			64,379
(Gain) loss on facility lease termination		(11,584	)		—			4,608
Loss on sale of communities, net		—			—			(3,298	)
Loss (gain) on acquisition		636			(1,982	)		—
Depreciation and amortization		252,281			268,506			292,341
Asset impairment		27,677			16,892			13,075
Straight-line lease expense		6,668			8,608			10,521
Amortization of deferred gain		(4,372	)		(4,373	)		(4,343	)
Amortization of entrance fees		(25,362	)		(23,966	)		(22,782	)
Non-cash stock-based compensation expense		25,520			19,856			20,759
Change in future service obligation		2,188			—			(1,064	)
Entrance fee receipts(2)		82,705			67,989			73,906
First generation entrance fees received(3)		—			(12,617	)		(18,548	)
Entrance fee disbursements(4)		(27,356	)		(24,993	)		(21,060	)
Adjusted EBITDA	$	409,940		$	402,665		$	408,494

(1) The calculation of Adjusted EBITDA includes integration, transaction-related and EMR roll-out costs of $23.5 million and $14.4 million for the years ended December 31, 2012 and 2011, respectively. There were no such costs in 2010. 

(2) Includes the receipt of refundable and non-refundable entrance fees.

(3) First generation entrance fees received represents initial entrance fees received from the sale of units at a recently opened entrance fee CCRC prior to stabilization.

(4) Entrance fee refunds disbursed excludes $0.8 million of first generation entrance fee refunds not replaced by second generation entrance fee receipts at a recently opened entrance fee CCRC prior to stabilization for the year ended December 31, 2011.

Cash From Facility Operations

Definition of Cash From Facility Operations

We define Cash From Facility Operations (CFFO) as follows:

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Net cash provided by (used in) operating activities adjusted for:

· changes in operating assets and liabilities;

· deferred interest and fees added to principal;

· refundable entrance fees received;

· first generation entrance fee receipts at a recently opened entrance fee CCRC prior to stabilization;

· entrance fee refunds disbursed adjusted for first generation entrance fee refunds not replaced by second generation entrance fee receipts at the recently opened community prior to stabilization;

· lease financing debt amortization with fair market value or no purchase options;

· gain (loss) on facility lease termination;

· recurring capital expenditures, net;

· distributions from unconsolidated ventures from cumulative share of net earnings;

· CFFO from unconsolidated ventures; and

· other.

Recurring capital expenditures include routine expenditures capitalized in accordance with GAAP that are funded from current operations. Amounts excluded from recurring capital expenditures consist primarily of major projects, renovations, community repositionings, expansions, systems projects or other non-recurring or unusual capital items (including integration capital expenditures) or community purchases that are funded using lease or financing proceeds, available cash and/or proceeds from the sale of communities that are held for sale.

In the first quarter of 2012, we revised the definition of CFFO to clarify the point at which first generation entrance fee receipts and refunds at recently opened entrance fee CCRCs will be included.  We determine the stabilization date of recently opened entrance fee communities to be the first day of the first full fiscal quarter occurring two years subsequent to the community's opening date for occupancy of all levels of care on the campus.

As a result of this change, beginning in the first quarter of 2012, we include all net entrance fee activity from a recently opened entrance fee CCRC in our non-GAAP financial measures.  For the year ended December 31, 2012, first generation net entrance fee receipts which would have been excluded under the previous definition of CFFO were $3.6 million.

Management's Use of Cash From Facility Operations

We use CFFO to assess our overall liquidity.  This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial and liquidity goals as well as to achieve optimal financial performance.  It provides an indicator for management to determine if adjustments to current spending decisions are needed.

This metric measures our liquidity based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization.  CFFO is one of the metrics used by our senior management and board of directors (i) to review our ability to service our outstanding indebtedness (including our credit facilities and long-term leases), (ii) to review our ability to pay dividends to stockholders, (iii) to review our ability to make regular recurring capital expenditures to maintain and improve our communities on a period-to-period basis, (iv) for planning purposes, including preparation of our annual budget, (v) in making compensation determinations for certain of our associates (including our named executive officers) and (vi) in setting various covenants in our credit agreements.  These agreements generally require us to escrow or spend a minimum of between $250 and $450 per unit per year.  Historically, we have spent in excess of these per unit amounts; however, there is no assurance that we will have funds available to escrow or spend these per unit amounts in the future.  If we do not escrow or spend the required minimum annual amounts, we would be in default of the applicable debt or lease agreement which could trigger cross default provisions in our outstanding indebtedness and lease arrangements.

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Limitations of Cash From Facility Operations

CFFO has limitations as an analytical tool.  It should not be viewed in isolation or as a substitute for GAAP measures of cash flow from operations.  CFFO does not represent cash available for dividends or discretionary expenditures, since we may have mandatory debt service requirements or other non-discretionary expenditures not reflected in the measure.  Material limitations in making the adjustment to our cash flow from operations to calculate CFFO, and using this non-GAAP financial measure as compared to GAAP operating cash flows, include:

· the cash portion of interest expense, income tax (benefit) provision and non-recurring charges related to gain (loss) on sale of communities and extinguishment of debt activities generally represent charges (gains), which may significantly affect our financial results; and

· depreciation and amortization, though not directly affecting our current cash position, represent the wear and tear and/or reduction in value of our communities, which affects the services we provide to our residents and may be indicative of future needs for capital expenditures.

We believe CFFO is useful to investors because it assists their ability to meaningfully evaluate (1) our ability to service our outstanding indebtedness, including our credit facilities and capital and financing leases, (2) our ability to pay dividends to stockholders and (3) our ability to make regular recurring capital expenditures to maintain and improve our communities.

CFFO is not an alternative to cash flows provided by or used in operations as calculated and presented in accordance with GAAP.  You should not rely on CFFO as a substitute for any such GAAP financial measure.  We strongly urge you to review the reconciliation of CFFO to GAAP net cash provided by (used in) operating activities, along with our consolidated financial statements included herein.  We also strongly urge you to not rely on any single financial measure to evaluate our business.  In addition, because CFFO is not a measure of financial performance under GAAP and is susceptible to varying calculations, the CFFO measure, as presented in this report, may differ from and may not be comparable to similarly titled measures used by other companies.

The table below shows the reconciliation of net cash provided by operating activities to CFFO for the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):

	Years Ended December 31(1),
	2012			2011			2010
Net cash provided by operating activities	$	290,969		$	268,427		$	228,244
Changes in operating assets and liabilities		(20,698	)		20,914			46,674
Refundable entrance fees received (2)(3)		42,600			29,611			36,420
First generation entrance fees received(4)		—			(12,617	)		(18,548	)
Entrance fee refunds disbursed(5)		(27,356	)		(24,993	)		(21,060	)
Recurring capital expenditures, net		(38,306	)		(33,661	)		(27,969	)
Lease financing debt amortization with fair market value or no purchase options		(12,120	)		(10,465	)		(8,972	)
Loss on facility lease termination		—			—			4,608
Distributions from unconsolidated ventures from cumulative share of net earnings		(1,507	)		(582	)		(775	)
CFFO from unconsolidated ventures		5,376			3,289			2,050
Cash From Facility Operations	$	238,958		$	239,923		$	240,672

(1) The calculation of Cash From Facility Operations includes integration, transaction-related and EMR roll-out costs of $23.5 million and $14.4 million for the years ended December 31, 2012 and 2011, respectively.  There were no such costs in 2010. 

(2) Entrance fee receipts include promissory notes issued to the Company by the resident in lieu of a portion of the entrance fees due.  Notes issued (net of collections) for the years ended December 31, 2012, 2011 and 2010 were $0.2 million, $3.3 million and $1.7 million, respectively.

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(3) Total entrance fee receipts for the year ended December 31, 2012, 2011 and 2010 were $82.7 million, $68.0 million, and $73.9 million, respectively, including $40.1 million, $38.4 million and $37.5 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities.

(4) First generation entrance fees received represents initial entrance fees received from the sale of units at a recently opened entrance fee CCRC prior to stabilization.

(5) Entrance fee refunds disbursed excludes $0.8 million of first generation entrance fee refunds not replaced by second generation entrance fee receipts at a recently opened entrance fee CCRC prior to stabilization for the year ended December 31, 2011.

Facility Operating Income

Definition of Facility Operating Income

We define Facility Operating Income as follows:

Net income (loss) before:

· provision (benefit) for income taxes;

· non-operating (income) expense items;

· (gain) loss on sale or acquisition of communities (including gain (loss) on facility lease termination);

· depreciation and amortization (including non-cash impairment charges);

· facility lease expense;

· general and administrative expense, including non-cash stock-based compensation expense;

· change in future service obligation;

· amortization of deferred entrance fee revenue; and

· management fees.

Management's Use of Facility Operating Income

We use Facility Operating Income to assess our facility operating performance.  We believe this non-GAAP measure, as we have defined it, is helpful in identifying trends in our day-to-day facility performance because the items excluded have little or no significance on our day-to-day facility operations.  This measure provides an assessment of revenue generation and expense management and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as to achieve optimal facility financial performance.  It provides an indicator for management to determine if adjustments to current spending decisions are needed.

Facility Operating Income provides us with a measure of facility financial performance, independent of items that are beyond the control of management in the short-term, such as the change in the liability for the obligation to provide future services under existing lifecare contracts, depreciation and amortization (including non-cash impairment charges), straight-line lease expense (income), taxation and interest expense associated with our capital structure.  This metric measures our facility financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization.  Facility Operating Income is one of the metrics used by our senior management and board of directors to review the financial performance of the business on a monthly basis.  Facility Operating Income is also used by research analysts and investors to evaluate the performance of and value companies in our industry by investors, lenders and lessors.  In addition, Facility Operating Income is a common measure used in the industry to value the acquisition or sales price of communities and is used as a measure of the returns expected to be generated by a community.

A number of our debt and lease agreements contain covenants measuring Facility Operating Income to gauge debt or

29

lease coverages.  The debt or lease coverage covenants are generally calculated as facility net operating income (defined as total operating revenue less operating expenses, all as determined on an accrual basis in accordance with GAAP).  For purposes of the coverage calculation, the lender or lessor will further require a pro forma adjustment to facility operating income to include a management fee (generally 4% to 5% of operating revenue) and an annual capital reserve (generally $250 to $450 per unit).  An investor or potential investor may find this item important in evaluating our performance, results of operations and financial position, particularly on a facility-by-facility basis.

Limitations of Facility Operating Income

Facility Operating Income has limitations as an analytical tool.  It should not be viewed in isolation or as a substitute for GAAP measures of earnings.  Material limitations in making the adjustments to our earnings to calculate Facility Operating Income, and using this non-GAAP financial measure as compared to GAAP net income (loss), include:

· interest expense, income tax (benefit) provision and non-recurring charges related to gain (loss) on sale of communities and extinguishment of debt activities generally represent charges (gains), which may significantly affect our financial results; and

· depreciation and amortization, though not directly affecting our current cash position, represent the wear and tear and/or reduction in value of our communities, which affects the services we provide to our residents and may be indicative of future needs for capital expenditures.

An investor or potential investor may find this item important in evaluating our performance, results of operations and financial position on a facility-by-facility basis.  We use non-GAAP financial measures to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Facility Operating Income is not an alternative to net income, income from operations or cash flows provided by or used in operations as calculated and presented in accordance with GAAP.  You should not rely on Facility Operating Income as a substitute for any such GAAP financial measure.  We strongly urge you to review the reconciliation of Facility Operating Income to GAAP net income (loss), along with our consolidated financial statements included herein.  We also strongly urge you to not rely on any single financial measure to evaluate our business.  In addition, because Facility Operating Income is not a measure of financial performance under GAAP and is susceptible to varying calculations, the Facility Operating Income measure, as presented in this report, may differ from and may not be comparable to similarly titled measures used by other companies.

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The table below shows the reconciliation of net loss to Facility Operating Income for the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):

	Years Ended December 31,
	2012			2011			2010
Net loss	$	(66,467	)	$	(69,050	)	$	(49,886	)
Provision (benefit) for income taxes		1,519			1,780			(32,062	)
Other non-operating (income) expense		(593	)		(56	)		1,454
Equity in loss (earnings) of unconsolidated ventures		3,488			(1,432	)		(168	)
Loss on extinguishment of debt, net		221			18,863			1,557
Interest expense:
Debt		98,183			93,229			102,245
Capitalized lease obligation		30,155			31,644			30,396
Amortization of deferred financing costs and debt discount		18,081			13,427			8,963
Change in fair value of derivatives and amortization		364			3,878			4,118
Interest income		(4,012	)		(3,538	)		(2,238	)
Income from operations		80,939			88,745			64,379
(Gain) loss on facility lease termination		(11,584	)		—			4,608
Loss on sale of communities, net		—			—			(3,298	)
Depreciation and amortization		252,281			268,506			292,341
Asset impairment		27,677			16,892			13,075
Loss (gain) on acquisition		636			(1,982	)		—
Facility lease expense		284,025			274,858			270,905
General and administrative (including non-cash stock-based compensation expense)		178,829			148,327			131,709
Change in future service obligation		2,188			—			(1,064	)
Amortization of entrance fees		(25,362	)		(23,966	)		(22,782	)
Management fees		(30,786	)		(13,595	)		(5,591	)
Facility Operating Income	$	758,843		$	757,785		$	744,282

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EX-99.3

Item 8.Financial Statements and Supplementary Data.

BROOKDALE SENIOR LIVING INC.

INDEX TO FINANCIAL STATEMENTS

	PAGE
Report of Independent Registered Public Accounting Firm	1
Consolidated Balance Sheets as of December 31, 2012 and 2011	2
Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010	3
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2012, 2011 and 2010	4
Consolidated Statements of Equity for the Years Ended December 31, 2012, 2011 and 2010	5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010	6
Notes to Consolidated Financial Statements	7
Schedule II — Valuation and Qualifying Accounts	41

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Brookdale Senior Living Inc.

We have audited the accompanying consolidated balance sheets of Brookdale Senior Living Inc. (the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedule listed in the accompanying index to the financial statements.  These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.  Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2013 (not provided herein) expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

19 February 2013, except for Notes 2, 18, 22 and 24, as to which the date is 11 December 2013

1

BROOKDALE SENIOR LIVING INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except stock amounts)

	December 31,
	2012			2011
Assets
Current assets
Cash and cash equivalents	$	69,240		$	30,836
Cash and escrow deposits – restricted		43,096			45,903
Accounts receivable, net		100,401			98,697
Deferred tax asset		13,377			11,776
Prepaid expenses and other current assets, net		82,924			93,663
Total current assets		309,038			280,875
Property, plant and equipment and leasehold intangibles, net		3,879,977			3,694,064
Cash and escrow deposits – restricted		62,767			52,980
Marketable securities — restricted		—			31,721
Investment in unconsolidated ventures		31,386			32,798
Goodwill		109,553			109,553
Other intangible assets, net		159,942			154,136
Other assets, net		113,315			109,934
Total assets	$	4,665,978		$	4,466,061
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt	$	509,543		$	47,654
Trade accounts payable		43,184			54,134
Accrued expenses		200,895			183,634
Refundable entrance fees and deferred revenue		370,755			335,856
Tenant security deposits		6,521			7,720
Total current liabilities		1,130,898			628,998
Long-term debt, less current portion		2,089,826			2,350,971
Line of credit		80,000			65,000
Deferred entrance fee revenue		79,010			72,485
Deferred liabilities		150,788			161,185
Deferred tax liability		96,187			109,597
Other liabilities		42,283			42,526
Total liabilities		3,668,992			3,430,762
Stockholders' Equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized at December 31, 2012 and 2011; no shares issued and outstanding		—			—
Common stock, $0.01 par value, 200,000,000 shares authorized at December 31, 2012 and 2011; 129,117,946 and 127,782,538 shares issued and 126,689,545 and 125,354,137 shares outstanding (including 3,951,950 and 4,221,598 unvested restricted shares), respectively		1,267			1,254
Additional paid-in-capital		1,997,946			1,970,820
Treasury stock, at cost; 2,428,401 shares at December 31, 2012 and 2011		(46,800	)		(46,800	)
Accumulated deficit		(955,427	)		(888,960	)
Accumulated other comprehensive loss		—			(1,015	)
Total stockholders' equity		996,986			1,035,299
Total liabilities and stockholders' equity	$	4,665,978		$	4,466,061

See accompanying notes to consolidated financial statements.

2

BROOKDALE SENIOR LIVING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	For the Years Ended December 31,
	2012			2011			2010
Revenue
Resident fees	$	2,412,936		$	2,290,322		$	2,206,058
Management fees		30,786			13,595			5,591
Reimbursed costs incurred on behalf of managed communities		325,016			152,566			67,271
Total revenue		2,768,738			2,456,483			2,278,920
Expense
Facility operating expense (excluding depreciation and amortization of $229,072, $230,414 and $242,050, respectively)		1,630,919			1,508,571			1,437,930
General and administrative expense (including non-cash stock-based compensation expense of $25,520, $19,856 and $20,759 , respectively)		178,829			148,327			131,709
Facility lease expense		284,025			274,858			270,905
Depreciation and amortization		252,281			268,506			292,341
Gain on sale of communities, net		—			—			(3,298	)
Asset impairment		27,677			16,892			13,075
Loss (gain) on acquisition		636			(1,982	)		—
Costs incurred on behalf of managed communities		325,016			152,566			67,271
(Gain) loss on facility lease termination		(11,584	)		—			4,608
Total operating expense		2,687,799			2,367,738			2,214,541
Income from operations		80,939			88,745			64,379
Interest income		4,012			3,538			2,238
Interest expense:
Debt		(128,338	)		(124,873	)		(132,641	)
Amortization of deferred financing costs  and debt discount		(18,081	)		(13,427	)		(8,963	)
Change in fair value of derivatives and amortization		(364	)		(3,878	)		(4,118	)
Loss on extinguishment of debt, net		(221	)		(18,863	)		(1,557	)
Equity in (loss) earnings of unconsolidated ventures		(3,488	)		1,432			168
Other non-operating income (expense)		593			56			(1,454	)
Loss before income taxes		(64,948	)		(67,270	)		(81,948	)
(Provision) benefit for income taxes		(1,519	)		(1,780	)		32,062
Net loss	$	(66,467	)	$	(69,050	)	$	(49,886	)
Basic and diluted net loss per share	$	(0.54	)	$	(0.57	)	$	(0.42	)
Weighted average shares used in computing basic and diluted net loss per share		121,991			121,161			120,010

See accompanying notes to consolidated financial statements.

3

BROOKDALE SENIOR LIVING INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	For the Years Ended December 31,
	2012			2011			2010
Net loss	$	(66,467	)	$	(69,050	)	$	(49,886	)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities - restricted		1,846			(998	)		—
Reclassification of realized gain on marketable securities – restricted into earnings		(848	)		—			—
Reclassification of net (gains) loss on derivatives into earnings		(79	)		134			505
Amortization of payments from settlement of forward interest rate swaps		179			376			376
Other		(83	)		(200	)		(343	)
Total other comprehensive income (loss), net of tax		1,015			(688	)		538
Comprehensive loss	$	(65,452	)	$	(69,738	)	$	(49,348	)

See accompanying notes to consolidated financial statements.

4

BROOKDALE SENIOR LIVING INC.

CONSOLIDATED STATEMENTS OF EQUITY

 For the Years Ended December 31, 2012, 2011 and 2010

(In thousands)

	Common Stock
	Shares			Amount		Additional Paid-In- Capital			Treasury Stock			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total
Balances at January 1, 2010 as previously reported		123,206		$	1,232	$	1,882,377		$	(29,187	)	$	(766,975	)	$	(865	)	$	1,086,582
Retrospective adjustment for adoption of accounting policy		—			—		—			—			(3,049	)		—			(3,049	)
Balances at January 1, 2010 as adjusted		123,206			1,232		1,882,377			(29,187	)		(770,024	)		(865	)		1,083,533
Compensation expense related to restricted stock grants		—			—		20,759			—			—			—			20,759
Net loss		—			—		—			—			(49,886	)		—			(49,886	)
Issuance of common stock under Associate Stock Purchase Plan		63			1		1,019			—			—			—			1,020
Restricted stock, net		1,048			10		(10	)		—			—			—			—
Reclassification of net loss on derivatives into earnings		—			—		—			—			—			505			505
Amortization of payments from settlement of forward interest rate swaps		—			—		—			—			—			376			376
Other		—			—		(1	)		—			—			(343	)		(344	)
Balances at December 31, 2010		124,317			1,243		1,904,144			(29,187	)		(819,910	)		(327	)		1,055,963
Compensation expense related to restricted stock grants		—			—		19,856			—			—			—			19,856
Net loss		—			—		—			—			(69,050	)		—			(69,050	)
Common stock issued in connection with an acquisition		97			1		1,537			—			—			—			1,538
Equity component of convertible notes, net		—			—		76,801			—			—			—			76,801
Purchase of bond hedge		—			—		(77,007	)		—			—			—			(77,007	)
Issuance of warrants		—			—		45,066			—			—			—			45,066
Issuance of common stock under Associate Stock Purchase Plan		68			—		1,258			—			—			—			1,258
Restricted stock, net		2,089			10		(10	)		—			—			—			—
Unrealized loss on marketable securities - restricted		—			—		—			—			—			(998	)		(998	)
Reclassification of net loss on derivatives into earnings		—			—		—			—			—			134			134
Purchase of treasury stock		(1,217	)		—		—			(17,613	)		—			—			(17,613	)
Amortization of payments from settlement of forward interest rate swaps		—			—		—			—			—			376			376
Other		—			—		(825	)		—			—			(200	)		(1,025	)
Balances at December 31, 2011		125,354			1,254		1,970,820			(46,800	)		(888,960	)		(1,015	)		1,035,299
Compensation expense related to restricted stock grants		—			—		25,520			—			—			—			25,520
Net loss		—			—		—			—			(66,467	)		—			(66,467	)
Issuance of common stock under Associate Stock Purchase Plan		74			—		1,401			—			—			—			1,401
Restricted stock, net		1,261			13		(100	)		—			—			—			(87	)
Unrealized gain on marketable securities - restricted		—			—		—			—			—			1,846			1,846
Reclassification of realized gain on marketable securities – restricted into earnings		—			—		—			—			—			(848	)		(848	)
Reclassification of net gains on derivatives into earnings		—			—		—			—			—			(79	)		(79	)
Amortization of payments from settlement of forward interest rate swaps		—			—		—			—			—			179			179
Other		—			—		305			—			—			(83	)		222
Balances at December 31, 2012		126,689		$	1,267	$	1,997,946		$	(46,800	)	$	(955,427	)	$	—		$	996,986

See accompanying notes to consolidated financial statements.

5

BROOKDALE SENIOR LIVING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Years Ended December 31,
	2012			2011			2010
Cash Flows from Operating Activities
Net loss	$	(66,467	)	$	(69,050	)	$	(49,886	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on extinguishment of debt		221			18,863			1,557
Depreciation and amortization		270,362			281,933			301,304
Asset impairment		27,677			16,892			13,075
Equity in loss (earnings) of unconsolidated ventures		3,488			(1,432	)		(168	)
Distributions from unconsolidated ventures from cumulative share of net earnings		1,507			1,282			775
Amortization of deferred gain		(4,372	)		(4,373	)		(4,343	)
Amortization of entrance fees		(25,362	)		(23,966	)		(22,782	)
Proceeds from deferred entrance fee revenue		40,105			38,378			37,486
Deferred income tax (benefit) provision		(525)			383			(33,925	)
Change in deferred lease liability		6,668			8,608			10,521
Change in fair value of derivatives and amortization		364			3,878			4,118
Loss (gain) on sale of assets and unconsolidated ventures		332			(1,180	)		(2,509	)
Loss (gain) on acquisition		636			(1,982	)		―
Gain on facility lease termination		(11,584	)		—			—
Lessor cash reimbursement for tenant incentive		—			1,251			—
Change in future service obligation		2,188			—			(1,064	)
Non-cash stock-based compensation		25,520			19,856			20,759
Other		(487	)		—			—
Changes in operating assets and liabilities:
Accounts receivable, net		(3,415	)		(5,367	)		(7,956	)
Prepaid expenses and other assets, net		8,687			(22,934	)		(22,050	)
Accounts payable and accrued expenses		4,854			13,721			(11,775	)
Tenant refundable fees and security deposits		(1,547	)		(2,186	)		(3,158	)
Deferred revenue		12,119			(4,148	)		(1,735	)
Net cash provided by operating activities		290,969			268,427			228,244
Cash Flows from Investing Activities
Increase in lease security deposits and lease acquisition deposits, net		(7,999	)		(3,088	)		(2,175	)
(Increase) decrease in cash and escrow deposits – restricted		(4,810	)		56,176			4,705
Purchase of marketable securities — restricted		(1,557	)		(32,724	)		―
Sale of marketable securities — restricted		35,124			1,431			―
Additions to property, plant and equipment, and leasehold intangibles, net of related payables		(208,412	)		(160,131	)		(93,681	)
Acquisition of assets, net of related payables and cash received		(272,523	)		(88,682	)		(57,948	)
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired		―			5,516			―
Payments on notes receivable, net		131			1,484			1,079
Investment in unconsolidated ventures		(5,368	)		(13,990	)		(660	)
Distributions received from unconsolidated ventures		350			206			97
Proceeds from sale of unconsolidated venture		—			—			675
Proceeds from sale of assets, net		9,243			30,817			12,079
Other		487			(914	)		(676	)
Net cash used in investing activities		(455,334	)		(203,899	)		(136,505	)
Cash Flows from Financing Activities
Proceeds from debt		372,291			482,669			414,795
Repayment of debt and capital lease obligations		(191,835	)		(898,565	)		(476,527	)
Proceeds from line of credit		375,000			225,000			60,000
Repayment of line of credit		(360,000	)		(160,000	)		(60,000	)
Proceeds from issuance of convertible notes, net		―			308,212			―
Issuance of warrants		―			45,066			―
Purchase of bond hedge		―			(77,007	)		―
Payment of financing costs, net of related payables		(5,563	)		(8,712	)		(8,541	)
Other		(342	)		(1,287	)		(763	)
Refundable entrance fees:
Proceeds from refundable entrance fees		42,600			29,611			36,420
Refunds of entrance fees		(27,356	)		(25,754	)		(21,060	)
Cash portion of loss on extinguishment of debt		(118	)		(17,040	)		(179	)
Recouponing and payment of swap termination		(1,908	)		(99	)		(20,427	)
Purchase of treasury stock		―			(17,613	)		―
Net cash provided by (used in) financing activities		202,769			(115,519	)		(76,282	)
Net increase (decrease) in cash and cash equivalents		38,404			(50,991	)		15,457
Cash and cash equivalents at beginning of year		30,836			81,827			66,370
Cash and cash equivalents at end of year	$	69,240		$	30,836		$	81,827

See accompanying notes to consolidated financial statements.

6

BROOKDALE SENIOR LIVING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Description of Business and Organization

Brookdale Senior Living Inc. ("Brookdale", "BSL" or the "Company") is a leading owner and operator of senior living communities throughout the United States.  The Company provides an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest quality service, care and living accommodations for residents.  The Company owns, leases and operates retirement centers, assisted living and dementia-care communities and continuing care retirement centers ("CCRCs").  Through its Innovative Senior Care ("ISC") program, the Company also offers a range of outpatient therapy, home health and hospice services, primarily to residents of its communities.

The Company was formed as a Delaware corporation on June 28, 2005. Under its Certificate of Incorporation, the Company was initially authorized to issue up to 5,000,000 shares of common stock and 5,000,000 shares of preferred stock. On September 30, 2005, the Company's Certificate of Incorporation was amended and restated to authorize up to 200,000,000 shares of common stock and 50,000,000 shares of preferred stock.

2.Summary of Significant Accounting Policies

The consolidated financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles ("GAAP").  The significant accounting policies are summarized below:

Principles of Consolidation

The consolidated financial statements include BSL and its wholly-owned subsidiaries Brookdale Living Communities, Inc., Brookdale Senior Living Communities, Inc. (formerly known as Alterra Healthcare Corporation) ("Alterra"), Fortress CCRC Acquisition LLC, American Retirement Corporation ("ARC") and BKD HB Acquisition Sub, Inc. In December 2003, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 810 - Consolidation of Variable Interest Entities ("ASC 810").  ASC 810 addresses the identification of variable interest entities ("VIE") consolidation by business enterprises deemed to be primary beneficiaries in the VIE.  The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity's economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company performs this analysis on an ongoing basis. At December 31, 2012, the Company did not have any unconsolidated VIEs.  Investments in affiliated companies that the Company does not control, but has the ability to exercise significant influence over governance and operation, are accounted for by the equity method.

The results of facilities and companies acquired are included in the consolidated financial statements from the effective date of the respective acquisition. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Estimates are used for, but not limited to, revenue, goodwill and asset impairments, future service obligations, self-insurance reserves, performance-based compensation, the allowance for doubtful accounts, depreciation and amortization, income taxes and other contingencies.  Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from the original estimates.

7

Revenue Recognition

Resident Fees

Resident fee revenue is recorded when services are rendered and consists of fees for basic housing, support services and fees associated with additional services such as personalized health and assisted living care. Residency agreements are generally for a term of 30 days to one year, with resident fees billed monthly in advance. Revenue for certain skilled nursing services and ancillary charges is recognized as services are provided and is billed monthly in arrears.

Entrance Fees

Certain of the Company's communities have residency agreements which require the resident to pay an upfront fee prior to occupying the community.  In addition, in connection with the Company's MyChoice program, new and existing residents are allowed to pay additional entrance fee amounts in return for a reduced monthly service fee.  The non-refundable portion of the entrance fee is recorded as deferred revenue and amortized over the estimated stay of the resident based on an actuarial valuation.  The refundable portion of a resident's entrance fee is generally refundable within a certain number of months or days following contract termination or upon the sale of the unit, or in certain agreements, upon the resale of a comparable unit or 12 months after the resident vacates the unit.  In such instances the refundable portion of the fee is not amortized and included in refundable entrance fees and deferred revenue.  All refundable amounts due to residents at any time in the future, including those recorded as deferred revenue, are classified as current liabilities.

Community Fees

Substantially all community fees received are non-refundable and are recorded initially as deferred revenue.  The deferred amounts, including both the deferred revenue and the related direct resident lease origination costs, are amortized over the estimated stay of the resident which is consistent with the implied contractual terms of the resident lease.

Management Fees

Management fee revenue is recorded as services are provided to the owners of the communities. Revenues are determined by an agreed upon percentage of gross revenues (as defined).  Incentives and penalties receivable or payable under management contracts containing these provisions (other than contractual termination fees) are recorded based on the amounts that would be due pursuant to the contractual arrangements if the contracts were terminated on the reporting date.

Reimbursed Costs Incurred on Behalf of Managed Communities

The Company manages certain communities under contracts which provide for payment to the Company of a monthly management fee plus reimbursement of certain operating expenses.  Where the Company is the primary

8

obligor with respect to any managed community operating expenses, the Company recognizes revenue when the goods have been delivered or the service has been rendered and the Company is due reimbursement.  This reimbursement revenue is included in "reimbursed costs incurred on behalf of managed communities" on the consolidated statements of operations.  The related costs are included in "costs incurred on behalf of managed communities" on the consolidated statements of operations.

Purchase Accounting

In determining the allocation of the purchase price of companies and communities to net tangible and identified intangible assets acquired and liabilities assumed, the Company makes estimates of fair value using information obtained as a result of pre-acquisition due diligence, marketing, leasing activities and/or independent appraisals. The Company allocates the purchase price of communities based on their fair values in accordance with the provisions of ASC 805 - Business Combinations ("ASC 805").  The determination of fair value involves the use of significant judgment and estimation. The Company determines fair values as follows:

Current assets and current liabilities assumed are valued at carryover basis which approximates fair value.

Property, plant and equipment are valued utilizing discounted cash flow projections of future revenue and costs, and capitalization and discount rates using current market conditions.

The Company allocates a portion of the purchase price to the value of resident leases acquired based on the difference between the communities valued with existing in-place leases adjusted to market rental rates and the communities valued with current leases in place based on current contractual terms. Factors management considers in its analysis include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar resident leases. In estimating carrying costs, management includes estimates of lost rentals during the lease-up period and estimated costs to execute similar leases. The value of in-place leases is amortized to expense over the remaining initial term of the respective leases.

Leasehold operating intangibles are valued utilizing discounted cash flow projections that assume certain future revenues and costs over the remaining lease term. The value assigned to leasehold operating intangibles is amortized on a straight-line basis over the lease term.

Community purchase options are valued at the estimated value of the underlying community less the cost of the option payment discounted at current market rates.  Management contracts and other acquired contracts are valued at a multiple of management fees and operating income or are valued utilizing discounted cash flow projections that assume certain future revenues and costs over the remaining contract.  The assets are then amortized over the estimated term of the agreement.

Long-term debt assumed is recorded at fair market value based on the current market rates and collateral securing the indebtedness.  Any debt premium or discount recorded is amortized over the related debt maturity period.

Capital lease obligations are valued based on the present value of the minimum lease payments applying a discount rate equal to the Company's estimated incremental borrowing rate at the date of acquisition.

Deferred entrance fee revenue is valued at the estimated cost of providing services to residents over the terms of the current contracts to provide such services. Refundable entrance fees are valued at cost pursuant to the resident lease plus the resident's share of any appreciation of the community unit at the date of acquisition, if applicable.

A deferred tax liability is recognized at statutory rates for the difference between the book and tax bases of the acquired assets and liabilities.

The excess of the fair value of liabilities assumed and cash paid over the fair value of assets acquired is allocated to goodwill.

Contingent consideration is valued using a probability-weighted discounted cash flow model.

9

Deferred Costs

Deferred financing and lease costs are recorded in other assets and amortized on a straight-line basis, which approximates the effective yield method, over the term of the related debt or lease.

Income Taxes

Income taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company has elected the "with-and-without approach" regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year.  Under this approach, the windfall tax benefits would be recognized in additional paid-in capital only if an incremental tax benefit is realized after considering all other tax benefits presently available.

Fair Value of Financial Instruments

Cash and cash equivalents, cash and escrow deposits-restricted, derivative financial instruments and marketable securities - restricted are reflected in the accompanying consolidated balance sheets at amounts considered by management to reasonably approximate fair value.  Management estimates the fair value of its long-term debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness.  The Company had outstanding debt with a carrying value of approximately $2.7 billion and $2.5 billion as of December 31, 2012 and 2011, respectively.  Fair value approximated carrying value in both years.

ASC 820 - Fair Value Measurement ("ASC 820") establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's cash and cash equivalents and cash and escrow deposits-restricted reported on its consolidated balance sheets approximate fair value due to the short maturity.

The Company's marketable securities - restricted include marketable securities that are recorded in the financial statements at fair value.  The fair value is based primarily on quoted market prices and is classified within Level 1 of the valuation hierarchy.  Changes in fair value are recorded, net of tax, as other comprehensive income and included as a component of stockholders' equity.

The Company's derivative assets and liabilities include interest rate swaps and caps that effectively convert a portion of the Company's variable rate debt to fixed rate debt.  The derivative positions are valued using models developed internally by the respective counterparty that use as their basis readily observable market parameters (such as forward yield curves) and are classified within Level 2 of the valuation hierarchy.

The Company considers its own credit risk as well as the credit risk of its counterparties when evaluating the fair value of its derivatives. Any adjustments resulting from credit risk are recorded as a change in fair value of derivatives and amortization in the current period statement of operations.

The Company's fair value of debt disclosure is determined based primarily on market interest rate assumptions of similar debt applied to future cash flows under the debt agreements and is classified within Level 2 of the valuation hierarchy.

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Cash and Cash Equivalents

The Company defines cash and cash equivalents as cash and investments with maturities of 90 days or less when purchased.

Cash and Escrow Deposits - Restricted

Cash and escrow deposits - restricted consist principally of deposits required by certain lenders and lessors pursuant to the applicable agreement and consist of the following (dollars in thousands):

	December 31,
	2012		2011
Current:
Real estate taxes	$	11,502	$	12,541
Tenant security deposits		2,015		4,374
Insurance reserves		12,892		12,904
Entrance fees		4,159		4,891
Replacement reserve and other		12,528		11,193
Subtotal		43,096		45,903
Long term:
Insurance reserves		5,188		5,412
Debt service and other deposits		57,579		47,568
Subtotal		62,767		52,980
Total	$	105,863	$	98,883

As of December 31, 2012 and 2011, ten communities located in Illinois are required to make escrow deposits under the Illinois Life Care Facility Act.  As of December 31, 2012 and 2011, required deposits were $19.6 million, all of which were made in the form of letters of credit.

Accounts Receivable

Accounts receivable are reported net of an allowance for doubtful accounts, to represent the Company's estimate of the amount that ultimately will be realized in cash. The allowance for doubtful accounts was $15.3 million and $17.0 million as of December 31, 2012 and 2011, respectively.  The adequacy of the Company's allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance as necessary.

Billings for services under third-party payor programs are recorded net of estimated retroactive adjustments, if any, under reimbursement programs. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods or as final settlements are determined. Contractual or cost related adjustments from Medicare or Medicaid are accrued when assessed (without regard to when the assessment is paid or withheld).  Subsequent positive or negative adjustments to these accrued amounts are recorded in net revenues when known.

Property, Plant and Equipment and Leasehold Intangibles

Property, plant and equipment and leasehold intangibles, which include amounts recorded under capital leases, are recorded at cost.  Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

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Asset Category	Estimated Useful Life (in years)
Buildings and improvements	40
Furniture and equipment	3 – 7
Resident lease intangibles	1 – 4
Leasehold improvements	Shorter of the lease term or asset useful life
Leasehold operating intangibles	Shorter of the lease term or asset useful life
Assets under capital and financing leases	Shorter of the lease term or asset useful life

Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Renovations and improvements, which improve and/or extend the useful life of the asset, are capitalized and depreciated over their estimated useful life, or if the renovations or improvements are made with respect to communities subject to an operating lease, over the shorter of the estimated useful life of the renovations or improvements, or the term of the operating lease. Facility operating expense excludes depreciation and amortization directly attributable to the operation of the facility.

Long-lived assets (groups) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of long-lived assets held for use are assessed by a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset.  If estimated future undiscounted net cash flows are less than the carrying amount of the asset then the fair value of the asset is estimated.  The impairment expense is determined by comparing the estimated fair value of the asset to its carrying value, with any amount in excess of fair value recognized as an expense in the current period.  Undiscounted cash flow projections and estimates of fair value amounts are based on a number of assumptions such as revenue and expense growth rates, estimated holding periods and estimated capitalization rates and discount rates.

Marketable Securities – Restricted

Marketable securities - restricted include amounts required to be held in reserve related to the Company's entrance fee CCRCs pursuant to various state insurance regulations and consist of mutual funds holding equities and fixed-income securities. The Company classifies its marketable securities - restricted as available-for-sale.  Accordingly, these investments are carried at their estimated fair value with the unrealized gain and losses, net of tax, reported in other comprehensive income.  Realized gains and losses from the available-for-sale securities are determined on the specific identification method and are included in interest income on the trade date.

A decline in the market value of any security below cost that is deemed to be other than temporary results in a reduction in the carrying amount of the security to fair market value. The impairment is charged to earnings and a new cost basis for the security is established. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

During the year ended December 31, 2012, the Company liquidated the marketable securities – restricted investments and recognized $0.8 million of realized gains from the transaction, included within interest income in the consolidated statements of operations.

The amortized cost basis of the marketable securities – restricted as of December 31, 2011 was $32.7 million.

Goodwill and Intangible Assets

The Company follows ASC 350 - Goodwill and Other Intangible Assets, and tests goodwill for impairment annually or whenever indicators of impairment arise.  The evaluation is based upon a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit's carrying value.  The fair values used in this evaluation are estimated based upon discounted future cash flow projections for the reporting

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unit.  These cash flow projections are based upon a number of estimates and assumptions such as revenue and expense growth rates, capitalization rates and discount rates.

In 2012, the Company adopted the guidance within Accounting Standards Update 2011-08, Intangibles — Goodwill and Other ("ASU 2011-08"), which allows the Company to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  In 2012, the Company assessed qualitative factors and determined that it was not necessary to perform the two-step quantitative goodwill impairment test.

Acquired intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset.  Intangible assets with definite lives are amortized over their estimated useful lives and all intangible assets are reviewed for impairment if indicators of impairment arise.  The evaluation of impairment for definite-lived intangibles is based upon a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset.  If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then the fair value of the asset is estimated.  The impairment expense is determined by comparing the estimated fair value of the intangible asset to its carrying value, with any shortfall from fair value recognized as an expense in the current period.

Indefinite-lived intangible assets are not amortized but are tested for impairment annually during the fourth quarter or more frequently as required.  The impairment test consists of a comparison of the estimated fair value of the indefinite-lived intangible asset with its carrying value.  If the carrying amount exceeds its fair value, an impairment loss is recognized for that difference.

During 2012, 2011 and 2010, the Company performed its annual impairment review of goodwill and intangible assets and determined that no impairment charge was necessary.

Amortization of the Company's definite lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Category	Estimated Useful Life (in years)
Community purchase options	40
Management contracts and other	3 – 5

Stock-Based Compensation

The Company follows ASC 718 - Stock Compensation ("ASC 718") in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee's requisite service period.  Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred.

Certain of the Company's employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company's determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Additionally, the Company must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

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Convertible Debt Instruments

Convertible debt instruments are accounted for under FASB ASC Topic 470-20, Debt – Debt with Conversion and Other Options.  This guidance requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion, including partial cash settlement, to separately account for the liability (debt) and equity (conversion option) components of the instruments in a manner that reflects the issuer's estimated non-convertible debt borrowing rate.

Derivative Financial Instruments

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has entered into certain interest rate protection and swap agreements to effectively cap or convert floating rate debt to a fixed rate basis. All derivative instruments are recognized as either assets or liabilities in the consolidated balance sheets at fair value. The change in mark-to-market of the value of the derivative is recorded as an adjustment to income.

Derivative contracts are not entered into for trading or speculative purposes. Furthermore, the Company has a policy of only entering into contracts with major financial institutions based upon their credit rating and other factors.  Under certain circumstances, the Company may be required to replace a counterparty in the event that the counterparty does not maintain a specified credit rating.

Obligation to Provide Future Services

Annually, the Company calculates the present value of the net cost of future services and the use of communities to be provided to current residents of certain of its CCRCs and compares that amount with the balance of non-refundable deferred revenue from entrance fees received. If the present value of the net cost of future services and the use of communities exceeds the related anticipated revenues including non-refundable deferred revenue from entrance fees, a liability is recorded (obligation to provide future services and use of communities) with a corresponding charge to income.

Self-Insurance Liability Accruals

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim.  As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts.  In addition, the Company maintains a large-deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Investment in Unconsolidated Ventures

In accordance with ASC 810, the general partner or managing member of a venture consolidates the venture unless the limited partners or other members have either (1) the substantive ability to dissolve the venture or otherwise remove the general partner or managing member without cause or (2) substantive participating rights in significant decisions of the venture, including authorizing operating and capital decisions of the venture, including budgets, in the ordinary course of business. The Company has reviewed all ventures where it is the general partner or managing member and has determined that in all cases the limited partners or other members have substantive participating rights such as those set forth above and, therefore, no ventures are consolidated.

The Company's reported share of earnings is adjusted for the impact, if any, of basis differences between its carrying value of the equity investment and its share of the venture's underlying assets. The Company generally does not have future requirements to contribute additional capital over and above the original capital commitments, and therefore, the Company discontinues applying the equity method of accounting when its investment is reduced

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to zero barring an expectation of an imminent return to profitability. If the venture subsequently reports net income, the equity method of accounting is resumed only after the Company's share of that net income equals the share of net losses not recognized during the period the equity method was suspended.

When the majority equity partner in one of the Company's ventures sells its equity interest to a third party, the venture frequently refinances its senior debt and distributes the net proceeds to the equity partners. All distributions received by the Company are first recorded as a reduction of the Company's investment. Next, the Company records a liability for any contractual or implied future financial support to the venture including obligations in its role as a general partner. Any remaining distributions are recorded as the Company's share of earnings and return on investment in unconsolidated ventures in the consolidated statements of operations.

The Company evaluates realization of its investment in ventures accounted for using the equity method if circumstances indicate that the Company's investment is other than temporarily impaired.

Community Leases

The Company, as lessee, makes a determination with respect to each of the community leases whether each should be accounted for as an operating lease or capital lease. The classification criteria is based on estimates regarding the fair value of the leased community, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements. In a business combination, the Company assumes the lease classification previously determined by the prior lessee absent a modification, as determined by ASC 840 – Leases ("ASC 840"), in the assumed lease agreement. Payments made under operating leases are accounted for in the Company's consolidated statements of operations as lease expense for actual rent paid plus or minus a straight-line adjustment for estimated minimum lease escalators and amortization of deferred gains in situations where sale-leaseback transactions have occurred. For communities under capital lease and lease financing obligation arrangements, a liability is established on the Company's consolidated balance sheets representing the present value of the future minimum lease payments and a corresponding long-term asset is recorded in property, plant and equipment and leasehold intangibles in the consolidated balance sheets. The asset is depreciated over the remaining lease term unless there is a bargain purchase option in which case the asset is depreciated over the useful life. Leasehold improvements purchased during the term of the lease are amortized over the shorter of their economic life or the lease term.

All of the Company's leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, all rent-free or rent holiday periods are recognized in lease expense on a straight-line basis over the lease term, including the rent holiday period.

Sale-leaseback accounting is applied to transactions in which an owned community is sold and leased back from the buyer. Under sale-leaseback accounting, the Company removes the community and related liabilities from the consolidated balance sheets. Gain on the sale is deferred and recognized as a reduction of facility lease expense for operating leases and a reduction of interest expense for capital leases.

For leases in which the Company is involved with the construction of the building, the Company accounts for the lease during the construction period under the provisions of ASC 840.  If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore is deemed the owner of the project for accounting purposes, it records an asset and related financing obligation for the amount of total project costs related to construction in progress.  Once construction is complete, the Company considers the requirements under ASC 840-40 – Leases – Sale-Leaseback Transactions.  If the arrangement does not qualify for sale-leaseback accounting, the Company continues to amortize the financing obligation and depreciate the building over the lease term.

Treasury Stock

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders' equity.

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New Accounting Pronouncements

In June 2011, the FASB issued Accounting Standards Update ("ASU") 2011-05, Presentation of Comprehensive Income ("ASU 2011-05").  The guidance in ASU 2011-05 is effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires the components of net income and other comprehensive income and total comprehensive income for each interim period. The Company adopted the provisions of this update as of January 1, 2012 and incorporated the provisions of this update to its consolidated financial statements upon adoption. The adoption of this update did not have an impact on the Company's financial condition or results of operations.

In September 2011, the FASB issued ASU 2011-08, Intangibles — Goodwill and Other ("ASU 2011-08").  ASU 2011-08 amends current guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  ASU 2011-08 applies to all companies that have goodwill reported in their financial statements.  The provisions of ASU 2011-08 are effective for the Company in 2012.  The adoption of this update did not have an impact on the Company's financial condition or results of operations.

In July 2012, the FASB issued ASU 2012-02, Intangibles — Goodwill and Other ("ASU 2012-02").  ASU 2012-02 amends current guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the annual quantitative indefinite-lived intangible asset impairment test.  Under this amendment, an entity would not be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  ASU 2012-02 applies to all companies that have indefinite-lived intangible assets reported in their financial statements.  The provisions of ASU 2012-02 are effective for annual reporting periods beginning after September 15, 2012.  The Company has not yet adopted this pronouncement, but does not believe it will have an impact on the Company's consolidated financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's consolidated financial position or results of operations.

3.Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing net income by the weighted average number of shares of common stock outstanding.  Diluted EPS includes the components of basic EPS and also gives effect to dilutive common stock equivalents.  For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding.  Under the treasury stock method, diluted EPS reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock.  Potentially dilutive common stock equivalents include unvested restricted stock, restricted stock units and convertible debt instruments and warrants (Note 9).

During fiscal 2012, 2011 and 2010, the Company reported a consolidated net loss.  As a result of the net loss, unvested restricted stock, restricted stock unit awards and convertible debt instruments and warrants were antidilutive for the year and were not included in the computation of diluted weighted average shares.  The weighted average unrestricted restricted stock grants and restricted stock units excluded from the calculations of diluted net

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loss per share were 1.2 million, 1.3 million and 1.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

4.Acquisitions and Dispositions

2012 Acquisitions and Dispositions

Effective February 2, 2012, the Company acquired the underlying real estate associated with nine communities that were previously leased for an aggregate purchase price of $121.3 million. The results of operations of these communities, prior and subsequent to the acquisition, are reported in the Retirement Centers segment. The Company financed the transaction with $77.9 million of first mortgage financing secured by seven of the communities and $15.0 million of seller-financing secured by two of the communities (Note 9).  The purchase price of the acquisitions has primarily been ascribed to the basis of the buildings acquired and recorded on the consolidated balance sheet under property, plant and equipment and leasehold intangibles, net.

During the month ended December 31, 2012, the Company acquired the underlying real estate interest in 12 communities that the Company previously leased for an aggregate purchase price of $162.1 million.  The results of operations of the previously leased communities are included in the consolidated financial statements from the effective dates of the respective lease agreements and are reported in the Assisted Living and Retirement Centers segments.  The purchase price of the acquisitions has primarily been ascribed to the basis of the buildings acquired and recorded on the consolidated balance sheet under property, plant and equipment and leasehold intangibles, net.

During the year ended December 31, 2012, the Company recognized an $11.6 million net gain on facility lease termination from the reversal of deferred lease liabilities associated with the termination of operating lease contracts in connection with the acquisition of the underlying real estate of the previously leased communities.

During the year ended December 31, 2012, the Company purchased four home health agencies and an existing skilled nursing facility as part of its growth strategy for an aggregate purchase price of approximately $7.0 million.  The purchase price of the acquisitions has primarily been ascribed to an indefinite useful life intangible asset and recorded on the consolidated balance sheet under other intangible assets, net.

During the year ended December 31, 2012, the Company sold one community for an aggregate selling price of $8.9 million.  The results of operations of the community were previously reported in the Assisted Living segment.

2011 Acquisitions and Dispositions

Effective January 13, 2011, the Company acquired the underlying real estate interest in 12 assisted living communities that the Company previously leased for an aggregate purchase price of $31.3 million, which was paid from cash on hand.  The results of operations of the previously leased communities are included in the consolidated financial statements from the effective date of the lease agreement and are reported in the Assisted Living segment.

Effective February 1, 2011, the Company acquired the underlying real estate interest in one assisted living community that the Company previously leased for an aggregate purchase price of $9.8 million, which was paid from cash on hand.  The results of operations of the previously leased community are included in the consolidated financial statements from the effective date of the lease agreement and are reported in the Assisted Living segment.

Effective February 1, 2011, the Company acquired one assisted living community for an aggregate purchase price of $9.2 million, which was paid from cash on hand.  The results of operations of the acquired community are included in the consolidated financial statements from the effective date of the acquisition and are reported in the Assisted Living segment.

Effective November 1, 2011, the Company acquired one assisted living community that the Company previously managed for an aggregate purchase price of $30.2 million, which was paid from cash on hand.  A former executive officer of the Company had an ownership interest in the community prior to the acquisition.  The results of operations of the acquired community are included in the consolidated financial statements from the effective date of the acquisition and are reported in the Assisted Living segment.

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During the year ended December 31, 2011, the Company purchased three home health agencies as part of its growth strategy for an aggregate purchase price of approximately $4.2 million.  The entire purchase price of the acquisitions has been ascribed to an indefinite useful life intangible asset and recorded on the consolidated balance sheet under other intangible assets, net.

During the year ended December 31, 2011, the Company sold four communities for an aggregate selling price of $30.8 million.  The results of operations of the communities were previously reported in the Retirement Centers and Assisted Living segments.

Horizon Bay/HCP Transactions

On September 1, 2011, the Company acquired 100% of the equity and voting interests in Horizon Bay Realty, L.L.C. ("Horizon Bay").  The results of Horizon Bay's operations have been included in the consolidated financial statements since that date.  Horizon Bay is a seniors housing management company primarily focused on managing large portfolios of retirement communities across the United States for institutional real estate investors.  In connection with the acquisition, the Company also restructured Horizon Bay's existing relationship with HCP, Inc. ("HCP") relating to 33 communities that Horizon Bay leased from HCP. In particular, the Company (i) formed a joint venture with HCP to own and operate 21 communities (the "HCP RIDEA JV"), and (ii) leased the remaining 12 communities from HCP under long-term, triple net leases. Of these 12 communities, the Company assumed the pre-existing lease for eight communities and entered into a new lease for the remaining four communities.  The joint venture with HCP utilizes a RIDEA structure with the Company having acquired a 10% non-controlling interest in the joint venture. The Company also manages the communities under a ten-year management agreement with four five-year renewal options and retains all ancillary services operations.

As part of the transactions, the Company entered into an agreement to restructure Horizon Bay's management arrangements with Chartwell Seniors Housing Real Estate Investment Trust ("Chartwell").  Certain elements of the Chartwell management arrangement restructuring are subject to lender and other third party approvals. Until such approvals are received, the Company will operate Chartwell's properties under the existing management contracts.

The aggregate acquisition-date fair value of the purchase consideration transferred for the acquisition of Horizon Bay was approximately $10.7 million which consisted of the following (dollars in thousands):

Fair value of consideration transferred
Cash	$	6,500
Common stock (96,862 shares)		1,538
Contingent consideration		2,708
Total	$	10,746

The fair value of the 96,862 common shares issued was determined based on the closing market price of the Company's common shares on the acquisition date.

The aggregate acquisition-date fair value of the purchase consideration transferred for the acquisition of Horizon Bay included $2.7 million of contingent consideration. The contingent consideration arrangement requires the Company to pay up to a maximum of approximately $3.4 million to Horizon Bay's former members.  The Company estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model.  This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. The key assumption in applying the income approach was the assignment of probabilities to the various possible outcomes.  During the year ended December 31, 2012, the Company paid approximately $1.2 million in contingent consideration.  As of December 31, 2012, there were no significant changes in the range of outcomes for the contingent consideration recognized as a result of the acquisition of

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Horizon Bay.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (dollars in thousands):

Purchase price allocation
Current assets	$	24,064
Property and equipment		2,167
Acquired lease intangibles		5,965
Current liabilities		(15,979	)
Long-term debt		(1,821	)
Other liabilities		(1,482	)
Deferred tax liability		(822	)
Gain on acquisition		(1,346	)
Total	$	10,746

The Company purchased 100% of Horizon Bay in a transaction that involved the restructuring of certain leases and other elements of Horizon Bay's capital structure.  The fair value of identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration transferred.  Consequently, the Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that all acquired assets and assumed liabilities were recognized and that the valuation procedures and resulting measures were appropriate.  As a result, the Company recognized a net non-cash gain of $2.0 million during the year ended December 31, 2011 which was subsequently reduced by approximately $0.6 million during the year ended December 31, 2012 due to adjustments related to pre-acquisition self-insurance reserves.

The Company recognized $14.4 million of integration and transaction-related costs that were expensed in 2011.  These costs are included in the consolidated statements of operations in the line item entitled "general and administrative expenses."

In connection with the formation of the HCP RIDEA JV, the Company contributed cash of $13.7 million for a 10% interest in the joint venture.  The Company has accounted for this interest under the equity method of accounting.

5.Investment in Unconsolidated Ventures

The Company had investments in unconsolidated joint ventures of 20% and 10% in ventures owning 13 and 21 communities, respectively, at December 31, 2012 and 2011.

Combined summarized financial information of the unconsolidated joint ventures accounted for using the equity method as of December 31, and for the years then ended are as follows (dollars in thousands):

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Statement of Operations Data	2012			2011			2010
Total revenue	$	295,539		$	154,964		$	84,689
Expense
Facility operating expense		202,855			103,611			54,766
Depreciation and amortization		49,142			23,923			12,730
Interest expense		50,825			27,072			13,153
Other expense		28,112			6,885			4,585
Total expense		330,934			161,491			85,234
Interest income		123			108			24
Net loss	$	(35,272	)	$	(6,419	)	$	(521	)

Balance Sheet Data	2012			2011
Cash and cash equivalents	$	16,578		$	15,255
Property, plant and equipment, net		1,073,610			1,012,941
Other		148,960			184,052
Total assets	$	1,239,148		$	1,212,248
Accounts payable and accrued expenses	$	66,841		$	61,199
Long-term debt		892,463			900,091
Members' equity		279,844			250,958
Total liabilities and members' equity	$	1,239,148		$	1,212,248
Members' equity consists of:
Invested capital	$	582,360		$	403,625
Cumulative net loss		(55,942	)		(25,810	)
Cumulative distributions		(246,574	)		(126,857	)
Members' equity	$	279,844		$	250,958

6.Property, Plant and Equipment and Leasehold Intangibles, Net

As of December 31, 2012 and 2011, net property, plant and equipment and leasehold intangibles, which include assets under capital leases, consisted of the following (dollars in thousands):

	2012			2011
Land	$	296,314		$	275,277
Buildings and improvements		3,391,667			3,083,316
Leasehold improvements		60,186			62,494
Furniture and equipment		541,585			450,179
Resident and leasehold operating intangibles		441,603			527,571
Construction in progress		75,419			39,600
Assets under capital and financing leases		674,492			667,239
		5,481,266			5,105,676
Accumulated depreciation and amortization		(1,601,289	)		(1,411,612	)
Property, plant and equipment and leasehold intangibles, net	$	3,879,977		$	3,694,064

Long-lived assets with definite useful lives are depreciated or amortized on a straight-line basis over their estimated useful lives (or, in certain cases, the shorter of their estimated useful lives or the lease term) and are tested for impairment whenever indicators of impairment arise.

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During the years ended December 31, 2012, 2011 and 2010, the Company evaluated property, plant and equipment and leasehold intangibles for impairment.  The Company compared the estimated fair value of the assets to their carrying value for properties with impairment indicators and recorded an impairment charge for the excess of carrying value over fair value.  For the years ended December 31, 2012, 2011 and 2010, $27.7 million primarily within the Retirement Centers and Assisted Living segments, $16.9 million within the Retirement Centers and Assisted Living segments and $13.1 million within the Retirement Centers and Assisted Living segments, respectively, of non-cash charges were recorded in the Company's operating results.  These impairment charges are primarily due to the amount by which the carrying values of the assets exceed the estimated fair value or estimated selling prices.

For the years ended December 31, 2012, 2011 and 2010, the Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $248.5 million, $247.1 million and $258.0 million, respectively.

Future amortization expense for resident and leasehold operating intangibles is estimated to be as follows (dollars in thousands):

Year Ending December 31,	Future Amortization
2013	$	26,900
2014		22,248
2015		20,613
2016		19,137
2017		12,272
Thereafter		14,083
Total	$	115,253

7.Goodwill and Other Intangible Assets, Net

The following is a summary of changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 presented on an operating segment basis (dollars in thousands):

	December 31, 2012										December 31, 2011
	Gross Carrying Amount		Adjustment			Accumulated Impairment and Other Charges			Net		Gross Carrying Amount		Adjustment			Accumulated Impairment and Other Charges			Net
Retirement Centers	$	7,642	$	(34	)	$	(487	)	$	7,121	$	7,642	$	(34	)	$	(487	)	$	7,121
Assisted Living		102,680		(106	)		(142	)		102,432		102,680		(106	)		(142	)		102,432
CCRCs – Rental		56,281		—			(56,281	)		—		56,281		—			(56,281	)		—
CCRCs – Entry Fee		158,718		—			(158,718	)		—		158,718		—			(158,718	)		—
Total	$	325,321	$	(140	)	$	(215,628	)	$	109,553	$	325,321	$	(140	)	$	(215,628	)	$	109,553

The following is a summary of other intangible assets at December 31, 2012 and 2011 (dollars in thousands):

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	December 31, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Community purchase options	$	147,610	$	(21,263	)	$	126,347	$	147,610	$	(17,566	)	$	130,044
Health care licenses		31,082		—			31,082		24,092		—			24,092
Management contracts and other		160,626		(158,113	)		2,513		158,041		(158,041	)		—
Total	$	339,318	$	(179,376	)	$	159,942	$	329,743	$	(175,607	)	$	154,136

Amortization expense related to definite-lived intangible assets for the years ended December 31, 2012, 2011 and 2010 was $3.8 million, $21.3 million and $34.8 million, respectively.

Estimated amortization expense related to intangible assets with definite lives at December 31, 2012, for each of the years in the five-year period ending December 31, 2017 and thereafter is as follows (dollars in thousands):

Year Ending December 31,	Future Amortization
2013	$	4,560
2014		4,560
2015		4,488
2016		3,698
2017		3,698
Thereafter		107,856
Total	$	128,860

8.Other Assets

Other assets consist of the following components as of December 31, (dollars in thousands):

	2012		2011
Notes receivable	$	34,968	$	32,844
Deferred costs, net		24,517		26,032
Lease security deposits		38,544		36,748
Other		15,286		14,310
Total	$	113,315	$	109,934

9.Debt

Long-term Debt, Capital Leases and Financing Obligations

Long-term debt, capital leases and financing obligations consist of the following (dollars in thousands):

	December 31,
	2012		2011
Mortgage notes payable due 2013 through 2022; weighted average interest rate of 4.62% in 2012, net of debt discount of $0.3 million (weighted average interest rate of 5.04% in 2011)	$	1,701,515	$	1,470,462
$150,000 Series A notes payable, secured by five communities and by a $3.0 million cash collateral deposit, bearing interest at LIBOR plus 0.88%, payable in monthly installments of interest only until August 2011 and payable in monthly installments of principal and interest through maturity in August 2013		144,384		148,601

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	December 31,
	2012		2011
Discount mortgage note payable due June 2013, weighted average interest rate of 2.56% in 2012, net of debt discount of $1.0 million and $3.0 million in 2012 and 2011, respectively (weighted average interest rate of 2.52% in 2011)		80,533		79,911
Variable rate tax-exempt bonds credit-enhanced by Fannie Mae (weighted average interest rates of 1.65% at December 31, 2012 and 2011), due 2032, payable in monthly installments of principal and interest through maturity, secured by the underlying assets of the portfolio		99,847		100,423
Capital and financing lease obligations payable through 2026; weighted average interest rate of 8.16% in 2012 (weighted average interest rate of 8.61% in 2011)		319,745		348,195
Convertible notes payable in aggregate principal amount of $316.3 million, less debt discount of $65.0 million and $74.4 million in 2012 and 2011, respectively, interest at 2.75% per annum, due June 2018		251,312		241,897
Construction financing due 2017 through 2024; weighted average interest rate of 8.0% in 2012 (weighted average interest rate of 7.0% in 2011)		1,280		6,591
Notes payable issued to finance insurance premiums, weighted average interest rate of 2.81% in 2012 (weighted average interest rate of 3.11% in 2011), due 2013		753		2,545
Total debt		2,599,369		2,398,625
Less current portion		509,543		47,654
Total long-term debt	$	2,089,826	$	2,350,971

As of December 31, 2012, the current portion of long-term debt within the Company's consolidated financial statements reflects approximately $465.6 million of mortgage notes payable due within the next 12 months.  Although these debt obligations are scheduled to mature on or prior to December 31, 2013, the Company has the option, subject to the satisfaction of customary conditions (such as the absence of a material adverse change), to extend the maturity of approximately $205.5 million of certain mortgages payable included in such debt until 2018 or later, as the instruments associated with such mortgages payable provide that the Company can extend the respective maturity dates for terms of five to seven years from the existing maturity dates.

The annual aggregate scheduled maturities of long-term debt obligations outstanding as of December 31, 2012 are as follows (dollars in thousands):

Year Ending December 31,	Long-term Debt			Capital and Financing Lease Obligations			Total Debt
2013	$	490,666		$	55,828		$	546,494
2014		170,705			55,065			225,770
2015		54,442			53,401			107,843
2016		50,643			46,957			97,600
2017		341,983			60,494			402,477
Thereafter		1,237,452			211,405			1,448,857
Total obligations		2,345,891			483,150			2,829,041
Less amount representing debt discount		(66,267	)		—			(66,267	)
Less amount representing interest (8.16%)		—			(163,405	)		(163,405	)
Total	$	2,279,624		$	319,745		$	2,599,369

Credit Facilities

On January 31, 2011, the Company entered into an amended and restated credit agreement with General Electric Capital Corporation, as administrative agent and lender, and the other lenders from time to time parties thereto. The amended credit agreement amended and restated in its entirety the Company's existing credit agreement dated as of February

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23, 2010, as previously amended.  The amended credit agreement increased the commitment under the credit facility from $120.0 million to $200.0 million and extended the maturity date to January 31, 2016.  Effective February 23, 2011, the commitment under the amended and restated credit agreement was further increased to $230.0 million.

The revolving line of credit can be used to finance acquisitions and fund working capital and capital expenditures and for other general corporate purposes.

The facility is secured by a first priority lien on certain of the Company's communities. The availability under the line will vary from time to time as it is based on borrowing base calculations related to the value and performance of the communities securing the facility.

Amounts drawn under the facility bear interest at 90-day LIBOR plus an applicable margin, as described below. For purposes of determining the interest rate, in no event will LIBOR be less than 2%. The applicable margin varies with the percentage of total commitment drawn, with a 4.5% margin at 35% or lower utilization, a 5.0% margin at utilization greater than 35% but less than or equal to 50% and a 5.5% margin at greater than 50% utilization. The Company is also required to pay a quarterly commitment fee of 1.0% per annum on the unused portion of the facility.

The credit agreement contains typical affirmative and negative covenants, including financial covenants with respect to minimum consolidated fixed charge coverage and minimum consolidated tangible net worth. A violation of any of these covenants could result in a default under the credit agreement, which would result in termination of all commitments under the credit agreement and all amounts owing under the credit agreement and certain other loan agreements becoming immediately due and payable.

As of December 31, 2012, the Company had an available secured line of credit with a $230.0 million commitment and $191.4 million of availability (of which $80.0 million had been drawn as of that date).  The Company also had secured and unsecured letter of credit facilities of up to $92.5 million in the aggregate as of December 31, 2012.  Letters of credit totaling $78.1 million had been issued under these facilities as of that date.

Convertible Debt Offering

In June 2011, the Company completed a registered offering of $316.3 million aggregate principal amount of 2.75% convertible senior notes (the "Notes"). The Company received net proceeds of approximately $308.2 million after the deduction of underwriting commissions and offering expenses.  The Company used a portion of the net proceeds to pay the Company's cost of the convertible note hedge transactions described below, taking into account the proceeds to the Company of the warrant transactions described below, and used the balance of the net proceeds to repay existing outstanding debt.

The Notes are senior unsecured obligations and rank equally in right of payment to all of the Company's other senior unsecured debt, if any. The Notes will be senior in right of payment to any of the Company's debt which is subordinated by its terms to the Notes (if any). The Notes are also structurally subordinated to all debt and other liabilities and commitments (including trade payables) of the Company's subsidiaries. The Notes are also effectively subordinated to the Company's secured debt to the extent of the assets securing the debt.

The Notes bear interest at 2.75% per annum, payable semi-annually in cash.  The Notes are convertible at an initial conversion rate of 34.1006 shares of Company common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $29.325 per share), subject to adjustment. Holders may convert their Notes at their option prior to the close of business on the second trading day immediately preceding the stated maturity date only under the following circumstances:  (i) during any fiscal quarter commencing after the fiscal quarter ending September 30, 2011, if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the

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"measurement period"), in which the trading price per $1,000 principal amount of notes for each trading day of that measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the applicable conversion rate on each such day; or (iii) upon the occurrence of specified corporate events.  On and after March 15, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.  Unconverted Notes mature at par in June 2018.

Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock at the Company's election.  It is the Company's current intent and policy to settle the principal amount of the Notes (or, if less, the amount of the conversion obligation) in cash upon conversion.

In addition, following certain corporate transactions, the Company will increase the conversion rate for a holder who elects to convert in connection with such transaction by a number of additional shares of common stock as set forth in the supplemental indenture governing the Notes.

The Notes were issued in an offering registered under the Securities Act of 1933, as amended (Securities Act).

In accordance with FASB guidance on the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial settlement), the liability and equity components are separated in a manner that will reflect the entity's non-convertible debt borrowing rate when interest expense is recognized in subsequent periods.

The Company is accreting the carrying value to the principal amount at maturity using an imputed interest rate of 7.5% (the estimated effective borrowing rate for nonconvertible debt at the time of issuance, Level 2) over its expected life of seven years.

As of December 31, 2012, the "if converted" value of the Notes does not exceed its principal amount.

The interest expense associated with the Notes (excluding amortization of the associated deferred financing costs) was as follows (dollars in thousands):

	For the Years Ended December 31,
	2012		2011
Coupon interest	$	8,697	$	4,759
Amortization of discount		9,415		4,456
Interest expense related to convertible notes	$	18,112	$	9,215

In connection with the offering of the Notes, in June 2011, the Company entered into convertible note hedge transactions (the "Convertible Note Hedges") with certain financial institutions (the "Hedge Counterparties"). The Convertible Note Hedges cover, subject to customary anti-dilution adjustments, 10,784,315 shares of common stock.  The Company also entered into warrant transactions with the Hedge Counterparties whereby the Company sold to the Hedge Counterparties warrants to acquire, subject to customary anti-dilution adjustments, up to 10,784,315 shares of common stock (the "Sold Warrant Transactions").  The warrants have a strike price of $40.25 per share, subject to customary anti-dilution adjustments.

The Convertible Note Hedges are expected to reduce the potential dilution with respect to common stock upon conversion of the Notes in the event that the price per share of common stock at the time of exercise is greater than the strike price of the Convertible Note Hedges, which corresponds to the initial conversion price of the Notes and is similarly subject to customary anti-dilution adjustments. If, however, the price per share of common stock exceeds the strike price of the Sold Warrant Transactions when they expire, there would be additional dilution from the issuance of common stock pursuant to the warrants.

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The Convertible Note Hedges and Sold Warrant Transactions are separate transactions (in each case entered into by the Company and Hedge Counterparties), are not part of the terms of the Notes and will not affect the holders' rights under the Notes. Holders of the Notes do not have any rights with respect to the Convertible Note Hedges or the Sold Warrant Transactions.

These hedging transactions had a net cost of approximately $31.9 million, which was paid from the proceeds of the Notes and recorded as a reduction of additional paid-in capital.  The Company has contractual rights, and, at execution of the related agreements, had the ability to settle its obligations under the conversion feature of the Notes, the Convertible Note Hedges and Sold Warrant Transactions, with the Company's common stock. Accordingly, these transactions are accounted for as equity, with no subsequent adjustment for changes in the value of these obligations.

2012 Financings

On January 5, 2012, the Company obtained a $63.0 million first mortgage loan, secured by the underlying community.  The loan bears interest at a variable rate equal to 30-day LIBOR plus a margin of 300 basis points and matures in January 2017.  In connection with the transaction, the Company repaid $62.8 million of existing variable rate debt.

On February 29, 2012, the Company obtained a $20.0 million first mortgage loan, secured by the underlying community.  The loan bears interest at a variable rate equal to 30-day LIBOR plus a margin of 275 basis points and matures in February 2017.

As discussed in Note 4, the Company financed a current year acquisition with a $77.9 million first mortgage.  The first mortgage facility has a ten year term and 75% of it bears interest at a fixed rate of 4.2% and the remaining 25% bears interest at a variable rate of 30-day LIBOR plus a margin of 276 basis points.  The $15.0 million mortgage loan used to partially finance the acquisition had a two year term and bore interest at a fixed rate of 7.0%.

On June 29, 2012, the Company obtained a $15.0 million first mortgage loan, secured by two communities that the Company acquired in February 2012.  The loan bears interest at a variable rate equal to 30-day LIBOR plus a margin of 425 basis points and matures in June 2017.  In connection with the transaction, the Company repaid $15.0 million of seller-financed debt that had been obtained at the time of closing of the acquisition (Note 4).

On December 28, 2012, the Company obtained a $171.3 million first mortgage loan secured by nine of the Company's communities, including eight recently-acquired communities.  The loan has a ten-year term and bears interest at a variable rate equal to 30-day LIBOR plus a margin of 259 basis points.  In connection with the transaction, the Company repaid $37.4 million of mortgage loans scheduled to mature in 2013.

2011 Financings

On March 29, 2011, the Company obtained a $28.0 million first mortgage loan, secured by the underlying community.  The loan bears interest at a rate that has been effectively fixed at 5.49% by means of a swap instrument issued by the lender and matures in March 2016.  In connection with the transaction, the Company repaid $28.0 million of existing variable rate debt.

During the year ended December 31, 2011, the Company repaid approximately $37.9 million of mortgage debt in connection with the release of entrance fee escrows at a recently opened entrance fee CCRC.  Additionally, during the year ended December 31, 2011, the Company repaid $48.7 million of mortgage debt and moved the related assets into the credit line borrowing base and repaid $274.9 million of mortgage debt from the net proceeds of the convertible debt offering.  The Company recognized a loss on extinguishment of debt of $18.9 million for the year ended December 31, 2011 in connection with the early repayment of first and second mortgage notes.

On July 29, 2011, the Company obtained $437.8 million in loans pursuant to the terms of a Master Credit Facility Agreement.  The loans are secured by first mortgages on 44 communities, and 75% of the loans bear interest at a fixed rate of 4.25% while the remaining 25% of the loans bear interest at a variable rate equal to the 30-day LIBOR plus a margin of 182 basis points.  The loans mature on August 1, 2018 and require amortization of principal over a

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30 year period.  Proceeds of the loans, together with cash on hand, were used to refinance or prepay $445.2 million of mortgage debt which was scheduled to mature in February and August 2012.

The Master Credit Facility Agreement permits additional loans and substitution or release of mortgaged communities subject to loan-to-value and debt service coverage requirements. The Master Credit Facility Agreement also provides flexibility for expansion of, and repositioning of services provided at, the mortgaged communities subject to lender approval.

On December 21, 2011, the Company repaid $5.0 million of mortgage debt related to two communities.  The partial repayments were allowed under the loan agreements and did not incur any prepayment penalties.

As of December 31, 2012, the Company is in compliance with the financial covenants of its outstanding debt and lease agreements.

Interest Rate Swaps and Caps

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. Interest rate protection and swap agreements were entered into to effectively cap or convert floating rate debt to a fixed rate basis, as well as to hedge anticipated future financing transactions.

The following table summarizes the Company's swap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	27,373
Highest possible notional	$	27,373
Lowest interest rate		5.49	%
Highest interest rate		5.49	%
Average fixed rate		5.49	%
Earliest maturity date		2016
Latest maturity date		2016
Weighted average original maturity	5.0 years
Estimated liability fair value (included in other liabilities at December 31, 2012)	$	(1,833	)
Estimated liability fair value (included in other liabilities at December 31, 2011)	$	(2,809	)

The following table summarizes the Company's cap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	589,568
Highest possible notional	$	589,568
Lowest interest cap rate		5.00	%
Highest interest cap rate		6.06	%
Average fixed cap rate		5.43	%
Earliest maturity date		2013
Latest maturity date		2018
Weighted average original maturity	3.5 years
Estimated asset fair value (included in other assets at December 31, 2012)	$	495
Estimated asset fair value (included in other assets at December 31, 2011)	$	—

During the year ended December 31, 2012, the Company terminated one swap agreement with a total notional amount of $150.0 million. In conjunction with this transaction, $1.2 million was paid to the counterparty, which had been previously deposited as collateral. The Company also entered into three new cap agreements with an aggregate notional amount of $340.8 million and extended the maturity of five cap agreements with an aggregate notional amount of $100.8 million.

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10.Accrued Expenses

Accrued expenses consist of the following components as of December 31, (dollars in thousands):

	2012		2011
Salaries and wages	$	71,567	$	52,268
Insurance reserves		37,717		35,066
Vacation		24,697		23,565
Real estate taxes		22,178		22,690
Lease payable		8,915		9,017
Interest		7,644		7,782
Income taxes		2,469		1,919
Other		25,708		31,327
Total	$	200,895	$	183,634

11.Facility Operating Leases

The Company has entered into sale leaseback and lease agreements with certain real estate investment trusts (REITs). Under these agreements communities are either sold to the REIT and leased back or a long-term lease agreement is entered into for the communities. The initial lease terms vary from 10 to 20 years and include renewal options ranging from 5 to 30 years.  The Company is responsible for all operating costs, including repairs, property taxes and insurance. The substantial majority of the Company's lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease.  The Company typically guarantees its performance and the lease payments under the master lease and the lease may include performance covenants, such as net worth, minimum capital expenditure requirements per community per annum and minimum lease coverage ratios.  Failure to comply with these covenants could result in an event of default.  Certain leases contain cure provisions generally requiring the posting of an additional lease security deposit if the required covenant is not met.

As of December 31, 2012 and 2011, the Company operated 329 and 350 communities, respectively, under long-term leases (275 operating leases and 54 capital and financing leases at December 31, 2012).  The remaining base lease terms vary from one year to 14 years and generally provide for renewal, extension and purchase options. The Company expects to renew, extend or exercise purchase options in the normal course of business; however, there can be no assurance that these rights will be exercised in the future.

One lease required posting of a lease security deposit in an interest bearing account at closing.  The lease security deposit will be released upon achieving certain lease coverage ratios.  The Company agreed to spend a minimum of $450 per unit per year on capital improvements of which the lessor will reduce the security deposit by the same amount up to $600 per unit, or $2.7 million per year. For the years ended December 31, 2012, 2011 and 2010, a release of $0.1 million, $2.6 million and $2.7 million, respectively, was received related to this lease security deposit.

A summary of facility lease expense and the impact of straight-line adjustment and amortization of deferred gains are as follows (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Cash basis payment	$	281,729		$	270,623		$	264,727
Straight-line expense		6,668			8,608			10,521
Amortization of deferred gain		(4,372	)		(4,373	)		(4,343	)
Facility lease expense	$	284,025		$	274,858		$	270,905

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12.Self-Insurance

The Company obtains various insurance coverages from commercial carriers at stated amounts as defined in the applicable policy. Losses related to deductible amounts are accrued based on the Company's estimate of expected losses plus incurred but not reported claims. As of December 31, 2012 and 2011, the Company accrued $77.7 million and $72.8 million, respectively, for the self-insured portions of these programs, of which $40.0 million and $37.7 million is classified as long-term as of December 31, 2012 and 2011, respectively.

The Company has secured self-insured retention risk under workers' compensation and general liability and professional liability programs with cash and letters of credit.  Cash securing the programs aggregated $16.1 million and $17.3 million as of December 31, 2012 and 2011, respectively. Letters of credit securing the programs aggregated $40.7 million as of December 31, 2012 and 2011.

13.Retirement Plans

The Company maintains a 401(k) Retirement Savings Plan for all employees that meet minimum employment criteria. The plan provides that the participants may defer eligible compensation on a pre-tax basis subject to certain Internal Revenue Code maximum amounts.  Effective January 1, 2010, the Company began making matching contributions in amounts equal to 12.5% of the employee's contribution to the plan, up to a maximum of 4.0% of contributed compensation and, effective January 1, 2011, the Company's matching contribution was raised to 25% of the employee's contribution to the plan subject to the same limit.  An additional matching contribution of 12.5%, subject to the same limit on contributed compensation, may be made at the discretion of the Company, based upon the Company's performance.  For the years ended December 31, 2012, 2011 and 2010, the Company's expense to the plan was $4.8 million, $3.1 million and $2.3 million, respectively.

14.Related Party Transactions

Under the terms of the registration rights provisions of the Company's Stockholders Agreement, the Company is generally obligated to pay all fees and expenses incurred in connection with certain public offerings by affiliates of Fortress Investment Group LLC ("Fortress") (other than underwriting discounts, commissions and transfer taxes).  In connection with the Company's obligations thereunder, the Company incurred approximately $0.6 million of expenses in 2010 related to the public equity offerings of Company shares by Fortress affiliates.

15.Stock-Based Compensation

The Company follows ASC 718 in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee's requisite service period.  Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred.

For all awards with graded vesting other than awards with performance-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period.  For graded-vesting awards with performance-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement.  Performance goals are evaluated quarterly.  If such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed.

The Company has issued restricted stock units to its Chief Executive Officer.  Under the terms of the award agreement, upon vesting, each restricted stock unit represents the right to receive one share of the Company's common stock.

The following table sets forth information about the Company's restricted stock awards (excluding restricted stock units) (amounts in thousands):

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	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding on January 1, 2010		3,915		$	14.62
Granted		1,341		$	16.92
Vested		(1,423	)	$	16.90
Cancelled/forfeited		(293	)	$	15.93
Outstanding on December 31, 2010		3,540		$	14.76
Granted		2,091		$	16.20
Vested		(1,207	)	$	16.43
Cancelled/forfeited		(202	)	$	15.34
Outstanding on December 31, 2011		4,222		$	14.93
Granted		1,592		$	19.20
Vested		(1,435	)	$	14.28
Cancelled/forfeited		(427	)	$	15.62
Outstanding on December 31, 2012		3,952		$	16.67

As of December 31, 2012, there was $44.2 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted.  That cost is expected to be recognized over a weighted-average period of 2.4 years and is based on grant date fair value, net of forfeiture estimates. The compensation cost reflects an initial estimated cumulative forfeiture rate from 0% to 10% over the requisite service period of the awards. That estimate is revised if subsequent information indicates that the actual number of awards expected to vest is likely to differ from previous estimates.

Current year grants of restricted shares under the Company's Omnibus Stock Incentive Plan were as follows (amounts in thousands except for value per share):

	Shares Granted		Value Per Share		Total Value
Three months ended March 31, 2012		1,286		$17.39 – $19.07	$	24,524
Three months ended June 30, 2012		85		$18.72 − $19.55	$	1,666
Three months ended September 30, 2012		128		$16.66 − $17.74	$	2,135
Three months ended December 31, 2012		93		$23.31 − $23.99	$	2,231

The Company has an employee stock purchase plan for all eligible employees.  The plan became effective on October 1, 2008.  Under the plan, eligible employees of the Company can purchase shares of the Company's common stock on a quarterly basis at a discounted price through accumulated payroll deductions.  Each eligible employee may elect to deduct up to 15% of his or her base pay each quarter.  Subject to certain limitations specified in the plan, on the last trading date of each calendar quarter, the amount deducted from each participant's pay over the course of the quarter will be used to purchase whole shares of the Company's common stock at a purchase price equal to 90% of the closing market price on the New York Stock Exchange on that date.  Initially, the Company reserved 1,000,000 shares of common stock for issuance under the plan.  The employee stock purchase plan also contains an "evergreen" provision that automatically increases the number of shares reserved for issuance under the plan by 200,000 shares on the first day of each calendar year beginning January 1, 2010.  The impact on the Company's current year consolidated financial statements is not material.

16.Fair Value Measurements

The following table provides the Company's derivative assets and liabilities carried at fair value as measured on a

30

recurring basis as of December 31, 2012 (dollars in thousands):

	Total Carrying Value at December 31, 2012			Quoted prices in active markets (Level 1)		Significant Other Observable inputs (Level 2)			Significant Unobservable inputs (Level 3)
Derivative assets	$	495		$	—	$	495		$	—
Derivative liabilities		(1,833	)		—		(1,833	)		—
	$	(1,338	)	$	—	$	(1,338	)	$	—

17.Share Repurchase Program

On August 11, 2011, the Company's board of directors approved a share repurchase program that authorizes the Company to purchase up to $100.0 million in the aggregate of the Company's common stock.  Purchases may be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of these methods, in accordance with applicable insider trading and other securities laws and regulations.  The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability.  The repurchase program does not obligate the Company to acquire any particular amount of common stock and the program may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares.

Pursuant to this authorization, during the year ended December 31, 2011, the Company purchased 1,217,100 shares at a cost of approximately $17.6 million.  No shares were purchased pursuant to this authorization during the year ended December 31, 2012. As of December 30, 2012, approximately $82.4 million remains available under this share repurchase authorization.

18.Income Taxes

The (provision) benefit for income taxes is comprised of the following (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Federal:
Current	$	193		$	631		$	626
Deferred		347			(383	)		33,865
Total Federal		540			248			34,491
State:
Current		(2,059	)		(2,028	)		(2,429	)
Deferred (included in Federal above)		―			―			―
Total State		(2,059	)		(2,028	)		(2,429	)
Total	$	(1,519	)	$	(1,780	)	$	32,062

A reconciliation of the (provision) benefit for income taxes to the amount computed at the U.S. Federal statutory rate of 35% is as follows (dollars in thousands):

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	For the Years Ended December 31,
	2012			2011			2010
Tax benefit at U.S. statutory rate	$	22,945		$	23,545		$	28,682
State taxes, net of federal income tax		1,258			1,373			1,699
Unrecognized tax benefits		193			630			626
Other, net		122			59			(124	)
Credits		—			4,803			3,354
Valuation allowance		(24,138	)		(30,489	)		(137	)
Officer's compensation		(922	)		(760	)		(2,197	)
Meals and entertainment		(486	)		(430	)		(383	)
Gain on acquisition		(266	)		791			—
Return to provision		(225	)		(1,302	)		679
Stock compensation		—			—			(137	)
Total	$	(1,519	)	$	(1,780	)	$	32,062

Significant components of the Company's deferred tax assets and liabilities at December 31 are as follows (dollars in thousands):

	2012			2011
Deferred income tax assets:
Operating loss carryforwards	$	169,792		$	174,433
Capital lease obligations		52,720			62,136
Prepaid revenue		55,386			51,726
Accrued expenses		50,602			40,422
Deferred lease liability		46,541			48,916
Tax credits		20,551			20,158
Deferred gain on sale leaseback		10,127			11,581
Fair value of interest rate swaps		522			152
Total gross deferred income tax asset		406,241			409,524
Valuation allowance		(65,269	)		(40,820	)
Net deferred income tax assets		340,972			368,704
Deferred income tax liabilities:
Property, plant and equipment		(415,354	)		(454,985	)
Other		(8,428	)		(11,540	)
Total gross deferred income tax liability		(423,782	)		(466,525	)
Net deferred tax liability	$	(82,810	)	$	(97,821	)

A reconciliation of the net deferred tax liability to the consolidated balance sheets at December 31 is as follows (dollars in thousands):

	2012			2011
Deferred tax asset – current	$	13,377		$	11,776
Deferred tax liability – noncurrent		(96,187	)		(109,597	)
Net deferred tax liability	$	(82,810	)	$	(97,821	)

As of December 31, 2012 and 2011, the Company had net federal operating loss carryforwards of approximately $454.6 million and $461.5 million, respectively, which are available to offset future taxable income through 2032.  The Company concluded that the additional benefits generated during 2012 and 2011 did not meet the more likely

32

than not criteria for realization.  The conclusion was determined solely based on the reversal of current timing differences and did not consider future taxable income to be generated by the Company. Therefore, the Company has recorded a valuation allowance of $49.6 million against federal net operating losses at December 31, 2012.  The Company continues to maintain that the deferred tax assets recorded as of December 31, 2012, primarily related to net operating losses generated prior to December 31, 2010, are more likely than not to be realized based on the reversal of deferred tax liabilities recorded.

The Company has recorded valuation allowances of $7.2 million and $9.7 million at December 31, 2012 and 2011, respectively, against its state net operating losses, as the Company anticipates these losses will not be utilized prior to expiration.  The carryforward period for some states is considerably shorter than the period which is allowed for federal purposes.  The Company also recorded a valuation allowance against federal and state credits of $8.5 million and $8.1 million as of December 31, 2012 and 2011, respectively.  As of December 31, 2012 and 2011, the Company had $31.9 million and $26.9 million, respectively, included in its net operating loss carryforward relating to restricted stock grants. Under ASC 718-10, this loss will be recorded in additional paid-in capital in the period in which the loss is effectively used to reduce taxes payable.

The formation of BSL, reorganization of Alterra, and the acquisitions of ARC and SALI constitute ownership changes under Section 382 of the Internal Revenue Code, as amended. As a result, BSL's ability to utilize the net operating loss carryforward to offset future taxable income is subject to certain limitations and restrictions.  Furthermore, the Company had an ownership change under Section 382 in May 2010 which resulted in an additional annual limitation to the utilization of the net operating loss in an amount of $92 million.  The Company expects the net operating loss to be fully released before expiration and therefore does not anticipate a financial statement impact as a result of the limitation.

At December 31, 2012, the Company had gross tax affected unrecognized tax benefits of $1.2million, which, if recognized, would result in an income tax benefit in accordance with ASC 805.  Interest and penalties related to these tax positions are classified as tax expense in the Company's financial statements.  Total interest and penalties reserved is $0.5 million at December 31, 2012.  Tax returns for years 2008 through 2011 are subject to future examination by tax authorities. In addition, certain tax returns are open from 2000 through 2007 to the extent of the net operating losses generated during those periods.  The Company does not expect that unrecognized tax benefits for tax positions taken with respect to 2011 and prior years will significantly change in 2013.

A reconciliation of the unrecognized tax benefits for the year 2012 is as follows (dollars in thousands):

Balance at January 1, 2012	$	1,439
Additions for tax positions related to the current year		48
Additions for tax positions related to prior years		201
Reductions for tax positions related to prior years		(443	)
Balance at December 31, 2012	$	1,245

19.Supplemental Disclosure of Cash Flow Information

(dollars in thousands)	For the Years Ended December 31,
	2012		2011		2010
Interest paid	$	130,009	$	125,047	$	132,425
Income taxes paid	$	2,658	$	2,431	$	2,223
Write-off of deferred financing costs	$	744	$	2,080	$	2,878

Acquisitions of assets, net of related payables and cash received, net:
Cash and escrow deposits-restricted	$	2,169		$	—	$	—
Prepaid expenses and other current assets		(2,817	)		—		—

 

33

Property, plant and equipment and leasehold intangibles		257,772			80,514			52,900
Other intangible assets, net		9,575			4,244			7,963
Other assets, net		(7,327	)		3,955			(2,870	)
Accrued expenses		(573	)		(31	)		(45	)
Other liabilities		3,601			—			—
Long-term debt and capital and financing lease obligations		10,123			—			—
Net	$	272,523		$	88,682		$	57,948
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired:
Property, plant and equipment and leasehold intangibles, net	$	—		$	8,132		$	—
Cash and escrow deposits—restricted		—			10,702			—
Accounts receivable, net		—			2,479			—
Long-term debt, less current portion		—			(1,821	)		—
Accrued expenses		—			(15,141	)		—
Other liabilities		—			(6,347	)		—
Common Stock		—			(1	)		—
Additional paid-in-capital		—			(1,537	)		—
Accumulated earnings		—			(1,982	)		—
Net	$	—		$	(5,516	)	$	—
Reinvested income on marketable securities - restricted	$	1,156		$	$1,426		$	—
Supplemental Schedule of Noncash Operating, Investing and Financing Activities:
Capital leases:
Property, plant and equipment and leasehold intangibles, net	$	13,852		$	―		$	5,791
Long-term debt		(13,852	)		―			(5,791	)
Net	$	—		$	—		$	—

20.Commitments and Contingencies

The Company has three operating lease agreements for 10,655, 74,593 and 117,609 square feet (unaudited) of corporate office space that extend through 2015, 2019 and 2024, respectively. The leases require the payment of base rent which escalates annually, plus operating expenses (as defined).  The Company incurred facility lease expense of $4.1 million, $3.7 million and $2.9 million for the years ended December 31, 2012, 2011 and 2010, respectively, under the corporate office leases.

The aggregate amounts of all future minimum operating lease payments, including community and office leases, as of December 31, 2012, are as follows (dollars in thousands):

Year Ending December 31,	Operating Leases
2013	$	277,684
2014		268,164
2015		259,624
2016		256,463
2017		232,445
Thereafter		684,536
Total	$	1,978,916

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The Company has employment or letter agreements with certain officers of the Company that grant these employees the right to receive their base salary and continuation of certain benefits, for a defined period of time, in the event of certain terminations of the officers' employment, as described in those agreements.

21.Litigation

The Company has been and is currently involved in litigation and claims incidental to the conduct of its business which are comparable to other companies in the senior living industry. Certain claims and lawsuits allege large damage amounts and may require significant costs to defend and resolve. Similarly, the senior living industry is continuously subject to scrutiny by governmental regulators, which could result in litigation related to regulatory compliance matters. As a result, the Company maintains general liability and professional liability insurance policies in amounts and with coverage and deductibles the Company believes are adequate, based on the nature and risks of its business, historical experience and industry standards.  The Company's current policies provide for deductibles for each claim.  Accordingly, the Company is, in effect, self-insured for claims that are less than the deductible amounts.

22.Segment Information

Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

During the year ended December 31, 2012, the Company changed the composition of its operating segments from four reportable segments to six reportable segments.  This change was made to align operating segments with the basis that the chief operating decision maker uses to review financial information to make operating decisions, assess performance, develop strategy and allocate capital resources.  All prior period disclosures below have been recast to present results on a comparable basis.

Retirement Centers.  The Company's Retirement Centers segment includes owned or leased communities that are primarily designed for middle to upper income senior citizens age 75 and older who desire an upscale residential environment providing the highest quality of service.  The majority of the Company's retirement center communities consist of both independent living and assisted living units in a single community, which allows residents to "age-in-place" by providing them with a continuum of senior independent and assisted living services.

Assisted Living.  The Company's Assisted Living segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily life to mid-acuity frail and elderly residents.  Assisted living communities include both freestanding, multi-story communities and freestanding single story communities.  The Company also operates memory care communities, which are freestanding assisted living communities specially designed for residents with Alzheimer's disease and other dementias.

CCRCs - Rental.  The Company's CCRCs - Rental segment includes large owned or leased communities that offer a variety of living arrangements and services to accommodate all levels of physical ability and health.  Most of the Company's CCRCs have independent living, assisted living and skilled nursing available on one campus or within the immediate market, and some also include memory care/Alzheimer's units.

CCRCs - Entry Fee.  The communities in the Company's CCRCs - Entry Fee segment are similar to those in the Company's CCRCs - Rental segment but allow for residents in the independent living apartment units to pay a one-time upfront entrance fee, which is partially refundable in certain circumstances.  The amount of the entrance fee varies depending upon the type and size of the dwelling unit, the type of contract plan selected, whether the contract contains a lifecare benefit for the resident, the amount and timing of refund, and other variables.  In addition to the initial entrance fee, residents under all entrance fee agreements also pay a monthly service fee, which entitles them to the use of certain amenities and services.  Since entrance fees are received upon initial occupancy, the monthly fees are generally less than fees at a comparable rental community.

ISC.  The Company's ISC segment includes the outpatient therapy, home health and hospice services provided to

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residents of many of the Company's communities, to other senior living communities that the Company does not own or operate and to seniors living outside of the Company's communities.  The ISC segment does not include the therapy services provided in the Company's skilled nursing units, which are included in the Company's CCRCs - Rental and CCRCs - Entry Fee segments.

Management Services.  The Company's management services segment includes communities operated by the Company pursuant to management agreements.  In some of the cases, the controlling financial interest in the community is held by third parties and, in other cases, the community is owned in a joint venture structure in which the Company has an ownership interest.  Under the management agreements for these communities, the Company receives management fees as well as reimbursed expenses, which represent the reimbursement of expenses it incurs on behalf of the owners.

The accounting policies of the Company's reportable segments are the same as those described in the summary of significant accounting policies.

The following table sets forth selected segment financial and operating data (dollars in thousands):

	For the Years Ended December 31,
	2012		2011		2010
Revenue(1):
Retirement Centers	$	503,902	$	473,842	$	463,260
Assisted Living		1,013,337		964,585		945,469
CCRCs - Rental		385,479		364,095		339,920
CCRCs - Entry Fee		285,701		282,020		267,441
ISC		224,517		205,780		189,968
Management Services(2)		355,802		166,161		72,862
	$	2,768,738	$	2,456,483	$	2,278,920
Segment Operating Income(3):
Retirement Centers	$	205,585	$	198,439	$	196,647
Assisted Living		361,184		339,928		331,220
CCRCs - Rental		106,063		116,849		108,929
CCRCs - Entry Fee		61,405		68,550		64,470
ISC		47,780		57,985		66,862
Management Services		30,786		13,595		5,591
		812,803		795,346		773,719

General and administrative (including non-cash stock-based compensation expense)	178,829	148,327	131,709
Facility lease expense	284,025	274,858	270,905
Depreciation and amortization:
Retirement Centers	61,060	60,275	60,869
Assisted Living	81,801	82,843	93,066
CCRCs - Rental	31,205	30,776	30,655
CCRCs - Entry Fee	52,840	54,794	56,006
ISC	2,220	1,699	1,169

 

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Corporate and Management Services		23,155			38,119			50,576
Gain on sale of communities, net		—			—			(3,298	)
Asset impairment		27,677			16,892			13,075
Loss (gain) on acquisition		636			(1,982	)		―
(Gain) loss on facility lease termination		(11,584	)		—			4,608
Income from operations	$	80,939		$	88,745		$	64,379
Total interest income:
Retirement Centers	$	184		$	311		$	19
Assisted Living		9			18			17
CCRCs - Rental		28			35			29
CCRCs - Entry Fee		3,378			2,263			941
ISC		—			—			—
Corporate and Management Services		413			911			1,232
	$	4,012		$	3,538		$	2,238
Total interest expense:
Retirement Centers	$	29,025		$	28,444		$	33,298
Assisted Living		57,634			58,453			65,086
CCRCs - Rental		17,336			15,324			15,433
CCRCs - Entry Fee		13,792			20,316			23,867
ISC		—			—			—
Corporate and Management Services		28,996			19,641			8,038
	$	146,783		$	142,178		$	145,722
Total expenditures for property, plant and equipment, and leasehold intangibles:
Retirement Centers	$	58,876		$	45,891		$	22,760
Assisted Living		68,675			43,955			24,687
CCRCs - Rental		21,916			20,615			12,077
CCRCs - Entry Fee		24,890			16,255			16,314
ISC		6,037			2,715			4,260
Corporate and Management Services		28,018			30,700			13,583
	$	208,412		$	160,131		$	93,681
	As of December 31,
		2012			2011			2010
Total assets:
Retirement Centers	$	1,256,497		$	1,047,388		$	1,080,410
Assisted Living		1,438,934			1,451,612			1,448,029
CCRCs - Rental		534,220			518,993			529,428
CCRCs - Entry Fee		951,584			1,021,938			1,096,714
ISC		90,357			78,137			67,845
Corporate and Management Services		394,386			347,993			308,044
	$	4,665,978		$	4,466,061		$	4,530,470

(1) All revenue is earned from external third parties in the United States.

(2) Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities.

(3) Segment operating income is defined as segment revenues less segment operating expenses (excluding depreciation and amortization).

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23.Quarterly Results of Operations (Unaudited)

The following is a summary of quarterly results of operations for each of the fiscal quarters in 2012 and 2011 (in thousands, except per share amounts):

	For the Quarters Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
Revenues	$	682,708		$	690,473		$	696,145		$	699,412
Income from operations(1)		26,523			18,528			24,269			11,619
Loss before income taxes		(9,614	)		(18,133	)		(11,469	)		(25,732	)
Net loss		(10,544	)		(19,015	)		(12,216	)		(24,692	)
Weighted average basic and diluted loss per share	$	(0.09	)	$	(0.16	)	$	(0.10	)	$	(0.20	)
Weighted average shares used in computing basic and diluted loss per share		121,145			121,708			122,493			122,608

	For the Quarters Ended
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011
Revenues	$	586,557		$	582,936		$	615,365		$	671,625
Income from operations(1)		11,637			28,500			29,142			19,466
Loss before income taxes		(23,822	)		(21,594	)		(6,886	)		(14,968	)
Net loss		(12,526	)		(34,181	)		(7,257	)		(15,086	)
Weighted average basic and diluted loss per share	$	(0.10	)	$	(0.28	)	$	(0.06	)	$	(0.12	)
Weighted average shares used in computing basic and diluted loss per share		120,792			121,280			121,616			120,951

(1) Fourth quarter 2012 and 2011 results include non-cash impairment charges of $19.3 million and $2.0 million, respectively. Second quarter 2012 results include non-cash impairment charges of $7.2 million. First quarter 2012 and 2011 results include non-cash impairment charges of $1.1 million and $14.8 million, respectively.

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24.Cumulative Effect Adjustment

In July 2012, the FASB issued ASU 2012-01, Continuing Care Retirement Communities — Refundable Advance Fees ("ASU 2012-01").  ASU 2012-01 amends the situations in which recognition of deferred revenue for refundable advance fees is appropriate.  Under this amendment, refundable advance fees that are contingent upon reoccupancy by a subsequent resident but are not limited to the proceeds of reoccupancy should be accounted for and reported as a liability.  The guidance in ASU 2012-01 is effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2012.  The Company adopted the provisions of this update as of January 1, 2013 and incorporated the provisions of this update to its consolidated financial statements through retrospective application to all periods presented and a cumulative effect adjustment to the Company's accumulated deficit as of January 1, 2010.

The effect of this change in accounting was not material to the consolidated results of operations or financial position for any period, including the years ending December 31, 2012, 2011 and 2010, and did not impact cash flows from operations in any period.  The Company increased its accumulated deficit by $3.0 million as of January 1, 2010 to reflect the net cumulative effect of the adoption of ASU 2012-01.

The financial statements included in this filing have been revised to reflect this change in accounting, the effects of which have been summarized below (dollars in thousands):

	As of and for the Year Ended December 31, 2012
	As Reported			Adjustment			As Adjusted
Consolidated Balance Sheets
Refundable entrance fees and deferred revenue	$	361,360		$	9,395		$	370,755
Deferred tax liability		99,851			(3,664	)		96,187
Accumulated deficit		(949,696	)		(5,731	)		(955,427	)
Consolidated Statements of Operations
Resident fees	$	2,414,283		$	(1,347	)	$	2,412,936
Total revenue		2,770,085			(1,347	)		2,768,738
Loss before income taxes		(63,601	)		(1,347	)		(64,948	)
Provision for income taxes		(2,044	)		525			(1,519	)
Net loss		(65,645	)		(822	)		(66,467	)
Basic and diluted net loss per share		(0.54	)		—			(0.54	)
Consolidated Statements of Cash Flows
Net loss	$	(65,645	)	$	(822	)	$	(66,467	)
Amortization of entrance fees		(26,709	)		1,347			(25,362	)
Deferred income tax benefit		—			(525	)		(525	)

39

	As of and for the Year Ended December 31, 2011
	As Reported			Adjustment			As Adjusted
Consolidated Balance Sheets
Refundable entrance fees and deferred revenue	$	327,808		$	8,048		$	335,856
Deferred tax liability		112,736			(3,139	)		109,597
Accumulated deficit		(884,051	)		(4,909	)		(888,960	)
Consolidated Statements of Operations
Resident fees	$	2,291,757		$	(1,435	)	$	2,290,322
Total revenue		2,457,918			(1,435	)		2,456,483
Loss before income taxes		(65,835	)		(1,435	)		(67,270	)
Provision for income taxes		(2,340	)		560			(1,780	)
Net loss		(68,175	)		(875	)		(69,050	)
Basic and diluted net loss per share		(0.56	)		(0.01	)		(0.57	)
Consolidated Statements of Cash Flows
Net loss	$	(68,175	)	$	(875	)	$	(69,050	)
Amortization of entrance fees		(25,401	)		1,435			(23,966	)
Deferred income tax provision		943			(560	)		383

	Year Ended December 31, 2010
	As Reported			Adjustment			As Adjusted
Consolidated Statements of Operations
Resident fees	$	2,207,673		$	(1,615	)	$	2,206,058
Total revenue		2,280,535			(1,615	)		2,278,920
Loss before income taxes		(80,333	)		(1,615	)		(81,948	)
Benefit for income taxes		31,432			630			32,062
Net loss		(48,901	)		(985	)		(49,886	)
Basic and diluted net loss per share		(0.41	)		(0.01	)		(0.42	)
Consolidated Statements of Cash Flows
Net loss	$	(48,901	)	$	(985	)	$	(49,886	)
Amortization of entrance fees		(24,397	)		1,615			(22,782	)
Deferred income tax benefit		(33,295	)		(630	)		(33,925	)

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SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

December 31, 2012

(In thousands)

			Additions
Description	Balance atbeginning of period		Charged tocosts and expenses			Chargedto other accounts			Deductions			Balance atend of period
Allowance for Doubtful Accounts:
Year ended December 31, 2010	$	13,907	$	13,816		$	179		$	(13,438	)	$	14,464
Year ended December 31, 2011	$	14,464	$	16,796		$	1,817		$	(16,105	)	$	16,972
Year ended December 31, 2012	$	16,972	$	15,683		$	660		$	(18,053	)	$	15,262
Deferred Tax Valuation Allowance: Account:
Year ended December 31, 2010	$	10,708	$	―		$	137	(1)	$	—		$	10,845
Year ended December 31, 2011	$	10,845	$	29,348	(2)	$	1,141	(3)	$	(514	)(4)	$	40,820
Year ended December 31, 2012	$	40,820	$	26,989	(5)	$	(2,540	)(6)	$	—		$	65,269

(1) Adjustment to valuation allowance for state net operating losses of $137.

(2) Adjustment to valuation allowance for federal net operating losses and federal credits of $22,940 and $6,408, respectively.

(3) Adjustment to valuation allowance for state net operating losses of $1,141.

(4) Adjustment to valuation allowance for state credits of $514.

(5) Adjustment to valuation allowance for federal net operating losses and federal credits of $26,589, and $400, respectively.

(6) Adjustment to valuation allowance for state net operating losses of $(2,540).

See accompanying report of independent registered public accounting firm

41

XML

Debt

12 Months Ended

Dec. 31, 2012

Debt [Abstract]

Debt

9.Debt

Long-term Debt, Capital Leases and Financing Obligations

Long-term debt, capital leases and financing obligations consist of the following (dollars in thousands):

	December 31,
	2012		2011
Mortgage notes payable due 2013 through 2022; weighted average interest rate of 4.62% in 2012, net of debt discount of $0.3 million (weighted average interest rate of 5.04% in 2011)	$	1,701,515	$	1,470,462
$150,000 Series A notes payable, secured by five communities and by a $3.0 million cash collateral deposit, bearing interest at LIBOR plus 0.88%, payable in monthly installments of interest only until August 2011 and payable in monthly installments of principal and interest through maturity in August 2013		144,384		148,601

	December 31,
	2012		2011
Discount mortgage note payable due June 2013, weighted average interest rate of 2.56% in 2012, net of debt discount of $1.0 million and $3.0 million in 2012 and 2011, respectively (weighted average interest rate of 2.52% in 2011)		80,533		79,911
Variable rate tax-exempt bonds credit-enhanced by Fannie Mae (weighted average interest rates of 1.65% at December 31, 2012 and 2011), due 2032, payable in monthly installments of principal and interest through maturity, secured by the underlying assets of the portfolio		99,847		100,423
Capital and financing lease obligations payable through 2026; weighted average interest rate of 8.16% in 2012 (weighted average interest rate of 8.61% in 2011)		319,745		348,195
Convertible notes payable in aggregate principal amount of $316.3 million, less debt discount of $65.0 million and $74.4 million in 2012 and 2011, respectively, interest at 2.75% per annum, due June 2018		251,312		241,897
Construction financing due 2017 through 2024; weighted average interest rate of 8.0% in 2012 (weighted average interest rate of 7.0% in 2011)		1,280		6,591
Notes payable issued to finance insurance premiums, weighted average interest rate of 2.81% in 2012 (weighted average interest rate of 3.11% in 2011), due 2013		753		2,545
Total debt		2,599,369		2,398,625
Less current portion		509,543		47,654
Total long-term debt	$	2,089,826	$	2,350,971

As of December 31, 2012, the current portion of long-term debt within the Company's consolidated financial statements reflects approximately $465.6 million of mortgage notes payable due within the next 12 months.  Although these debt obligations are scheduled to mature on or prior to December 31, 2013, the Company has the option, subject to the satisfaction of customary conditions (such as the absence of a material adverse change), to extend the maturity of approximately $205.5 million of certain mortgages payable included in such debt until 2018 or later, as the instruments associated with such mortgages payable provide that the Company can extend the respective maturity dates for terms of five to seven years from the existing maturity dates.

The annual aggregate scheduled maturities of long-term debt obligations outstanding as of December 31, 2012 are as follows (dollars in thousands):

Year Ending December 31,	Long-term Debt			Capital and Financing Lease Obligations			Total Debt
2013	$	490,666		$	55,828		$	546,494
2014		170,705			55,065			225,770
2015		54,442			53,401			107,843
2016		50,643			46,957			97,600
2017		341,983			60,494			402,477
Thereafter		1,237,452			211,405			1,448,857
Total obligations		2,345,891			483,150			2,829,041
Less amount representing debt discount		(66,267	)		—			(66,267	)
Less amount representing interest (8.16%)		—			(163,405	)		(163,405	)
Total	$	2,279,624		$	319,745		$	2,599,369

Credit Facilities

On January 31, 2011, the Company entered into an amended and restated credit agreement with General Electric Capital Corporation, as administrative agent and lender, and the other lenders from time to time parties thereto. The amended credit agreement amended and restated in its entirety the Company's existing credit agreement dated as of February

23, 2010, as previously amended.  The amended credit agreement increased the commitment under the credit facility from $120.0 million to $200.0 million and extended the maturity date to January 31, 2016.  Effective February 23, 2011, the commitment under the amended and restated credit agreement was further increased to $230.0 million.

The revolving line of credit can be used to finance acquisitions and fund working capital and capital expenditures and for other general corporate purposes.

The facility is secured by a first priority lien on certain of the Company's communities. The availability under the line will vary from time to time as it is based on borrowing base calculations related to the value and performance of the communities securing the facility.

Amounts drawn under the facility bear interest at 90-day LIBOR plus an applicable margin, as described below. For purposes of determining the interest rate, in no event will LIBOR be less than 2%. The applicable margin varies with the percentage of total commitment drawn, with a 4.5% margin at 35% or lower utilization, a 5.0% margin at utilization greater than 35% but less than or equal to 50% and a 5.5% margin at greater than 50% utilization. The Company is also required to pay a quarterly commitment fee of 1.0% per annum on the unused portion of the facility.

The credit agreement contains typical affirmative and negative covenants, including financial covenants with respect to minimum consolidated fixed charge coverage and minimum consolidated tangible net worth. A violation of any of these covenants could result in a default under the credit agreement, which would result in termination of all commitments under the credit agreement and all amounts owing under the credit agreement and certain other loan agreements becoming immediately due and payable.

As of December 31, 2012, the Company had an available secured line of credit with a $230.0 million commitment and $191.4 million of availability (of which $80.0 million had been drawn as of that date).  The Company also had secured and unsecured letter of credit facilities of up to $92.5 million in the aggregate as of December 31, 2012.  Letters of credit totaling $78.1 million had been issued under these facilities as of that date.

Convertible Debt Offering

In June 2011, the Company completed a registered offering of $316.3 million aggregate principal amount of 2.75% convertible senior notes (the "Notes"). The Company received net proceeds of approximately $308.2 million after the deduction of underwriting commissions and offering expenses.  The Company used a portion of the net proceeds to pay the Company's cost of the convertible note hedge transactions described below, taking into account the proceeds to the Company of the warrant transactions described below, and used the balance of the net proceeds to repay existing outstanding debt.

The Notes are senior unsecured obligations and rank equally in right of payment to all of the Company's other senior unsecured debt, if any. The Notes will be senior in right of payment to any of the Company's debt which is subordinated by its terms to the Notes (if any). The Notes are also structurally subordinated to all debt and other liabilities and commitments (including trade payables) of the Company's subsidiaries. The Notes are also effectively subordinated to the Company's secured debt to the extent of the assets securing the debt.

The Notes bear interest at 2.75% per annum, payable semi-annually in cash.  The Notes are convertible at an initial conversion rate of 34.1006 shares of Company common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $29.325 per share), subject to adjustment. Holders may convert their Notes at their option prior to the close of business on the second trading day immediately preceding the stated maturity date only under the following circumstances:  (i) during any fiscal quarter commencing after the fiscal quarter ending September 30, 2011, if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the

"measurement period"), in which the trading price per $1,000 principal amount of notes for each trading day of that measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the applicable conversion rate on each such day; or (iii) upon the occurrence of specified corporate events.  On and after March 15, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.  Unconverted Notes mature at par in June 2018.

Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock at the Company's election.  It is the Company's current intent and policy to settle the principal amount of the Notes (or, if less, the amount of the conversion obligation) in cash upon conversion.

In addition, following certain corporate transactions, the Company will increase the conversion rate for a holder who elects to convert in connection with such transaction by a number of additional shares of common stock as set forth in the supplemental indenture governing the Notes.

The Notes were issued in an offering registered under the Securities Act of 1933, as amended (Securities Act).

In accordance with FASB guidance on the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial settlement), the liability and equity components are separated in a manner that will reflect the entity's non-convertible debt borrowing rate when interest expense is recognized in subsequent periods.

The Company is accreting the carrying value to the principal amount at maturity using an imputed interest rate of 7.5% (the estimated effective borrowing rate for nonconvertible debt at the time of issuance, Level 2) over its expected life of seven years.

As of December 31, 2012, the "if converted" value of the Notes does not exceed its principal amount.

The interest expense associated with the Notes (excluding amortization of the associated deferred financing costs) was as follows (dollars in thousands):

	For the Years Ended December 31,
	2012		2011
Coupon interest	$	8,697	$	4,759
Amortization of discount		9,415		4,456
Interest expense related to convertible notes	$	18,112	$	9,215

In connection with the offering of the Notes, in June 2011, the Company entered into convertible note hedge transactions (the "Convertible Note Hedges") with certain financial institutions (the "Hedge Counterparties"). The Convertible Note Hedges cover, subject to customary anti-dilution adjustments, 10,784,315 shares of common stock.  The Company also entered into warrant transactions with the Hedge Counterparties whereby the Company sold to the Hedge Counterparties warrants to acquire, subject to customary anti-dilution adjustments, up to 10,784,315 shares of common stock (the "Sold Warrant Transactions").  The warrants have a strike price of $40.25 per share, subject to customary anti-dilution adjustments.

The Convertible Note Hedges are expected to reduce the potential dilution with respect to common stock upon conversion of the Notes in the event that the price per share of common stock at the time of exercise is greater than the strike price of the Convertible Note Hedges, which corresponds to the initial conversion price of the Notes and is similarly subject to customary anti-dilution adjustments. If, however, the price per share of common stock exceeds the strike price of the Sold Warrant Transactions when they expire, there would be additional dilution from the issuance of common stock pursuant to the warrants.

The Convertible Note Hedges and Sold Warrant Transactions are separate transactions (in each case entered into by the Company and Hedge Counterparties), are not part of the terms of the Notes and will not affect the holders' rights under the Notes. Holders of the Notes do not have any rights with respect to the Convertible Note Hedges or the Sold Warrant Transactions.

These hedging transactions had a net cost of approximately $31.9 million, which was paid from the proceeds of the Notes and recorded as a reduction of additional paid-in capital.  The Company has contractual rights, and, at execution of the related agreements, had the ability to settle its obligations under the conversion feature of the Notes, the Convertible Note Hedges and Sold Warrant Transactions, with the Company's common stock. Accordingly, these transactions are accounted for as equity, with no subsequent adjustment for changes in the value of these obligations.

2012 Financings

On January 5, 2012, the Company obtained a $63.0 million first mortgage loan, secured by the underlying community.  The loan bears interest at a variable rate equal to 30-day LIBOR plus a margin of 300 basis points and matures in January 2017.  In connection with the transaction, the Company repaid $62.8 million of existing variable rate debt.

On February 29, 2012, the Company obtained a $20.0 million first mortgage loan, secured by the underlying community.  The loan bears interest at a variable rate equal to 30-day LIBOR plus a margin of 275 basis points and matures in February 2017.

As discussed in Note 4, the Company financed a current year acquisition with a $77.9 million first mortgage.  The first mortgage facility has a ten year term and 75% of it bears interest at a fixed rate of 4.2% and the remaining 25% bears interest at a variable rate of 30-day LIBOR plus a margin of 276 basis points.  The $15.0 million mortgage loan used to partially finance the acquisition had a two year term and bore interest at a fixed rate of 7.0%.

On June 29, 2012, the Company obtained a $15.0 million first mortgage loan, secured by two communities that the Company acquired in February 2012.  The loan bears interest at a variable rate equal to 30-day LIBOR plus a margin of 425 basis points and matures in June 2017.  In connection with the transaction, the Company repaid $15.0 million of seller-financed debt that had been obtained at the time of closing of the acquisition (Note 4).

On December 28, 2012, the Company obtained a $171.3 million first mortgage loan secured by nine of the Company's communities, including eight recently-acquired communities.  The loan has a ten-year term and bears interest at a variable rate equal to 30-day LIBOR plus a margin of 259 basis points.  In connection with the transaction, the Company repaid $37.4 million of mortgage loans scheduled to mature in 2013.

2011 Financings

On March 29, 2011, the Company obtained a $28.0 million first mortgage loan, secured by the underlying community.  The loan bears interest at a rate that has been effectively fixed at 5.49% by means of a swap instrument issued by the lender and matures in March 2016.  In connection with the transaction, the Company repaid $28.0 million of existing variable rate debt.

During the year ended December 31, 2011, the Company repaid approximately $37.9 million of mortgage debt in connection with the release of entrance fee escrows at a recently opened entrance fee CCRC.  Additionally, during the year ended December 31, 2011, the Company repaid $48.7 million of mortgage debt and moved the related assets into the credit line borrowing base and repaid $274.9 million of mortgage debt from the net proceeds of the convertible debt offering.  The Company recognized a loss on extinguishment of debt of $18.9 million for the year ended December 31, 2011 in connection with the early repayment of first and second mortgage notes.

On July 29, 2011, the Company obtained $437.8 million in loans pursuant to the terms of a Master Credit Facility Agreement.  The loans are secured by first mortgages on 44 communities, and 75% of the loans bear interest at a fixed rate of 4.25% while the remaining 25% of the loans bear interest at a variable rate equal to the 30-day LIBOR plus a margin of 182 basis points.  The loans mature on August 1, 2018 and require amortization of principal over a

30 year period.  Proceeds of the loans, together with cash on hand, were used to refinance or prepay $445.2 million of mortgage debt which was scheduled to mature in February and August 2012.

The Master Credit Facility Agreement permits additional loans and substitution or release of mortgaged communities subject to loan-to-value and debt service coverage requirements. The Master Credit Facility Agreement also provides flexibility for expansion of, and repositioning of services provided at, the mortgaged communities subject to lender approval.

On December 21, 2011, the Company repaid $5.0 million of mortgage debt related to two communities.  The partial repayments were allowed under the loan agreements and did not incur any prepayment penalties.

As of December 31, 2012, the Company is in compliance with the financial covenants of its outstanding debt and lease agreements.

Interest Rate Swaps and Caps

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. Interest rate protection and swap agreements were entered into to effectively cap or convert floating rate debt to a fixed rate basis, as well as to hedge anticipated future financing transactions.

The following table summarizes the Company's swap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	27,373
Highest possible notional	$	27,373
Lowest interest rate		5.49	%
Highest interest rate		5.49	%
Average fixed rate		5.49	%
Earliest maturity date		2016
Latest maturity date		2016
Weighted average original maturity	5.0 years
Estimated liability fair value (included in other liabilities at December 31, 2012)	$	(1,833	)
Estimated liability fair value (included in other liabilities at December 31, 2011)	$	(2,809	)

The following table summarizes the Company's cap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	589,568
Highest possible notional	$	589,568
Lowest interest cap rate		5.00	%
Highest interest cap rate		6.06	%
Average fixed cap rate		5.43	%
Earliest maturity date		2013
Latest maturity date		2018
Weighted average original maturity	3.5 years
Estimated asset fair value (included in other assets at December 31, 2012)	$	495
Estimated asset fair value (included in other assets at December 31, 2011)	$	—

During the year ended December 31, 2012, the Company terminated one swap agreement with a total notional amount of $150.0 million. In conjunction with this transaction, $1.2 million was paid to the counterparty, which had been previously deposited as collateral. The Company also entered into three new cap agreements with an aggregate notional amount of $340.8 million and extended the maturity of five cap agreements with an aggregate notional amount of $100.8 million.

XML

Summary of Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenue Recognition [Abstract]
Term of residency agreements- minimum (in days)	30
Term of residency agreements - maximum (in years)	1
Refund of resident's entrance fee under certain conditions (in months)	12
Cash and escrow deposits - restricted [Line Items]
Cash and escrow deposits - restricted, current	$ 43,096,000	$ 45,903,000
Cash and escrow deposits - restricted, long term	62,767,000	52,980,000
Cash and escrow deposits - restricted, total	105,863,000	98,883,000
Number of communities located in Illinois required to make escrow deposits	10	10
Required deposits, in the form of letters of credit, for communities located in Illinois	19,600,000	19,600,000
Accounts Receivable [Abstract]
Allowance for doubtful accounts	15,300,000	17,000,000
Marketable Securities [Abstract]
Amortized cost basis of marketable securities - restricted		32,700,000
Reclassification of realized gain on marketable securities - restricted into earnings	(848,000)	0	0
Weighted Average [Member] | Community Purchase Options [Member]
Finite lived intangible assets - useful lives [Abstract]
Estimated Useful Life (in years)	40 years
Minimum [Member] | Management Contracts and Other [Abstract]
Finite lived intangible assets - useful lives [Abstract]
Estimated Useful Life (in years)	3 years
Maximum [Member] | Management Contracts and Other [Abstract]
Finite lived intangible assets - useful lives [Abstract]
Estimated Useful Life (in years)	5 years
Buildings and improvements [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	40 years
Furniture and equipment [Member] | Minimum [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	3 years
Furniture and equipment [Member] | Maximum [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	7 years
Resident lease intangibles [Member] | Minimum [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	1 year
Resident lease intangibles [Member] | Maximum [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	4 years
Leasehold Improvements [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	Shorter of the lease term or asset useful life
Leasehold Operating Intangibles [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	Shorter of the lease term or asset useful life
Assets under capital and financing leases [Member]
Estimated useful life of property, plant and equipment [Abstract]
Estimated Useful Life (in years)	Shorter of the lease term or asset useful life
Real estate taxes [Member]
Cash and escrow deposits - restricted [Line Items]
Cash and escrow deposits - restricted, current	11,502,000	12,541,000
Tenant security deposits [Member]
Cash and escrow deposits - restricted [Line Items]
Cash and escrow deposits - restricted, current	2,015,000	4,374,000
Insurance reserves [Member]
Cash and escrow deposits - restricted [Line Items]
Cash and escrow deposits - restricted, current	12,892,000	12,904,000
Cash and escrow deposits - restricted, long term	5,188,000	5,412,000
Entrance fees [Member]
Cash and escrow deposits - restricted [Line Items]
Cash and escrow deposits - restricted, current	4,159,000	4,891,000
Replacement reserve and other [Member]
Cash and escrow deposits - restricted [Line Items]
Cash and escrow deposits - restricted, current	12,528,000	11,193,000
Debt service and other deposits [Member]
Cash and escrow deposits - restricted [Line Items]
Cash and escrow deposits - restricted, long term	57,579,000	47,568,000
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair value of financial instruments [Abstract]
Debt at carrying value	2,700,000,000	2,500,000,000
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair value of financial instruments [Abstract]
Fair value of debt	$ 2,700,000,000	$ 2,500,000,000

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenue
Resident fees	$ 2,412,936	$ 2,290,322	$ 2,206,058
Management fees	30,786	13,595	5,591
Reimbursed costs incurred on behalf of managed communities	325,016	152,566	67,271
Total revenue	2,768,738	2,456,483	2,278,920
Expense
Facility operating expense (excluding depreciation and amortization of $229,072, $230,414 and $242,050, respectively)	1,630,919	1,508,571	1,437,930
General and administrative expense (including non-cash stock-based compensation expense of $25,520, $19,856 and $20,759 , respectively)	178,829	148,327	131,709
Facility lease expense	284,025	274,858	270,905
Depreciation and amortization	252,281	268,506	292,341
Gain on sale of communities, net	0	0	(3,298)
Asset impairment	27,677	16,892	13,075
Loss (gain) on acquisition	636	(1,982)	0
Costs incurred on behalf of managed communities	325,016	152,566	67,271
Gain on facility lease termination	(11,584)	0	4,608
Total operating expense	2,687,799	2,367,738	2,214,541
Income from operations	80,939	88,745	64,379
Interest income	4,012	3,538	2,238
Interest expense:
Debt	(128,338)	(124,873)	(132,641)
Amortization of deferred financing costs and debt discount	(18,081)	(13,427)	(8,963)
Change in fair value of derivatives and amortization	(364)	(3,878)	(4,118)
Loss on extinguishment of debt, net	(221)	(18,863)	(1,557)
Equity in (loss) earnings of unconsolidated ventures	(3,488)	1,432	168
Other non-operating income (expense)	593	56	(1,454)
Loss before income taxes	(64,948)	(67,270)	(81,948)
(Provision) benefit for income taxes	(1,519)	(1,780)	32,062
Net loss	$ (66,467)	$ (69,050)	$ (49,886)
Basic and diluted net loss per share	$ (0.54)	$ (0.57)	$ (0.42)
Weighted average shares used in computing basic and diluted net loss per share	121,991	121,161	120,010

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.Summary of Significant Accounting Policies

The consolidated financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles ("GAAP").  The significant accounting policies are summarized below:

Principles of Consolidation

The consolidated financial statements include BSL and its wholly-owned subsidiaries Brookdale Living Communities, Inc., Brookdale Senior Living Communities, Inc. (formerly known as Alterra Healthcare Corporation) ("Alterra"), Fortress CCRC Acquisition LLC, American Retirement Corporation ("ARC") and BKD HB Acquisition Sub, Inc. In December 2003, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 810 - Consolidation of Variable Interest Entities ("ASC 810").  ASC 810 addresses the identification of variable interest entities ("VIE") consolidation by business enterprises deemed to be primary beneficiaries in the VIE.  The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity's economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company performs this analysis on an ongoing basis. At December 31, 2012, the Company did not have any unconsolidated VIEs.  Investments in affiliated companies that the Company does not control, but has the ability to exercise significant influence over governance and operation, are accounted for by the equity method.

The results of facilities and companies acquired are included in the consolidated financial statements from the effective date of the respective acquisition. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Estimates are used for, but not limited to, revenue, goodwill and asset impairments, future service obligations, self-insurance reserves, performance-based compensation, the allowance for doubtful accounts, depreciation and amortization, income taxes and other contingencies.  Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from the original estimates.

Revenue Recognition

Resident Fees

Resident fee revenue is recorded when services are rendered and consists of fees for basic housing, support services and fees associated with additional services such as personalized health and assisted living care. Residency agreements are generally for a term of 30 days to one year, with resident fees billed monthly in advance. Revenue for certain skilled nursing services and ancillary charges is recognized as services are provided and is billed monthly in arrears.

Entrance Fees

Certain of the Company's communities have residency agreements which require the resident to pay an upfront fee prior to occupying the community.  In addition, in connection with the Company's MyChoice program, new and existing residents are allowed to pay additional entrance fee amounts in return for a reduced monthly service fee.  The non-refundable portion of the entrance fee is recorded as deferred revenue and amortized over the estimated stay of the resident based on an actuarial valuation.  The refundable portion of a resident's entrance fee is generally refundable within a certain number of months or days following contract termination or upon the sale of the unit, or in certain agreements, upon the resale of a comparable unit or 12 months after the resident vacates the unit.  In such instances the refundable portion of the fee is not amortized and included in refundable entrance fees and deferred revenue.  All refundable amounts due to residents at any time in the future, including those recorded as deferred revenue, are classified as current liabilities.

Community Fees

Substantially all community fees received are non-refundable and are recorded initially as deferred revenue.  The deferred amounts, including both the deferred revenue and the related direct resident lease origination costs, are amortized over the estimated stay of the resident which is consistent with the implied contractual terms of the resident lease.

Management Fees

Management fee revenue is recorded as services are provided to the owners of the communities. Revenues are determined by an agreed upon percentage of gross revenues (as defined).  Incentives and penalties receivable or payable under management contracts containing these provisions (other than contractual termination fees) are recorded based on the amounts that would be due pursuant to the contractual arrangements if the contracts were terminated on the reporting date.

Reimbursed Costs Incurred on Behalf of Managed Communities

The Company manages certain communities under contracts which provide for payment to the Company of a monthly management fee plus reimbursement of certain operating expenses.  Where the Company is the primary

obligor with respect to any managed community operating expenses, the Company recognizes revenue when the goods have been delivered or the service has been rendered and the Company is due reimbursement.  This reimbursement revenue is included in "reimbursed costs incurred on behalf of managed communities" on the consolidated statements of operations.  The related costs are included in "costs incurred on behalf of managed communities" on the consolidated statements of operations.

Purchase Accounting

In determining the allocation of the purchase price of companies and communities to net tangible and identified intangible assets acquired and liabilities assumed, the Company makes estimates of fair value using information obtained as a result of pre-acquisition due diligence, marketing, leasing activities and/or independent appraisals. The Company allocates the purchase price of communities based on their fair values in accordance with the provisions of ASC 805 - Business Combinations ("ASC 805").  The determination of fair value involves the use of significant judgment and estimation. The Company determines fair values as follows:

Current assets and current liabilities assumed are valued at carryover basis which approximates fair value.

Property, plant and equipment are valued utilizing discounted cash flow projections of future revenue and costs, and capitalization and discount rates using current market conditions.

The Company allocates a portion of the purchase price to the value of resident leases acquired based on the difference between the communities valued with existing in-place leases adjusted to market rental rates and the communities valued with current leases in place based on current contractual terms. Factors management considers in its analysis include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar resident leases. In estimating carrying costs, management includes estimates of lost rentals during the lease-up period and estimated costs to execute similar leases. The value of in-place leases is amortized to expense over the remaining initial term of the respective leases.

Leasehold operating intangibles are valued utilizing discounted cash flow projections that assume certain future revenues and costs over the remaining lease term. The value assigned to leasehold operating intangibles is amortized on a straight-line basis over the lease term.

Community purchase options are valued at the estimated value of the underlying community less the cost of the option payment discounted at current market rates.  Management contracts and other acquired contracts are valued at a multiple of management fees and operating income or are valued utilizing discounted cash flow projections that assume certain future revenues and costs over the remaining contract.  The assets are then amortized over the estimated term of the agreement.

Long-term debt assumed is recorded at fair market value based on the current market rates and collateral securing the indebtedness.  Any debt premium or discount recorded is amortized over the related debt maturity period.

Capital lease obligations are valued based on the present value of the minimum lease payments applying a discount rate equal to the Company's estimated incremental borrowing rate at the date of acquisition.

Deferred entrance fee revenue is valued at the estimated cost of providing services to residents over the terms of the current contracts to provide such services. Refundable entrance fees are valued at cost pursuant to the resident lease plus the resident's share of any appreciation of the community unit at the date of acquisition, if applicable.

A deferred tax liability is recognized at statutory rates for the difference between the book and tax bases of the acquired assets and liabilities.

The excess of the fair value of liabilities assumed and cash paid over the fair value of assets acquired is allocated to goodwill.

Contingent consideration is valued using a probability-weighted discounted cash flow model.

Deferred Costs

Deferred financing and lease costs are recorded in other assets and amortized on a straight-line basis, which approximates the effective yield method, over the term of the related debt or lease.

Income Taxes

Income taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company has elected the "with-and-without approach" regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year.  Under this approach, the windfall tax benefits would be recognized in additional paid-in capital only if an incremental tax benefit is realized after considering all other tax benefits presently available.

Fair Value of Financial Instruments

Cash and cash equivalents, cash and escrow deposits-restricted, derivative financial instruments and marketable securities - restricted are reflected in the accompanying consolidated balance sheets at amounts considered by management to reasonably approximate fair value.  Management estimates the fair value of its long-term debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness.  The Company had outstanding debt with a carrying value of approximately $2.7 billion and $2.5 billion as of December 31, 2012 and 2011, respectively.  Fair value approximated carrying value in both years.

ASC 820 - Fair Value Measurement ("ASC 820") establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's cash and cash equivalents and cash and escrow deposits-restricted reported on its consolidated balance sheets approximate fair value due to the short maturity.

The Company's marketable securities - restricted include marketable securities that are recorded in the financial statements at fair value.  The fair value is based primarily on quoted market prices and is classified within Level 1 of the valuation hierarchy.  Changes in fair value are recorded, net of tax, as other comprehensive income and included as a component of stockholders' equity.

The Company's derivative assets and liabilities include interest rate swaps and caps that effectively convert a portion of the Company's variable rate debt to fixed rate debt.  The derivative positions are valued using models developed internally by the respective counterparty that use as their basis readily observable market parameters (such as forward yield curves) and are classified within Level 2 of the valuation hierarchy.

The Company considers its own credit risk as well as the credit risk of its counterparties when evaluating the fair value of its derivatives. Any adjustments resulting from credit risk are recorded as a change in fair value of derivatives and amortization in the current period statement of operations.

The Company's fair value of debt disclosure is determined based primarily on market interest rate assumptions of similar debt applied to future cash flows under the debt agreements and is classified within Level 2 of the valuation hierarchy.

Cash and Cash Equivalents

The Company defines cash and cash equivalents as cash and investments with maturities of 90 days or less when purchased.

Cash and Escrow Deposits - Restricted

Cash and escrow deposits - restricted consist principally of deposits required by certain lenders and lessors pursuant to the applicable agreement and consist of the following (dollars in thousands):

	December 31,
	2012		2011
Current:
Real estate taxes	$	11,502	$	12,541
Tenant security deposits		2,015		4,374
Insurance reserves		12,892		12,904
Entrance fees		4,159		4,891
Replacement reserve and other		12,528		11,193
Subtotal		43,096		45,903
Long term:
Insurance reserves		5,188		5,412
Debt service and other deposits		57,579		47,568
Subtotal		62,767		52,980
Total	$	105,863	$	98,883

As of December 31, 2012 and 2011, ten communities located in Illinois are required to make escrow deposits under the Illinois Life Care Facility Act.  As of December 31, 2012 and 2011, required deposits were $19.6 million, all of which were made in the form of letters of credit.

Accounts Receivable

Accounts receivable are reported net of an allowance for doubtful accounts, to represent the Company's estimate of the amount that ultimately will be realized in cash. The allowance for doubtful accounts was $15.3 million and $17.0 million as of December 31, 2012 and 2011, respectively.  The adequacy of the Company's allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance as necessary.

Billings for services under third-party payor programs are recorded net of estimated retroactive adjustments, if any, under reimbursement programs. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods or as final settlements are determined. Contractual or cost related adjustments from Medicare or Medicaid are accrued when assessed (without regard to when the assessment is paid or withheld).  Subsequent positive or negative adjustments to these accrued amounts are recorded in net revenues when known.

Property, Plant and Equipment and Leasehold Intangibles

Property, plant and equipment and leasehold intangibles, which include amounts recorded under capital leases, are recorded at cost.  Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Category	Estimated Useful Life (in years)
Buildings and improvements	40
Furniture and equipment	3 – 7
Resident lease intangibles	1 – 4
Leasehold improvements	Shorter of the lease term or asset useful life
Leasehold operating intangibles	Shorter of the lease term or asset useful life
Assets under capital and financing leases	Shorter of the lease term or asset useful life

Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Renovations and improvements, which improve and/or extend the useful life of the asset, are capitalized and depreciated over their estimated useful life, or if the renovations or improvements are made with respect to communities subject to an operating lease, over the shorter of the estimated useful life of the renovations or improvements, or the term of the operating lease. Facility operating expense excludes depreciation and amortization directly attributable to the operation of the facility.

Long-lived assets (groups) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of long-lived assets held for use are assessed by a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset.  If estimated future undiscounted net cash flows are less than the carrying amount of the asset then the fair value of the asset is estimated.  The impairment expense is determined by comparing the estimated fair value of the asset to its carrying value, with any amount in excess of fair value recognized as an expense in the current period.  Undiscounted cash flow projections and estimates of fair value amounts are based on a number of assumptions such as revenue and expense growth rates, estimated holding periods and estimated capitalization rates and discount rates.

Marketable Securities – Restricted

Marketable securities - restricted include amounts required to be held in reserve related to the Company's entrance fee CCRCs pursuant to various state insurance regulations and consist of mutual funds holding equities and fixed-income securities. The Company classifies its marketable securities - restricted as available-for-sale.  Accordingly, these investments are carried at their estimated fair value with the unrealized gain and losses, net of tax, reported in other comprehensive income.  Realized gains and losses from the available-for-sale securities are determined on the specific identification method and are included in interest income on the trade date.

A decline in the market value of any security below cost that is deemed to be other than temporary results in a reduction in the carrying amount of the security to fair market value. The impairment is charged to earnings and a new cost basis for the security is established. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

During the year ended December 31, 2012, the Company liquidated the marketable securities – restricted investments and recognized $0.8 million of realized gains from the transaction, included within interest income in the consolidated statements of operations.

The amortized cost basis of the marketable securities – restricted as of December 31, 2011 was $32.7 million.

Goodwill and Intangible Assets

The Company follows ASC 350 - Goodwill and Other Intangible Assets, and tests goodwill for impairment annually or whenever indicators of impairment arise.  The evaluation is based upon a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit's carrying value.  The fair values used in this evaluation are estimated based upon discounted future cash flow projections for the reporting

unit.  These cash flow projections are based upon a number of estimates and assumptions such as revenue and expense growth rates, capitalization rates and discount rates.

In 2012, the Company adopted the guidance within Accounting Standards Update 2011-08, Intangibles — Goodwill and Other ("ASU 2011-08"), which allows the Company to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  In 2012, the Company assessed qualitative factors and determined that it was not necessary to perform the two-step quantitative goodwill impairment test.

Acquired intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset.  Intangible assets with definite lives are amortized over their estimated useful lives and all intangible assets are reviewed for impairment if indicators of impairment arise.  The evaluation of impairment for definite-lived intangibles is based upon a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset.  If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then the fair value of the asset is estimated.  The impairment expense is determined by comparing the estimated fair value of the intangible asset to its carrying value, with any shortfall from fair value recognized as an expense in the current period.

Indefinite-lived intangible assets are not amortized but are tested for impairment annually during the fourth quarter or more frequently as required.  The impairment test consists of a comparison of the estimated fair value of the indefinite-lived intangible asset with its carrying value.  If the carrying amount exceeds its fair value, an impairment loss is recognized for that difference.

During 2012, 2011 and 2010, the Company performed its annual impairment review of goodwill and intangible assets and determined that no impairment charge was necessary.

Amortization of the Company's definite lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Category	Estimated Useful Life (in years)
Community purchase options	40
Management contracts and other	3 – 5

Stock-Based Compensation

The Company follows ASC 718 - Stock Compensation ("ASC 718") in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee's requisite service period.  Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred.

Certain of the Company's employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company's determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Additionally, the Company must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Convertible Debt Instruments

Convertible debt instruments are accounted for under FASB ASC Topic 470-20, Debt – Debt with Conversion and Other Options.  This guidance requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion, including partial cash settlement, to separately account for the liability (debt) and equity (conversion option) components of the instruments in a manner that reflects the issuer's estimated non-convertible debt borrowing rate.

Derivative Financial Instruments

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has entered into certain interest rate protection and swap agreements to effectively cap or convert floating rate debt to a fixed rate basis. All derivative instruments are recognized as either assets or liabilities in the consolidated balance sheets at fair value. The change in mark-to-market of the value of the derivative is recorded as an adjustment to income.

Derivative contracts are not entered into for trading or speculative purposes. Furthermore, the Company has a policy of only entering into contracts with major financial institutions based upon their credit rating and other factors.  Under certain circumstances, the Company may be required to replace a counterparty in the event that the counterparty does not maintain a specified credit rating.

Obligation to Provide Future Services

Annually, the Company calculates the present value of the net cost of future services and the use of communities to be provided to current residents of certain of its CCRCs and compares that amount with the balance of non-refundable deferred revenue from entrance fees received. If the present value of the net cost of future services and the use of communities exceeds the related anticipated revenues including non-refundable deferred revenue from entrance fees, a liability is recorded (obligation to provide future services and use of communities) with a corresponding charge to income.

Self-Insurance Liability Accruals

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim.  As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts.  In addition, the Company maintains a large-deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Investment in Unconsolidated Ventures

In accordance with ASC 810, the general partner or managing member of a venture consolidates the venture unless the limited partners or other members have either (1) the substantive ability to dissolve the venture or otherwise remove the general partner or managing member without cause or (2) substantive participating rights in significant decisions of the venture, including authorizing operating and capital decisions of the venture, including budgets, in the ordinary course of business. The Company has reviewed all ventures where it is the general partner or managing member and has determined that in all cases the limited partners or other members have substantive participating rights such as those set forth above and, therefore, no ventures are consolidated.

The Company's reported share of earnings is adjusted for the impact, if any, of basis differences between its carrying value of the equity investment and its share of the venture's underlying assets. The Company generally does not have future requirements to contribute additional capital over and above the original capital commitments, and therefore, the Company discontinues applying the equity method of accounting when its investment is reduced

to zero barring an expectation of an imminent return to profitability. If the venture subsequently reports net income, the equity method of accounting is resumed only after the Company's share of that net income equals the share of net losses not recognized during the period the equity method was suspended.

When the majority equity partner in one of the Company's ventures sells its equity interest to a third party, the venture frequently refinances its senior debt and distributes the net proceeds to the equity partners. All distributions received by the Company are first recorded as a reduction of the Company's investment. Next, the Company records a liability for any contractual or implied future financial support to the venture including obligations in its role as a general partner. Any remaining distributions are recorded as the Company's share of earnings and return on investment in unconsolidated ventures in the consolidated statements of operations.

The Company evaluates realization of its investment in ventures accounted for using the equity method if circumstances indicate that the Company's investment is other than temporarily impaired.

Community Leases

The Company, as lessee, makes a determination with respect to each of the community leases whether each should be accounted for as an operating lease or capital lease. The classification criteria is based on estimates regarding the fair value of the leased community, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements. In a business combination, the Company assumes the lease classification previously determined by the prior lessee absent a modification, as determined by ASC 840 – Leases ("ASC 840"), in the assumed lease agreement. Payments made under operating leases are accounted for in the Company's consolidated statements of operations as lease expense for actual rent paid plus or minus a straight-line adjustment for estimated minimum lease escalators and amortization of deferred gains in situations where sale-leaseback transactions have occurred. For communities under capital lease and lease financing obligation arrangements, a liability is established on the Company's consolidated balance sheets representing the present value of the future minimum lease payments and a corresponding long-term asset is recorded in property, plant and equipment and leasehold intangibles in the consolidated balance sheets. The asset is depreciated over the remaining lease term unless there is a bargain purchase option in which case the asset is depreciated over the useful life. Leasehold improvements purchased during the term of the lease are amortized over the shorter of their economic life or the lease term.

All of the Company's leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, all rent-free or rent holiday periods are recognized in lease expense on a straight-line basis over the lease term, including the rent holiday period.

Sale-leaseback accounting is applied to transactions in which an owned community is sold and leased back from the buyer. Under sale-leaseback accounting, the Company removes the community and related liabilities from the consolidated balance sheets. Gain on the sale is deferred and recognized as a reduction of facility lease expense for operating leases and a reduction of interest expense for capital leases.

For leases in which the Company is involved with the construction of the building, the Company accounts for the lease during the construction period under the provisions of ASC 840.  If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore is deemed the owner of the project for accounting purposes, it records an asset and related financing obligation for the amount of total project costs related to construction in progress.  Once construction is complete, the Company considers the requirements under ASC 840-40 – Leases – Sale-Leaseback Transactions.  If the arrangement does not qualify for sale-leaseback accounting, the Company continues to amortize the financing obligation and depreciate the building over the lease term.

Treasury Stock

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders' equity.

New Accounting Pronouncements

In June 2011, the FASB issued Accounting Standards Update ("ASU") 2011-05, Presentation of Comprehensive Income ("ASU 2011-05").  The guidance in ASU 2011-05 is effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires the components of net income and other comprehensive income and total comprehensive income for each interim period. The Company adopted the provisions of this update as of January 1, 2012 and incorporated the provisions of this update to its consolidated financial statements upon adoption. The adoption of this update did not have an impact on the Company's financial condition or results of operations.

In September 2011, the FASB issued ASU 2011-08, Intangibles — Goodwill and Other ("ASU 2011-08").  ASU 2011-08 amends current guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  ASU 2011-08 applies to all companies that have goodwill reported in their financial statements.  The provisions of ASU 2011-08 are effective for the Company in 2012.  The adoption of this update did not have an impact on the Company's financial condition or results of operations.

In July 2012, the FASB issued ASU 2012-02, Intangibles — Goodwill and Other ("ASU 2012-02").  ASU 2012-02 amends current guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the annual quantitative indefinite-lived intangible asset impairment test.  Under this amendment, an entity would not be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  ASU 2012-02 applies to all companies that have indefinite-lived intangible assets reported in their financial statements.  The provisions of ASU 2012-02 are effective for annual reporting periods beginning after September 15, 2012.  The Company has not yet adopted this pronouncement, but does not believe it will have an impact on the Company's consolidated financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's consolidated financial position or results of operations.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

16.Fair Value Measurements

The following table provides the Company's derivative assets and liabilities carried at fair value as measured on a

recurring basis as of December 31, 2012 (dollars in thousands):

	Total Carrying Value at December 31, 2012			Quoted prices in active markets (Level 1)		Significant Other Observable inputs (Level 2)			Significant Unobservable inputs (Level 3)
Derivative assets	$	495		$	—	$	495		$	—
Derivative liabilities		(1,833	)		—		(1,833	)		—
	$	(1,338	)	$	—	$	(1,338	)	$	—

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Total carrying value at period end
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated asset fair value (included in other assets)	$ 495
Estimated liability fair value (included in other liabilities)	(1,833)
Total	(1,338)
Quoted prices in active markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated asset fair value (included in other assets)	0
Estimated liability fair value (included in other liabilities)	0
Total	0
Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated asset fair value (included in other assets)	495
Estimated liability fair value (included in other liabilities)	(1,833)
Total	(1,338)
Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated asset fair value (included in other assets)	0
Estimated liability fair value (included in other liabilities)	0
Total	$ 0

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Investment in Unconsolidated Ventures (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Expense [Abstract]
Total operating expense	$ 2,687,799	$ 2,367,738	$ 2,214,541
Interest income	4,012	3,538	2,238
Balance Sheet Data [Abstract]
Cash and cash equivalents	69,240	30,836	81,827	66,370
Property, plant and equipment, net	3,879,977	3,694,064
Other	113,315	109,934
Total assets	4,665,978	4,466,061
Long-term debt	2,089,826	2,350,971
Total liabilities and stockholders' equity	4,665,978	4,466,061
Members' equity consists of [Abstract]
Cumulative net loss	(955,427)	(888,960)
Investment in Unconsolidated Ventures [Member]
Statement of Operations Data [Abstract]
Total revenue	295,539	154,964	84,689
Expense [Abstract]
Facility operating expense	202,855	103,611	54,766
Depreciation and amortization	49,142	23,923	12,730
Interest expense	50,825	27,072	13,153
Other expense	28,112	6,885	4,585
Total operating expense	330,934	161,491	85,234
Interest income	123	108	24
Net (loss) income	(35,272)	(6,419)	(521)
Balance Sheet Data [Abstract]
Cash and cash equivalents	16,578	15,255
Property, plant and equipment, net	1,073,610	1,012,941
Other	148,960	184,052
Total assets	1,239,148	1,212,248
Accounts payable and accrued expenses	66,841	61,199
Long-term debt	892,463	900,091
Members' equity	279,844	250,958
Total liabilities and stockholders' equity	1,239,148	1,212,248
Members' equity consists of [Abstract]
Invested capital	582,360	403,625
Cumulative net loss	(55,942)	(25,810)
Cumulative Distributions	(246,574)	(126,857)
Members' equity	$ 279,844	$ 250,958
Investment In Unconsolidated Ventures, 10 Percent Interest [Member]
Schedule of Investment in Unconsolidated Joint Ventures [Line Items]
Percentage ownership in unconsolidated joint ventures	10.00%	10.00%
Equity Method Investment Additional Information, Number of Communities Owned	21	21
Investment In Unconsolidated Ventures, 20 Percent Interest [Member]
Schedule of Investment in Unconsolidated Joint Ventures [Line Items]
Percentage ownership in unconsolidated joint ventures	20.00%	20.00%
Equity Method Investment Additional Information, Number of Communities Owned	13	13

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Accrued Expenses

12 Months Ended

Dec. 31, 2012

Accrued Expenses [Abstract]

Accrued Expenses

10.Accrued Expenses

Accrued expenses consist of the following components as of December 31, (dollars in thousands):

	2012		2011
Salaries and wages	$	71,567	$	52,268
Insurance reserves		37,717		35,066
Vacation		24,697		23,565
Real estate taxes		22,178		22,690
Lease payable		8,915		9,017
Interest		7,644		7,782
Income taxes		2,469		1,919
Other		25,708		31,327
Total	$	200,895	$	183,634

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies [Abstract]

Future minimum operating lease payments

The aggregate amounts of all future minimum operating lease payments, including community and office leases, as of December 31, 2012, are as follows (dollars in thousands):

Year Ending December 31,	Operating Leases
2013	$	277,684
2014		268,164
2015		259,624
2016		256,463
2017		232,445
Thereafter		684,536
Total	$	1,978,916

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Property, Plant and Equipment and Leasehold Intangibles, Net (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	$ 5,481,266,000	$ 5,105,676,000
Accumulated depreciation and amortization	1,601,289,000	1,411,612,000
Property, plant and equipment and leasehold intangibles, net	3,879,977,000	3,694,064,000
Impaired Long-Lived Assets Held and Used [Line Items]
Asset impairment, non-cash charge	27,677,000	16,892,000	13,075,000
Depreciation and amortization expense on property, plant and equipment and leasehold intangibles	248,500,000	247,100,000	258,000,000
Resident And Leasehold Operating Intangibles Future Amortization Expense [Abstract]
2013	26,900,000
2014	22,248,000
2015	20,613,000
2016	19,137,000
2017	12,272,000
Thereafter	14,083,000
Total	115,253,000
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	296,314,000	275,277,000
Buildings and improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	3,391,667,000	3,083,316,000
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	60,186,000	62,494,000
Furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	541,585,000	450,179,000
Resident and leasehold operating intangibles [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	441,603,000	527,571,000
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	75,419,000	39,600,000
Assets under capital and financing leases [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment and leasehold intangibles gross	$ 674,492,000	$ 667,239,000

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Property, Plant and Equipment and Leasehold Intangibles, Net (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment and Leasehold Intangibles, Net [Abstract]

Property, plant and equipment and leasehold intangibles, net

As of December 31, 2012 and 2011, net property, plant and equipment and leasehold intangibles, which include assets under capital leases, consisted of the following (dollars in thousands):

	2012			2011
Land	$	296,314		$	275,277
Buildings and improvements		3,391,667			3,083,316
Leasehold improvements		60,186			62,494
Furniture and equipment		541,585			450,179
Resident and leasehold operating intangibles		441,603			527,571
Construction in progress		75,419			39,600
Assets under capital and financing leases		674,492			667,239
		5,481,266			5,105,676
Accumulated depreciation and amortization		(1,601,289	)		(1,411,612	)
Property, plant and equipment and leasehold intangibles, net	$	3,879,977		$	3,694,064

Resident and Leasehold Operating Intangibles, Future Amortization Expense

Future amortization expense for resident and leasehold operating intangibles is estimated to be as follows (dollars in thousands):

Year Ending December 31,	Future Amortization
2013	$	26,900
2014		22,248
2015		20,613
2016		19,137
2017		12,272
Thereafter		14,083
Total	$	115,253

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Supplemental Disclosure of Cash Flow Information

12 Months Ended

Dec. 31, 2012

Supplemental Disclosure of Cash Flow Information [Abstract]

Supplemental Disclosure of Cash Flow Information

19.Supplemental Disclosure of Cash Flow Information

(dollars in thousands)	For the Years Ended December 31,
	2012		2011		2010
Interest paid	$	130,009	$	125,047	$	132,425
Income taxes paid	$	2,658	$	2,431	$	2,223
Write-off of deferred financing costs	$	744	$	2,080	$	2,878

Acquisitions of assets, net of related payables and cash received, net:
Cash and escrow deposits-restricted	$	2,169		$	—	$	—
Prepaid expenses and other current assets		(2,817	)		—		—

Property, plant and equipment and leasehold intangibles		257,772			80,514			52,900
Other intangible assets, net		9,575			4,244			7,963
Other assets, net		(7,327	)		3,955			(2,870	)
Accrued expenses		(573	)		(31	)		(45	)
Other liabilities		3,601			—			—
Long-term debt and capital and financing lease obligations		10,123			—			—
Net	$	272,523		$	88,682		$	57,948
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired:
Property, plant and equipment and leasehold intangibles, net	$	—		$	8,132		$	—
Cash and escrow deposits—restricted		—			10,702			—
Accounts receivable, net		—			2,479			—
Long-term debt, less current portion		—			(1,821	)		—
Accrued expenses		—			(15,141	)		—
Other liabilities		—			(6,347	)		—
Common Stock		—			(1	)		—
Additional paid-in-capital		—			(1,537	)		—
Accumulated earnings		—			(1,982	)		—
Net	$	—		$	(5,516	)	$	—
Reinvested income on marketable securities - restricted	$	1,156		$	$1,426		$	—
Supplemental Schedule of Noncash Operating, Investing and Financing Activities:
Capital leases:
Property, plant and equipment and leasehold intangibles, net	$	13,852		$	―		$	5,791
Long-term debt		(13,852	)		―			(5,791	)
Net	$	—		$	—		$	—

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

18.Income Taxes

The (provision) benefit for income taxes is comprised of the following (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Federal:
Current	$	193		$	631		$	626
Deferred		347			(383	)		33,865
Total Federal		540			248			34,491
State:
Current		(2,059	)		(2,028	)		(2,429	)
Deferred (included in Federal above)		―			―			―
Total State		(2,059	)		(2,028	)		(2,429	)
Total	$	(1,519	)	$	(1,780	)	$	32,062

A reconciliation of the (provision) benefit for income taxes to the amount computed at the U.S. Federal statutory rate of 35% is as follows (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Tax benefit at U.S. statutory rate	$	22,945		$	23,545		$	28,682
State taxes, net of federal income tax		1,258			1,373			1,699
Unrecognized tax benefits		193			630			626
Other, net		122			59			(124	)
Credits		—			4,803			3,354
Valuation allowance		(24,138	)		(30,489	)		(137	)
Officer's compensation		(922	)		(760	)		(2,197	)
Meals and entertainment		(486	)		(430	)		(383	)
Gain on acquisition		(266	)		791			—
Return to provision		(225	)		(1,302	)		679
Stock compensation		—			—			(137	)
Total	$	(1,519	)	$	(1,780	)	$	32,062

Significant components of the Company's deferred tax assets and liabilities at December 31 are as follows (dollars in thousands):

	2012			2011
Deferred income tax assets:
Operating loss carryforwards	$	169,792		$	174,433
Capital lease obligations		52,720			62,136
Prepaid revenue		55,386			51,726
Accrued expenses		50,602			40,422
Deferred lease liability		46,541			48,916
Tax credits		20,551			20,158
Deferred gain on sale leaseback		10,127			11,581
Fair value of interest rate swaps		522			152
Total gross deferred income tax asset		406,241			409,524
Valuation allowance		(65,269	)		(40,820	)
Net deferred income tax assets		340,972			368,704
Deferred income tax liabilities:
Property, plant and equipment		(415,354	)		(454,985	)
Other		(8,428	)		(11,540	)
Total gross deferred income tax liability		(423,782	)		(466,525	)
Net deferred tax liability	$	(82,810	)	$	(97,821	)

A reconciliation of the net deferred tax liability to the consolidated balance sheets at December 31 is as follows (dollars in thousands):

	2012			2011
Deferred tax asset – current	$	13,377		$	11,776
Deferred tax liability – noncurrent		(96,187	)		(109,597	)
Net deferred tax liability	$	(82,810	)	$	(97,821	)

As of December 31, 2012 and 2011, the Company had net federal operating loss carryforwards of approximately $454.6 million and $461.5 million, respectively, which are available to offset future taxable income through 2032.  The Company concluded that the additional benefits generated during 2012 and 2011 did not meet the more likely

than not criteria for realization.  The conclusion was determined solely based on the reversal of current timing differences and did not consider future taxable income to be generated by the Company. Therefore, the Company has recorded a valuation allowance of $49.6 million against federal net operating losses at December 31, 2012.  The Company continues to maintain that the deferred tax assets recorded as of December 31, 2012, primarily related to net operating losses generated prior to December 31, 2010, are more likely than not to be realized based on the reversal of deferred tax liabilities recorded.

The Company has recorded valuation allowances of $7.2 million and $9.7 million at December 31, 2012 and 2011, respectively, against its state net operating losses, as the Company anticipates these losses will not be utilized prior to expiration.  The carryforward period for some states is considerably shorter than the period which is allowed for federal purposes.  The Company also recorded a valuation allowance against federal and state credits of $8.5 million and $8.1 million as of December 31, 2012 and 2011, respectively.  As of December 31, 2012 and 2011, the Company had $31.9 million and $26.9 million, respectively, included in its net operating loss carryforward relating to restricted stock grants. Under ASC 718-10, this loss will be recorded in additional paid-in capital in the period in which the loss is effectively used to reduce taxes payable.

The formation of BSL, reorganization of Alterra, and the acquisitions of ARC and SALI constitute ownership changes under Section 382 of the Internal Revenue Code, as amended. As a result, BSL's ability to utilize the net operating loss carryforward to offset future taxable income is subject to certain limitations and restrictions.  Furthermore, the Company had an ownership change under Section 382 in May 2010 which resulted in an additional annual limitation to the utilization of the net operating loss in an amount of $92 million.  The Company expects the net operating loss to be fully released before expiration and therefore does not anticipate a financial statement impact as a result of the limitation.

At December 31, 2012, the Company had gross tax affected unrecognized tax benefits of $1.2million, which, if recognized, would result in an income tax benefit in accordance with ASC 805.  Interest and penalties related to these tax positions are classified as tax expense in the Company's financial statements.  Total interest and penalties reserved is $0.5 million at December 31, 2012.  Tax returns for years 2008 through 2011 are subject to future examination by tax authorities. In addition, certain tax returns are open from 2000 through 2007 to the extent of the net operating losses generated during those periods.  The Company does not expect that unrecognized tax benefits for tax positions taken with respect to 2011 and prior years will significantly change in 2013.

A reconciliation of the unrecognized tax benefits for the year 2012 is as follows (dollars in thousands):

Balance at January 1, 2012	$	1,439
Additions for tax positions related to the current year		48
Additions for tax positions related to prior years		201
Reductions for tax positions related to prior years		(443	)
Balance at December 31, 2012	$	1,245

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income tax expense (benefit)

The (provision) benefit for income taxes is comprised of the following (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Federal:
Current	$	193		$	631		$	626
Deferred		347			(383	)		33,865
Total Federal		540			248			34,491
State:
Current		(2,059	)		(2,028	)		(2,429	)
Deferred (included in Federal above)		―			―			―
Total State		(2,059	)		(2,028	)		(2,429	)
Total	$	(1,519	)	$	(1,780	)	$	32,062

Reconciliation of the benefit for income taxes to the amount computed at the U.S. Federal statutory rate

A reconciliation of the (provision) benefit for income taxes to the amount computed at the U.S. Federal statutory rate of 35% is as follows (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Tax benefit at U.S. statutory rate	$	22,945		$	23,545		$	28,682
State taxes, net of federal income tax		1,258			1,373			1,699
Unrecognized tax benefits		193			630			626
Other, net		122			59			(124	)
Credits		—			4,803			3,354
Valuation allowance		(24,138	)		(30,489	)		(137	)
Officer's compensation		(922	)		(760	)		(2,197	)
Meals and entertainment		(486	)		(430	)		(383	)
Gain on acquisition		(266	)		791			—
Return to provision		(225	)		(1,302	)		679
Stock compensation		—			—			(137	)
Total	$	(1,519	)	$	(1,780	)	$	32,062

Components of deferred tax assets and liabilities

Significant components of the Company's deferred tax assets and liabilities at December 31 are as follows (dollars in thousands):

	2012			2011
Deferred income tax assets:
Operating loss carryforwards	$	169,792		$	174,433
Capital lease obligations		52,720			62,136
Prepaid revenue		55,386			51,726
Accrued expenses		50,602			40,422
Deferred lease liability		46,541			48,916
Tax credits		20,551			20,158
Deferred gain on sale leaseback		10,127			11,581
Fair value of interest rate swaps		522			152
Total gross deferred income tax asset		406,241			409,524
Valuation allowance		(65,269	)		(40,820	)
Net deferred income tax assets		340,972			368,704
Deferred income tax liabilities:
Property, plant and equipment		(415,354	)		(454,985	)
Other		(8,428	)		(11,540	)
Total gross deferred income tax liability		(423,782	)		(466,525	)
Net deferred tax liability	$	(82,810	)	$	(97,821	)

Reconciliation of net deferred tax liability to the consolidated balance sheets

A reconciliation of the net deferred tax liability to the consolidated balance sheets at December 31 is as follows (dollars in thousands):

	2012			2011
Deferred tax asset – current	$	13,377		$	11,776
Deferred tax liability – noncurrent		(96,187	)		(109,597	)
Net deferred tax liability	$	(82,810	)	$	(97,821	)

Reconciliation of the unrecognized tax benefits

A reconciliation of the unrecognized tax benefits for the year 2012 is as follows (dollars in thousands):

Balance at January 1, 2012	$	1,439
Additions for tax positions related to the current year		48
Additions for tax positions related to prior years		201
Reductions for tax positions related to prior years		(443	)
Balance at December 31, 2012	$	1,245

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include BSL and its wholly-owned subsidiaries Brookdale Living Communities, Inc., Brookdale Senior Living Communities, Inc. (formerly known as Alterra Healthcare Corporation) ("Alterra"), Fortress CCRC Acquisition LLC, American Retirement Corporation ("ARC") and BKD HB Acquisition Sub, Inc. In December 2003, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 810 - Consolidation of Variable Interest Entities ("ASC 810").  ASC 810 addresses the identification of variable interest entities ("VIE") consolidation by business enterprises deemed to be primary beneficiaries in the VIE.  The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity's economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company performs this analysis on an ongoing basis. At December 31, 2012, the Company did not have any unconsolidated VIEs.  Investments in affiliated companies that the Company does not control, but has the ability to exercise significant influence over governance and operation, are accounted for by the equity method.

The results of facilities and companies acquired are included in the consolidated financial statements from the effective date of the respective acquisition. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of the financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Estimates are used for, but not limited to, revenue, goodwill and asset impairments, future service obligations, self-insurance reserves, performance-based compensation, the allowance for doubtful accounts, depreciation and amortization, income taxes and other contingencies.  Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from the original estimates.

Revenue Recognition

Revenue Recognition

Resident Fees

Resident fee revenue is recorded when services are rendered and consists of fees for basic housing, support services and fees associated with additional services such as personalized health and assisted living care. Residency agreements are generally for a term of 30 days to one year, with resident fees billed monthly in advance. Revenue for certain skilled nursing services and ancillary charges is recognized as services are provided and is billed monthly in arrears.

Entrance Fees

Certain of the Company's communities have residency agreements which require the resident to pay an upfront fee prior to occupying the community.  In addition, in connection with the Company's MyChoice program, new and existing residents are allowed to pay additional entrance fee amounts in return for a reduced monthly service fee.  The non-refundable portion of the entrance fee is recorded as deferred revenue and amortized over the estimated stay of the resident based on an actuarial valuation.  The refundable portion of a resident's entrance fee is generally refundable within a certain number of months or days following contract termination or upon the sale of the unit, or in certain agreements, upon the resale of a comparable unit or 12 months after the resident vacates the unit.  In such instances the refundable portion of the fee is not amortized and included in refundable entrance fees and deferred revenue.  All refundable amounts due to residents at any time in the future, including those recorded as deferred revenue, are classified as current liabilities.

Community Fees

Substantially all community fees received are non-refundable and are recorded initially as deferred revenue.  The deferred amounts, including both the deferred revenue and the related direct resident lease origination costs, are amortized over the estimated stay of the resident which is consistent with the implied contractual terms of the resident lease.

Management Fees

Management fee revenue is recorded as services are provided to the owners of the communities. Revenues are determined by an agreed upon percentage of gross revenues (as defined).  Incentives and penalties receivable or payable under management contracts containing these provisions (other than contractual termination fees) are recorded based on the amounts that would be due pursuant to the contractual arrangements if the contracts were terminated on the reporting date.

Reimbursed Costs Incurred on Behalf of Managed Communities

The Company manages certain communities under contracts which provide for payment to the Company of a monthly management fee plus reimbursement of certain operating expenses.  Where the Company is the primary

obligor with respect to any managed community operating expenses, the Company recognizes revenue when the goods have been delivered or the service has been rendered and the Company is due reimbursement.  This reimbursement revenue is included in "reimbursed costs incurred on behalf of managed communities" on the consolidated statements of operations.  The related costs are included in "costs incurred on behalf of managed communities" on the consolidated statements of operations.

Purchase Accounting

Purchase Accounting

In determining the allocation of the purchase price of companies and communities to net tangible and identified intangible assets acquired and liabilities assumed, the Company makes estimates of fair value using information obtained as a result of pre-acquisition due diligence, marketing, leasing activities and/or independent appraisals. The Company allocates the purchase price of communities based on their fair values in accordance with the provisions of ASC 805 - Business Combinations ("ASC 805").  The determination of fair value involves the use of significant judgment and estimation. The Company determines fair values as follows:

Current assets and current liabilities assumed are valued at carryover basis which approximates fair value.

Property, plant and equipment are valued utilizing discounted cash flow projections of future revenue and costs, and capitalization and discount rates using current market conditions.

The Company allocates a portion of the purchase price to the value of resident leases acquired based on the difference between the communities valued with existing in-place leases adjusted to market rental rates and the communities valued with current leases in place based on current contractual terms. Factors management considers in its analysis include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar resident leases. In estimating carrying costs, management includes estimates of lost rentals during the lease-up period and estimated costs to execute similar leases. The value of in-place leases is amortized to expense over the remaining initial term of the respective leases.

Leasehold operating intangibles are valued utilizing discounted cash flow projections that assume certain future revenues and costs over the remaining lease term. The value assigned to leasehold operating intangibles is amortized on a straight-line basis over the lease term.

Community purchase options are valued at the estimated value of the underlying community less the cost of the option payment discounted at current market rates.  Management contracts and other acquired contracts are valued at a multiple of management fees and operating income or are valued utilizing discounted cash flow projections that assume certain future revenues and costs over the remaining contract.  The assets are then amortized over the estimated term of the agreement.

Long-term debt assumed is recorded at fair market value based on the current market rates and collateral securing the indebtedness.  Any debt premium or discount recorded is amortized over the related debt maturity period.

Capital lease obligations are valued based on the present value of the minimum lease payments applying a discount rate equal to the Company's estimated incremental borrowing rate at the date of acquisition.

Deferred entrance fee revenue is valued at the estimated cost of providing services to residents over the terms of the current contracts to provide such services. Refundable entrance fees are valued at cost pursuant to the resident lease plus the resident's share of any appreciation of the community unit at the date of acquisition, if applicable.

A deferred tax liability is recognized at statutory rates for the difference between the book and tax bases of the acquired assets and liabilities.

The excess of the fair value of liabilities assumed and cash paid over the fair value of assets acquired is allocated to goodwill.

Contingent consideration is valued using a probability-weighted discounted cash flow model.

Deferred Costs

Deferred Costs

Deferred financing and lease costs are recorded in other assets and amortized on a straight-line basis, which approximates the effective yield method, over the term of the related debt or lease.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company has elected the "with-and-without approach" regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year.  Under this approach, the windfall tax benefits would be recognized in additional paid-in capital only if an incremental tax benefit is realized after considering all other tax benefits presently available.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Cash and cash equivalents, cash and escrow deposits-restricted, derivative financial instruments and marketable securities - restricted are reflected in the accompanying consolidated balance sheets at amounts considered by management to reasonably approximate fair value.  Management estimates the fair value of its long-term debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness.  The Company had outstanding debt with a carrying value of approximately $2.7 billion and $2.5 billion as of December 31, 2012 and 2011, respectively.  Fair value approximated carrying value in both years.

ASC 820 - Fair Value Measurement ("ASC 820") establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's cash and cash equivalents and cash and escrow deposits-restricted reported on its consolidated balance sheets approximate fair value due to the short maturity.

The Company's marketable securities - restricted include marketable securities that are recorded in the financial statements at fair value.  The fair value is based primarily on quoted market prices and is classified within Level 1 of the valuation hierarchy.  Changes in fair value are recorded, net of tax, as other comprehensive income and included as a component of stockholders' equity.

The Company's derivative assets and liabilities include interest rate swaps and caps that effectively convert a portion of the Company's variable rate debt to fixed rate debt.  The derivative positions are valued using models developed internally by the respective counterparty that use as their basis readily observable market parameters (such as forward yield curves) and are classified within Level 2 of the valuation hierarchy.

The Company considers its own credit risk as well as the credit risk of its counterparties when evaluating the fair value of its derivatives. Any adjustments resulting from credit risk are recorded as a change in fair value of derivatives and amortization in the current period statement of operations.

The Company's fair value of debt disclosure is determined based primarily on market interest rate assumptions of similar debt applied to future cash flows under the debt agreements and is classified within Level 2 of the valuation hierarchy.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company defines cash and cash equivalents as cash and investments with maturities of 90 days or less when purchased.

Cash and Escrow Deposits - Restricted

Cash and Escrow Deposits - Restricted

Cash and escrow deposits - restricted consist principally of deposits required by certain lenders and lessors pursuant to the applicable agreement and consist of the following (dollars in thousands):

	December 31,
	2012		2011
Current:
Real estate taxes	$	11,502	$	12,541
Tenant security deposits		2,015		4,374
Insurance reserves		12,892		12,904
Entrance fees		4,159		4,891
Replacement reserve and other		12,528		11,193
Subtotal		43,096		45,903
Long term:
Insurance reserves		5,188		5,412
Debt service and other deposits		57,579		47,568
Subtotal		62,767		52,980
Total	$	105,863	$	98,883

As of December 31, 2012 and 2011, ten communities located in Illinois are required to make escrow deposits under the Illinois Life Care Facility Act.  As of December 31, 2012 and 2011, required deposits were $19.6 million, all of which were made in the form of letters of credit.

Accounts Receivable

Accounts Receivable

Accounts receivable are reported net of an allowance for doubtful accounts, to represent the Company's estimate of the amount that ultimately will be realized in cash. The allowance for doubtful accounts was $15.3 million and $17.0 million as of December 31, 2012 and 2011, respectively.  The adequacy of the Company's allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance as necessary.

Billings for services under third-party payor programs are recorded net of estimated retroactive adjustments, if any, under reimbursement programs. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods or as final settlements are determined. Contractual or cost related adjustments from Medicare or Medicaid are accrued when assessed (without regard to when the assessment is paid or withheld).  Subsequent positive or negative adjustments to these accrued amounts are recorded in net revenues when known.

Property, Plant and Equipment and Leasehold Intangibles

Property, Plant and Equipment and Leasehold Intangibles

Property, plant and equipment and leasehold intangibles, which include amounts recorded under capital leases, are recorded at cost.  Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Category	Estimated Useful Life (in years)
Buildings and improvements	40
Furniture and equipment	3 – 7
Resident lease intangibles	1 – 4
Leasehold improvements	Shorter of the lease term or asset useful life
Leasehold operating intangibles	Shorter of the lease term or asset useful life
Assets under capital and financing leases	Shorter of the lease term or asset useful life

Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Renovations and improvements, which improve and/or extend the useful life of the asset, are capitalized and depreciated over their estimated useful life, or if the renovations or improvements are made with respect to communities subject to an operating lease, over the shorter of the estimated useful life of the renovations or improvements, or the term of the operating lease. Facility operating expense excludes depreciation and amortization directly attributable to the operation of the facility.

Long-lived assets (groups) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of long-lived assets held for use are assessed by a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset.  If estimated future undiscounted net cash flows are less than the carrying amount of the asset then the fair value of the asset is estimated.  The impairment expense is determined by comparing the estimated fair value of the asset to its carrying value, with any amount in excess of fair value recognized as an expense in the current period.  Undiscounted cash flow projections and estimates of fair value amounts are based on a number of assumptions such as revenue and expense growth rates, estimated holding periods and estimated capitalization rates and discount rates.

Marketable Securities - Restricted

Marketable Securities – Restricted

Marketable securities - restricted include amounts required to be held in reserve related to the Company's entrance fee CCRCs pursuant to various state insurance regulations and consist of mutual funds holding equities and fixed-income securities. The Company classifies its marketable securities - restricted as available-for-sale.  Accordingly, these investments are carried at their estimated fair value with the unrealized gain and losses, net of tax, reported in other comprehensive income.  Realized gains and losses from the available-for-sale securities are determined on the specific identification method and are included in interest income on the trade date.

A decline in the market value of any security below cost that is deemed to be other than temporary results in a reduction in the carrying amount of the security to fair market value. The impairment is charged to earnings and a new cost basis for the security is established. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

During the year ended December 31, 2012, the Company liquidated the marketable securities – restricted investments and recognized $0.8 million of realized gains from the transaction, included within interest income in the consolidated statements of operations.

The amortized cost basis of the marketable securities – restricted as of December 31, 2011 was $32.7 million.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The Company follows ASC 350 - Goodwill and Other Intangible Assets, and tests goodwill for impairment annually or whenever indicators of impairment arise.  The evaluation is based upon a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit's carrying value.  The fair values used in this evaluation are estimated based upon discounted future cash flow projections for the reporting

unit.  These cash flow projections are based upon a number of estimates and assumptions such as revenue and expense growth rates, capitalization rates and discount rates.

In 2012, the Company adopted the guidance within Accounting Standards Update 2011-08, Intangibles — Goodwill and Other ("ASU 2011-08"), which allows the Company to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  In 2012, the Company assessed qualitative factors and determined that it was not necessary to perform the two-step quantitative goodwill impairment test.

Acquired intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset.  Intangible assets with definite lives are amortized over their estimated useful lives and all intangible assets are reviewed for impairment if indicators of impairment arise.  The evaluation of impairment for definite-lived intangibles is based upon a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset.  If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then the fair value of the asset is estimated.  The impairment expense is determined by comparing the estimated fair value of the intangible asset to its carrying value, with any shortfall from fair value recognized as an expense in the current period.

Indefinite-lived intangible assets are not amortized but are tested for impairment annually during the fourth quarter or more frequently as required.  The impairment test consists of a comparison of the estimated fair value of the indefinite-lived intangible asset with its carrying value.  If the carrying amount exceeds its fair value, an impairment loss is recognized for that difference.

During 2012, 2011 and 2010, the Company performed its annual impairment review of goodwill and intangible assets and determined that no impairment charge was necessary.

Amortization of the Company's definite lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Category	Estimated Useful Life (in years)
Community purchase options	40
Management contracts and other	3 – 5

Stock-Based Compensation

Stock-Based Compensation

The Company follows ASC 718 - Stock Compensation ("ASC 718") in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee's requisite service period.  Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred.

Certain of the Company's employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company's determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Additionally, the Company must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Convertible Debt Instruments

Convertible Debt Instruments

Convertible debt instruments are accounted for under FASB ASC Topic 470-20, Debt – Debt with Conversion and Other Options.  This guidance requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion, including partial cash settlement, to separately account for the liability (debt) and equity (conversion option) components of the instruments in a manner that reflects the issuer's estimated non-convertible debt borrowing rate.

Derivative Financial Instruments

Derivative Financial Instruments

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has entered into certain interest rate protection and swap agreements to effectively cap or convert floating rate debt to a fixed rate basis. All derivative instruments are recognized as either assets or liabilities in the consolidated balance sheets at fair value. The change in mark-to-market of the value of the derivative is recorded as an adjustment to income.

Derivative contracts are not entered into for trading or speculative purposes. Furthermore, the Company has a policy of only entering into contracts with major financial institutions based upon their credit rating and other factors.  Under certain circumstances, the Company may be required to replace a counterparty in the event that the counterparty does not maintain a specified credit rating.

Obligation to Provide Future Services

Obligation to Provide Future Services

Annually, the Company calculates the present value of the net cost of future services and the use of communities to be provided to current residents of certain of its CCRCs and compares that amount with the balance of non-refundable deferred revenue from entrance fees received. If the present value of the net cost of future services and the use of communities exceeds the related anticipated revenues including non-refundable deferred revenue from entrance fees, a liability is recorded (obligation to provide future services and use of communities) with a corresponding charge to income.

Self-Insurance Liability Accruals

Self-Insurance Liability Accruals

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim.  As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts.  In addition, the Company maintains a large-deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Self-Insurance Liability Accruals

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim.  As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts.  In addition, the Company maintains a large-deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

Investment in Unconsolidated Ventures

Investment in Unconsolidated Ventures

In accordance with ASC 810, the general partner or managing member of a venture consolidates the venture unless the limited partners or other members have either (1) the substantive ability to dissolve the venture or otherwise remove the general partner or managing member without cause or (2) substantive participating rights in significant decisions of the venture, including authorizing operating and capital decisions of the venture, including budgets, in the ordinary course of business. The Company has reviewed all ventures where it is the general partner or managing member and has determined that in all cases the limited partners or other members have substantive participating rights such as those set forth above and, therefore, no ventures are consolidated.

The Company's reported share of earnings is adjusted for the impact, if any, of basis differences between its carrying value of the equity investment and its share of the venture's underlying assets. The Company generally does not have future requirements to contribute additional capital over and above the original capital commitments, and therefore, the Company discontinues applying the equity method of accounting when its investment is reduced

to zero barring an expectation of an imminent return to profitability. If the venture subsequently reports net income, the equity method of accounting is resumed only after the Company's share of that net income equals the share of net losses not recognized during the period the equity method was suspended.

When the majority equity partner in one of the Company's ventures sells its equity interest to a third party, the venture frequently refinances its senior debt and distributes the net proceeds to the equity partners. All distributions received by the Company are first recorded as a reduction of the Company's investment. Next, the Company records a liability for any contractual or implied future financial support to the venture including obligations in its role as a general partner. Any remaining distributions are recorded as the Company's share of earnings and return on investment in unconsolidated ventures in the consolidated statements of operations.

The Company evaluates realization of its investment in ventures accounted for using the equity method if circumstances indicate that the Company's investment is other than temporarily impaired.

Community Leases

Community Leases

The Company, as lessee, makes a determination with respect to each of the community leases whether each should be accounted for as an operating lease or capital lease. The classification criteria is based on estimates regarding the fair value of the leased community, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements. In a business combination, the Company assumes the lease classification previously determined by the prior lessee absent a modification, as determined by ASC 840 – Leases ("ASC 840"), in the assumed lease agreement. Payments made under operating leases are accounted for in the Company's consolidated statements of operations as lease expense for actual rent paid plus or minus a straight-line adjustment for estimated minimum lease escalators and amortization of deferred gains in situations where sale-leaseback transactions have occurred. For communities under capital lease and lease financing obligation arrangements, a liability is established on the Company's consolidated balance sheets representing the present value of the future minimum lease payments and a corresponding long-term asset is recorded in property, plant and equipment and leasehold intangibles in the consolidated balance sheets. The asset is depreciated over the remaining lease term unless there is a bargain purchase option in which case the asset is depreciated over the useful life. Leasehold improvements purchased during the term of the lease are amortized over the shorter of their economic life or the lease term.

All of the Company's leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, all rent-free or rent holiday periods are recognized in lease expense on a straight-line basis over the lease term, including the rent holiday period.

Sale-leaseback accounting is applied to transactions in which an owned community is sold and leased back from the buyer. Under sale-leaseback accounting, the Company removes the community and related liabilities from the consolidated balance sheets. Gain on the sale is deferred and recognized as a reduction of facility lease expense for operating leases and a reduction of interest expense for capital leases.

For leases in which the Company is involved with the construction of the building, the Company accounts for the lease during the construction period under the provisions of ASC 840.  If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore is deemed the owner of the project for accounting purposes, it records an asset and related financing obligation for the amount of total project costs related to construction in progress.  Once construction is complete, the Company considers the requirements under ASC 840-40 – Leases – Sale-Leaseback Transactions.  If the arrangement does not qualify for sale-leaseback accounting, the Company continues to amortize the financing obligation and depreciate the building over the lease term.

Treasury Stock

Treasury Stock

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders' equity.

New Accounting Pronouncements

New Accounting Pronouncements

In June 2011, the FASB issued Accounting Standards Update ("ASU") 2011-05, Presentation of Comprehensive Income ("ASU 2011-05").  The guidance in ASU 2011-05 is effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires the components of net income and other comprehensive income and total comprehensive income for each interim period. The Company adopted the provisions of this update as of January 1, 2012 and incorporated the provisions of this update to its consolidated financial statements upon adoption. The adoption of this update did not have an impact on the Company's financial condition or results of operations.

In September 2011, the FASB issued ASU 2011-08, Intangibles — Goodwill and Other ("ASU 2011-08").  ASU 2011-08 amends current guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.  Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  ASU 2011-08 applies to all companies that have goodwill reported in their financial statements.  The provisions of ASU 2011-08 are effective for the Company in 2012.  The adoption of this update did not have an impact on the Company's financial condition or results of operations.

In July 2012, the FASB issued ASU 2012-02, Intangibles — Goodwill and Other ("ASU 2012-02").  ASU 2012-02 amends current guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the annual quantitative indefinite-lived intangible asset impairment test.  Under this amendment, an entity would not be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.  ASU 2012-02 applies to all companies that have indefinite-lived intangible assets reported in their financial statements.  The provisions of ASU 2012-02 are effective for annual reporting periods beginning after September 15, 2012.  The Company has not yet adopted this pronouncement, but does not believe it will have an impact on the Company's consolidated financial statements.

Reclassifications

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's consolidated financial position or results of operations.

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Other Assets (Tables)

12 Months Ended

Dec. 31, 2012

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other assets

Other assets consist of the following components as of December 31, (dollars in thousands):

	2012		2011
Notes receivable	$	34,968	$	32,844
Deferred costs, net		24,517		26,032
Lease security deposits		38,544		36,748
Other		15,286		14,310
Total	$	113,315	$	109,934

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Schedule of segment reporting infomration

The following table sets forth selected segment financial and operating data (dollars in thousands):

	For the Years Ended December 31,
	2012		2011		2010
Revenue(1):
Retirement Centers	$	503,902	$	473,842	$	463,260
Assisted Living		1,013,337		964,585		945,469
CCRCs - Rental		385,479		364,095		339,920
CCRCs - Entry Fee		285,701		282,020		267,441
ISC		224,517		205,780		189,968
Management Services(2)		355,802		166,161		72,862
	$	2,768,738	$	2,456,483	$	2,278,920
Segment Operating Income(3):
Retirement Centers	$	205,585	$	198,439	$	196,647
Assisted Living		361,184		339,928		331,220
CCRCs - Rental		106,063		116,849		108,929
CCRCs - Entry Fee		61,405		68,550		64,470
ISC		47,780		57,985		66,862
Management Services		30,786		13,595		5,591
		812,803		795,346		773,719

General and administrative (including non-cash stock-based compensation expense)	178,829	148,327	131,709
Facility lease expense	284,025	274,858	270,905
Depreciation and amortization:
Retirement Centers	61,060	60,275	60,869
Assisted Living	81,801	82,843	93,066
CCRCs - Rental	31,205	30,776	30,655
CCRCs - Entry Fee	52,840	54,794	56,006
ISC	2,220	1,699	1,169

Corporate and Management Services		23,155			38,119			50,576
Gain on sale of communities, net		—			—			(3,298	)
Asset impairment		27,677			16,892			13,075
Loss (gain) on acquisition		636			(1,982	)		―
(Gain) loss on facility lease termination		(11,584	)		—			4,608
Income from operations	$	80,939		$	88,745		$	64,379
Total interest income:
Retirement Centers	$	184		$	311		$	19
Assisted Living		9			18			17
CCRCs - Rental		28			35			29
CCRCs - Entry Fee		3,378			2,263			941
ISC		—			—			—
Corporate and Management Services		413			911			1,232
	$	4,012		$	3,538		$	2,238
Total interest expense:
Retirement Centers	$	29,025		$	28,444		$	33,298
Assisted Living		57,634			58,453			65,086
CCRCs - Rental		17,336			15,324			15,433
CCRCs - Entry Fee		13,792			20,316			23,867
ISC		—			—			—
Corporate and Management Services		28,996			19,641			8,038
	$	146,783		$	142,178		$	145,722
Total expenditures for property, plant and equipment, and leasehold intangibles:
Retirement Centers	$	58,876		$	45,891		$	22,760
Assisted Living		68,675			43,955			24,687
CCRCs - Rental		21,916			20,615			12,077
CCRCs - Entry Fee		24,890			16,255			16,314
ISC		6,037			2,715			4,260
Corporate and Management Services		28,018			30,700			13,583
	$	208,412		$	160,131		$	93,681
	As of December 31,
		2012			2011			2010
Total assets:
Retirement Centers	$	1,256,497		$	1,047,388		$	1,080,410
Assisted Living		1,438,934			1,451,612			1,448,029
CCRCs - Rental		534,220			518,993			529,428
CCRCs - Entry Fee		951,584			1,021,938			1,096,714
ISC		90,357			78,137			67,845
Corporate and Management Services		394,386			347,993			308,044
	$	4,665,978		$	4,466,061		$	4,530,470

(1) All revenue is earned from external third parties in the United States.

(2) Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities.

(3) Segment operating income is defined as segment revenues less segment operating expenses (excluding depreciation and amortization).

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Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2012

Quarterly Results of Operations (Unaudited) [Abstract]

Quarterly Results of Operations (Unaudited)

23.Quarterly Results of Operations (Unaudited)

The following is a summary of quarterly results of operations for each of the fiscal quarters in 2012 and 2011 (in thousands, except per share amounts):

	For the Quarters Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
Revenues	$	682,708		$	690,473		$	696,145		$	699,412
Income from operations(1)		26,523			18,528			24,269			11,619
Loss before income taxes		(9,614	)		(18,133	)		(11,469	)		(25,732	)
Net loss		(10,544	)		(19,015	)		(12,216	)		(24,692	)
Weighted average basic and diluted loss per share	$	(0.09	)	$	(0.16	)	$	(0.10	)	$	(0.20	)
Weighted average shares used in computing basic and diluted loss per share		121,145			121,708			122,493			122,608

	For the Quarters Ended
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011
Revenues	$	586,557		$	582,936		$	615,365		$	671,625
Income from operations(1)		11,637			28,500			29,142			19,466
Loss before income taxes		(23,822	)		(21,594	)		(6,886	)		(14,968	)
Net loss		(12,526	)		(34,181	)		(7,257	)		(15,086	)
Weighted average basic and diluted loss per share	$	(0.10	)	$	(0.28	)	$	(0.06	)	$	(0.12	)
Weighted average shares used in computing basic and diluted loss per share		120,792			121,280			121,616			120,951

(1) Fourth quarter 2012 and 2011 results include non-cash impairment charges of $19.3 million and $2.0 million, respectively. Second quarter 2012 results include non-cash impairment charges of $7.2 million. First quarter 2012 and 2011 results include non-cash impairment charges of $1.1 million and $14.8 million, respectively.

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Retirement Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Retirement Plans [Abstract]
Matching contributions equal to employee's contributions	25.00%	25.00%	12.50%
Maximum contributed compensation	4.00%	4.00%	4.00%
Additional matching contribution	12.50%
Expense related to retirement savings plan	$ 4.8	$ 3.1	$ 2.3

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30, 2011		Jun. 30, 2011		Mar. 31, 2011		Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Segment Information [Abstract]
Number of reportable segments																	6		4
Segment Reporting Information [Line Items]
Revenue	$ 699,412		$ 696,145		$ 690,473		$ 682,708		$ 671,625		$ 615,365		$ 582,936		$ 586,557		$ 2,768,738		$ 2,456,483		$ 2,278,920
Segment operating income																	812,803		795,346		773,719
General and administrative (including non-cash stock-based compensation expense)																	178,829		148,327		131,709
Facility lease expense																	284,025		274,858		270,905
Depreciation and amortization																	252,281		268,506		292,341
Gain on sale of communities, net																	0		0		(3,298)
Asset impairment																	27,677		16,892		13,075
Loss (gain) on acquisition																	(636)		1,982		0
(Gain) loss on facility lease termination																	(11,584)		0		4,608
Income from operations	11,619	[1]	24,269	[1]	18,528	[1]	26,523	[1]	19,466	[1]	29,142	[1]	28,500	[1]	11,637	[1]	80,939		88,745		64,379
Total interest income																	4,012		3,538		2,238
Total interest expense																	146,783		142,178		145,722
Total expenditures for property, plan and equipment, and leasehold improvements																	208,412		160,131		93,681
Assets by segment	4,665,978								4,466,061								4,665,978		4,466,061		4,530,470
Retirement Centers [Member]
Segment Reporting Information [Line Items]
Revenue																	503,902	[2]	473,842	[2]	463,260	[2]
Segment operating income																	205,585	[3]	198,439	[3]	196,647	[3]
Depreciation and amortization																	61,060		60,275		60,869
Total interest income																	184		311		19
Total interest expense																	29,025		28,444		33,298
Total expenditures for property, plan and equipment, and leasehold improvements																	58,876		45,891		22,760
Assets by segment	1,256,497								1,047,388								1,256,497		1,047,388		1,080,410
Assisted Living [Member]
Segment Reporting Information [Line Items]
Revenue																	1,013,337	[2]	964,585	[2]	945,469	[2]
Segment operating income																	361,184	[3]	339,928	[3]	331,220	[3]
Depreciation and amortization																	81,801		82,843		93,066
Total interest income																	9		18		17
Total interest expense																	57,634		58,453		65,086
Total expenditures for property, plan and equipment, and leasehold improvements																	68,675		43,955		24,687
Assets by segment	1,438,934								1,451,612								1,438,934		1,451,612		1,448,029
CCRCs - Rental [Member]
Segment Reporting Information [Line Items]
Revenue																	385,479	[2]	364,095	[2]	339,920	[2]
Segment operating income																	106,063	[3]	116,849	[3]	108,929	[3]
Depreciation and amortization																	31,205		30,776		30,655
Total interest income																	28		35		29
Total interest expense																	17,336		15,324		15,433
Total expenditures for property, plan and equipment, and leasehold improvements																	21,916		20,615		12,077
Assets by segment	534,220								518,993								534,220		518,993		529,428
CCRCs - Entry Fee [Member]
Segment Reporting Information [Line Items]
Revenue																	285,701	[2]	282,020	[2]	267,441	[2]
Segment operating income																	61,405	[3]	68,550	[3]	64,470	[3]
Depreciation and amortization																	52,840		54,794		56,006
Total interest income																	3,378		2,263		941
Total interest expense																	13,792		20,316		23,867
Total expenditures for property, plan and equipment, and leasehold improvements																	24,890		16,255		16,314
Assets by segment	951,584								1,021,938								951,584		1,021,938		1,096,714
ISC [Member]
Segment Reporting Information [Line Items]
Revenue																	224,517	[2]	205,780	[2]	189,968	[2]
Segment operating income																	47,780	[3]	57,985	[3]	66,862	[3]
Depreciation and amortization																	2,220		1,699		1,169
Total interest income																	0		0		0
Total interest expense																	0		0		0
Total expenditures for property, plan and equipment, and leasehold improvements																	6,037		2,715		4,260
Assets by segment	90,357								78,137								90,357		78,137		67,845
Management Services [Member]
Segment Reporting Information [Line Items]
Revenue																	355,802	[2],[4]	166,161	[2],[4]	72,862	[2],[4]
Segment operating income																	30,786	[3]	13,595	[3]	5,591	[3]
Depreciation and amortization																	23,155		38,119		50,576
Total interest income																	413		911		1,232
Total interest expense																	28,996		19,641		8,038
Total expenditures for property, plan and equipment, and leasehold improvements																	28,018		30,700		13,583
Assets by segment	$ 394,386								$ 347,993								$ 394,386		$ 347,993		$ 308,044

[1] <div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td style="width: 20pt; font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt; vertical-align: top; align: right;">(1)</td><td style="width: auto; font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt; vertical-align: top;">Fourth quarter 2012 and 2011 results include non-cash impairment charges of $19.3 million and $2.0 million, respectively. Second quarter 2012 results include non-cash impairment charges of $7.2 million. First quarter 2012 and 2011 results include non-cash impairment charges of $1.1 million and $14.8 million, respectively.</td></tr></table></div>

[2] All revenue is earned from external third parties in the United States.

[3] Segment operating income is defined as segment revenues less segment operating expenses (excluding depreciation and amortization).

[4] Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities.

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Self-Insurance (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Self-Insurance [Abstract]
Self-insured portions of programs accrued, total	$ 77.7	$ 72.8
Accrued self-insured portions of programs , noncurrent	40.0	37.7
Secured self-insured retention risk under workers' compensation, general liability, and professional liability programs with cash	16.1	17.3
Letters of credit associated to the secured self-insured retention risk	$ 40.7	$ 40.7

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Facility Operating Leases (Tables)

12 Months Ended

Dec. 31, 2012

Facility Operating Leases [Abstract]

Summary of facility operating leases

A summary of facility lease expense and the impact of straight-line adjustment and amortization of deferred gains are as follows (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Cash basis payment	$	281,729		$	270,623		$	264,727
Straight-line expense		6,668			8,608			10,521
Amortization of deferred gain		(4,372	)		(4,373	)		(4,343	)
Facility lease expense	$	284,025		$	274,858		$	270,905

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Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Federal [Abstract]
Current	$ (193,000)	$ (631,000)	$ (626,000)
Deferred	(347,000)	383,000	(33,865,000)
Total Federal Tax Expense	(540,000)	(248,000)	(34,491,000)
State [Abstract]
Current	2,059,000	2,028,000	2,429,000
Deferred (included in Federal above)	0	0	0
Total State Tax Expense	2,059,000	2,028,000	2,429,000
Total	1,519,000	1,780,000	(32,062,000)
U.S. Federal statutory rate	35.00%
Tax benefit at U.S. statutory rate	(22,945,000)	(23,545,000)	(28,682,000)
State taxes, net of federal income tax	(1,258,000)	(1,373,000)	(1,699,000)
Unrecognized tax benefits	(193,000)	(630,000)	(626,000)
Other, net	(122,000)	(59,000)	124,000
Credits	0	(4,803,000)	(3,354,000)
Valuation allowance	24,138,000	30,489,000	137,000
Officer's compensation	922,000	760,000	2,197,000
Meals and entertainment	486,000	430,000	383,000
Gain on acquisition	266,000	(791,000)	0
Return to provision	225,000	1,302,000	(679,000)
Stock compensation	0	0	137,000
Deferred income tax assets [Abstract]
Operating loss carryforwards	169,792,000	174,433,000
Capital lease obligations	52,720,000	62,136,000
Prepaid revenue	55,386,000	51,726,000
Accrued expenses	50,602,000	40,422,000
Deferred lease liability	46,541,000	48,916,000
Tax credits	20,551,000	20,158,000
Deferred gain on sale leaseback	10,127,000	11,581,000
Fair value of interest rate swaps	522,000	152,000
Total gross deferred income tax asset	406,241,000	409,524,000
Valuation allowance	(65,269,000)	(40,820,000)
Net deferred income tax assets	340,972,000	368,704,000
Deferred income tax liabilities [Abstract]
Property, plant and equipment	415,354,000	454,985,000
Other	8,428,000	11,540,000
Total gross deferred income tax liability	(423,782,000)	(466,525,000)
Net deferred tax liability	(82,810,000)	(97,821,000)
Deferred tax assets (liabilities), Net [Abstract]
Deferred tax asset - current	13,377,000	11,776,000
Deferred tax liability - noncurrent	(96,187,000)	(109,597,000)
Net deferred tax liability	(82,810,000)	(97,821,000)
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards, valuation allowance	49,600,000
Tax Credit Carryforward [Line Items]
Tax credits, valuation allowance	8,500,000	8,100,000
Net operating loss, limitation of utilization	92,000,000
Unrecognized tax benefits [Roll Forward]
Balance at beginning of period	1,439,000
Additions for tax positions related to the current year	48,000
Additions for tax positions related to prior years	201,000
Reductions for tax positions related to prior years	(443,000)
Balance at end of period	1,245,000	1,439,000
Total interest and penalties reserved	500,000
Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carry-forwards	454,600,000	461,500,000
Operating loss carry forwards, valuation allowance	26,589,000	22,940,000
Tax Credit Carryforward [Line Items]
Tax credits, valuation allowance	400,000	6,408,000
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards, valuation allowance	7,200,000	9,700,000
Restricted Stock [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carry-forwards	$ 9,000,000	$ 26,900,000

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Share Repurchase Program

12 Months Ended

Dec. 31, 2012

Share Repurchase Program [Abstract]

Share Repurchase Program

17.Share Repurchase Program

On August 11, 2011, the Company's board of directors approved a share repurchase program that authorizes the Company to purchase up to $100.0 million in the aggregate of the Company's common stock.  Purchases may be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of these methods, in accordance with applicable insider trading and other securities laws and regulations.  The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability.  The repurchase program does not obligate the Company to acquire any particular amount of common stock and the program may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares.

Pursuant to this authorization, during the year ended December 31, 2011, the Company purchased 1,217,100 shares at a cost of approximately $17.6 million.  No shares were purchased pursuant to this authorization during the year ended December 31, 2012. As of December 30, 2012, approximately $82.4 million remains available under this share repurchase authorization.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) [Abstract]
Net loss	$ (66,467)	$ (69,050)	$ (49,886)
Other comprehensive income (loss)
Unrealized gain (loss) on marketable securities - restricted	1,846	(998)	0
Reclassification of realized gain on marketable securities - restricted into earnings	(848)	0	0
Reclassification of net gains on derivatives into earnings	(79)	134	505
Amortization of payments from settlement of forward interest rate swaps	179	376	376
Other	(83)	(200)	(343)
Total other comprehensive income (loss), net of tax	1,015	(688)	538
Comprehensive loss	$ (65,452)	$ (69,738)	$ (49,348)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash Flows from Operating Activities
Net loss	$ (66,467)	$ (69,050)	$ (49,886)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on extinguishment of debt	221	18,863	1,557
Depreciation and amortization	270,362	281,933	301,304
Asset impairment	27,677	16,892	13,075
Equity in loss (earnings) of unconsolidated ventures	3,488	(1,432)	(168)
Distributions from unconsolidated ventures from cumulative share of net earnings	1,507	1,282	775
Amortization of deferred gain	(4,372)	(4,373)	(4,343)
Amortization of entrance fees	(25,362)	(23,966)	(22,782)
Proceeds from deferred entrance fee revenue	40,105	38,378	37,486
Deferred income tax provision (benefit)	(525)	383	(33,925)
Change in deferred lease liability	6,668	8,608	10,521
Change in fair value of derivatives and amortization	364	3,878	4,118
Loss (gain) on sale of assets and unconsolidated ventures	332	(1,180)	(2,509)
Loss (gain) on acquisition	636	(1,982)	0
Noncash gain on facility lease termination	(11,584)	0	0
Lessor cash reimbursement for tenant incentive	0	1,251	0
Change in future service obligation	2,188	0	(1,064)
Non-cash stock-based compensation	25,520	19,856	20,759
Other	(487)	0	0
Changes in operating assets and liabilities:
Accounts receivable, net	(3,415)	(5,367)	(7,956)
Prepaid expenses and other assets, net	8,687	(22,934)	(22,050)
Accounts payable and accrued expenses	4,854	13,721	(11,775)
Tenant refundable fees and security deposits	(1,547)	(2,186)	(3,158)
Deferred revenue	12,119	(4,148)	(1,735)
Net cash provided by operating activities	290,969	268,427	228,244
Cash Flows from Investing Activities
Increase in lease security deposits and lease acquisition deposits, net	(7,999)	(3,088)	(2,175)
(Increase) decrease in cash and escrow deposits - restricted	(4,810)	56,176	4,705
Purchase of marketable securities - restricted	(1,557)	(32,724)	0
Sale of marketable securities - restricted	35,124	1,431	0
Additions to property, plant and equipment, and leasehold intangibles, net of related payables	(208,412)	(160,131)	(93,681)
Acquisition of assets, net of related payables and cash received	(272,523)	(88,682)	(57,948)
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired	0	5,516	0
Payments on notes receivable, net	131	1,484	1,079
Investment in unconsolidated ventures	(5,368)	(13,990)	(660)
Distributions received from unconsolidated ventures	350	206	97
Proceeds from sale of unconsolidated venture	0	0	675
Proceeds from sale of assets, net	9,243	30,817	12,079
Other	487	(914)	(676)
Net cash used in investing activities	(455,334)	(203,899)	(136,505)
Cash Flows from Financing Activities
Proceeds from debt	372,291	482,669	414,795
Repayment of debt and capital lease obligations	(191,835)	(898,565)	(476,527)
Proceeds from line of credit	375,000	225,000	60,000
Repayment of line of credit	(360,000)	(160,000)	(60,000)
Proceeds from issuance of convertible notes, net	0	308,212	0
Issuance of warrants	0	45,066	0
Purchase of bond hedge	0	(77,007)	0
Payment of financing costs, net of related payables	(5,563)	(8,712)	(8,541)
Other	(342)	(1,287)	(763)
Refundable entrance fees:
Proceeds from refundable entrance fees	42,600	29,611	36,420
Refunds of entrance fees	(27,356)	(25,754)	(21,060)
Cash portion of loss on extinguishment of debt	(118)	(17,040)	(179)
Recouponing and payment of swap termination	(1,908)	(99)	(20,427)
Purchase of treasury stock	0	(17,613)	0
Net cash provided by (used in) financing activities	202,769	(115,519)	(76,282)
Net increase (decrease) in cash and cash equivalents	38,404	(50,991)	15,457
Cash and cash equivalents at beginning of year	30,836	81,827	66,370
Cash and cash equivalents at end of year	$ 69,240	$ 30,836	$ 81,827

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Earnings Per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share

3.Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing net income by the weighted average number of shares of common stock outstanding.  Diluted EPS includes the components of basic EPS and also gives effect to dilutive common stock equivalents.  For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding.  Under the treasury stock method, diluted EPS reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock.  Potentially dilutive common stock equivalents include unvested restricted stock, restricted stock units and convertible debt instruments and warrants (Note 9).

During fiscal 2012, 2011 and 2010, the Company reported a consolidated net loss.  As a result of the net loss, unvested restricted stock, restricted stock unit awards and convertible debt instruments and warrants were antidilutive for the year and were not included in the computation of diluted weighted average shares.  The weighted average unrestricted restricted stock grants and restricted stock units excluded from the calculations of diluted net

loss per share were 1.2 million, 1.3 million and 1.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

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Quarterly Results of Operations (Unaudited) (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30, 2011		Jun. 30, 2011		Mar. 31, 2011		Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Quarterly Results of Operations (Unaudited) [Abstract]
Revenue	$ 699,412,000		$ 696,145,000		$ 690,473,000		$ 682,708,000		$ 671,625,000		$ 615,365,000		$ 582,936,000		$ 586,557,000		$ 2,768,738,000	$ 2,456,483,000	$ 2,278,920,000
Income from operations	11,619,000	[1]	24,269,000	[1]	18,528,000	[1]	26,523,000	[1]	19,466,000	[1]	29,142,000	[1]	28,500,000	[1]	11,637,000	[1]	80,939,000	88,745,000	64,379,000
Loss before income taxes	(25,732,000)		(11,469,000)		(18,133,000)		(9,614,000)		(14,968,000)		(6,886,000)		(21,594,000)		(23,822,000)		(64,948,000)	(67,270,000)	(81,948,000)
Net loss	(24,692,000)		(12,216,000)		(19,015,000)		(10,544,000)		(15,086,000)		(7,257,000)		(34,181,000)		(12,526,000)		(66,467,000)	(69,050,000)	(49,886,000)
Weighted average basic and diluted loss per share (in dollars per share)	$ (0.2)		$ (0.1)		$ (0.16)		$ (0.09)		$ (0.12)		$ (0.06)		$ (0.28)		$ (0.1)		$ (0.54)	$ (0.57)	$ (0.42)
Weighted average shares used in computing basic and diluted loss per share (in shares)	122,608		122,493		121,708		121,145		120,951		121,616		121,280		120,792
Non-cash impairment charges included in quarterly results	$ 19,300,000				$ 7,200,000		$ 1,100,000		$ 2,000,000						$ 14,800,000

[1] <div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td style="width: 20pt; font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt; vertical-align: top; align: right;">(1)</td><td style="width: auto; font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt; vertical-align: top;">Fourth quarter 2012 and 2011 results include non-cash impairment charges of $19.3 million and $2.0 million, respectively. Second quarter 2012 results include non-cash impairment charges of $7.2 million. First quarter 2012 and 2011 results include non-cash impairment charges of $1.1 million and $14.8 million, respectively.</td></tr></table></div>

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Description of Business and Organization

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Organization

1.Description of Business and Organization

Brookdale Senior Living Inc. ("Brookdale", "BSL" or the "Company") is a leading owner and operator of senior living communities throughout the United States.  The Company provides an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest quality service, care and living accommodations for residents.  The Company owns, leases and operates retirement centers, assisted living and dementia-care communities and continuing care retirement centers ("CCRCs").  Through its Innovative Senior Care ("ISC") program, the Company also offers a range of outpatient therapy, home health and hospice services, primarily to residents of its communities.

The Company was formed as a Delaware corporation on June 28, 2005. Under its Certificate of Incorporation, the Company was initially authorized to issue up to 5,000,000 shares of common stock and 5,000,000 shares of preferred stock. On September 30, 2005, the Company's Certificate of Incorporation was amended and restated to authorize up to 200,000,000 shares of common stock and 50,000,000 shares of preferred stock.

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Debt (Tables)

12 Months Ended

Dec. 31, 2012

Debt [Abstract]

Schedule of debt

Long-term debt, capital leases and financing obligations consist of the following (dollars in thousands):

	December 31,
	2012		2011
Mortgage notes payable due 2013 through 2022; weighted average interest rate of 4.62% in 2012, net of debt discount of $0.3 million (weighted average interest rate of 5.04% in 2011)	$	1,701,515	$	1,470,462
$150,000 Series A notes payable, secured by five communities and by a $3.0 million cash collateral deposit, bearing interest at LIBOR plus 0.88%, payable in monthly installments of interest only until August 2011 and payable in monthly installments of principal and interest through maturity in August 2013		144,384		148,601

	December 31,
	2012		2011
Discount mortgage note payable due June 2013, weighted average interest rate of 2.56% in 2012, net of debt discount of $1.0 million and $3.0 million in 2012 and 2011, respectively (weighted average interest rate of 2.52% in 2011)		80,533		79,911
Variable rate tax-exempt bonds credit-enhanced by Fannie Mae (weighted average interest rates of 1.65% at December 31, 2012 and 2011), due 2032, payable in monthly installments of principal and interest through maturity, secured by the underlying assets of the portfolio		99,847		100,423
Capital and financing lease obligations payable through 2026; weighted average interest rate of 8.16% in 2012 (weighted average interest rate of 8.61% in 2011)		319,745		348,195
Convertible notes payable in aggregate principal amount of $316.3 million, less debt discount of $65.0 million and $74.4 million in 2012 and 2011, respectively, interest at 2.75% per annum, due June 2018		251,312		241,897
Construction financing due 2017 through 2024; weighted average interest rate of 8.0% in 2012 (weighted average interest rate of 7.0% in 2011)		1,280		6,591
Notes payable issued to finance insurance premiums, weighted average interest rate of 2.81% in 2012 (weighted average interest rate of 3.11% in 2011), due 2013		753		2,545
Total debt		2,599,369		2,398,625
Less current portion		509,543		47,654
Total long-term debt	$	2,089,826	$	2,350,971

Annual aggregate scheduled maturities of long-term debt obligations outstanding

The annual aggregate scheduled maturities of long-term debt obligations outstanding as of December 31, 2012 are as follows (dollars in thousands):

Year Ending December 31,	Long-term Debt			Capital and Financing Lease Obligations			Total Debt
2013	$	490,666		$	55,828		$	546,494
2014		170,705			55,065			225,770
2015		54,442			53,401			107,843
2016		50,643			46,957			97,600
2017		341,983			60,494			402,477
Thereafter		1,237,452			211,405			1,448,857
Total obligations		2,345,891			483,150			2,829,041
Less amount representing debt discount		(66,267	)		—			(66,267	)
Less amount representing interest (8.16%)		—			(163,405	)		(163,405	)
Total	$	2,279,624		$	319,745		$	2,599,369

Interest expense associated with the convertible notes

The interest expense associated with the Notes (excluding amortization of the associated deferred financing costs) was as follows (dollars in thousands):

	For the Years Ended December 31,
	2012		2011
Coupon interest	$	8,697	$	4,759
Amortization of discount		9,415		4,456
Interest expense related to convertible notes	$	18,112	$	9,215

Summary of swap and cap instruments

The following table summarizes the Company's swap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	27,373
Highest possible notional	$	27,373
Lowest interest rate		5.49	%
Highest interest rate		5.49	%
Average fixed rate		5.49	%
Earliest maturity date		2016
Latest maturity date		2016
Weighted average original maturity	5.0 years
Estimated liability fair value (included in other liabilities at December 31, 2012)	$	(1,833	)
Estimated liability fair value (included in other liabilities at December 31, 2011)	$	(2,809	)

The following table summarizes the Company's cap instruments at December 31, 2012 (dollars in thousands):

Current notional balance	$	589,568
Highest possible notional	$	589,568
Lowest interest cap rate		5.00	%
Highest interest cap rate		6.06	%
Average fixed cap rate		5.43	%
Earliest maturity date		2013
Latest maturity date		2018
Weighted average original maturity	3.5 years
Estimated asset fair value (included in other assets at December 31, 2012)	$	495
Estimated asset fair value (included in other assets at December 31, 2011)	$	—

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

20.Commitments and Contingencies

The Company has three operating lease agreements for 10,655, 74,593 and 117,609 square feet (unaudited) of corporate office space that extend through 2015, 2019 and 2024, respectively. The leases require the payment of base rent which escalates annually, plus operating expenses (as defined).  The Company incurred facility lease expense of $4.1 million, $3.7 million and $2.9 million for the years ended December 31, 2012, 2011 and 2010, respectively, under the corporate office leases.

The aggregate amounts of all future minimum operating lease payments, including community and office leases, as of December 31, 2012, are as follows (dollars in thousands):

Year Ending December 31,	Operating Leases
2013	$	277,684
2014		268,164
2015		259,624
2016		256,463
2017		232,445
Thereafter		684,536
Total	$	1,978,916

The Company has employment or letter agreements with certain officers of the Company that grant these employees the right to receive their base salary and continuation of certain benefits, for a defined period of time, in the event of certain terminations of the officers' employment, as described in those agreements.

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Cumulative Effect Adjustment

12 Months Ended

Dec. 31, 2012

Cumulative Effect Adjustment [Abstract]

Cumulative Effect Adjustment [Text Block]

24.Cumulative Effect Adjustment

In July 2012, the FASB issued ASU 2012-01, Continuing Care Retirement Communities — Refundable Advance Fees ("ASU 2012-01").  ASU 2012-01 amends the situations in which recognition of deferred revenue for refundable advance fees is appropriate.  Under this amendment, refundable advance fees that are contingent upon reoccupancy by a subsequent resident but are not limited to the proceeds of reoccupancy should be accounted for and reported as a liability.  The guidance in ASU 2012-01 is effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2012.  The Company adopted the provisions of this update as of January 1, 2013 and incorporated the provisions of this update to its consolidated financial statements through retrospective application to all periods presented and a cumulative effect adjustment to the Company's accumulated deficit as of January 1, 2010.

The effect of this change in accounting was not material to the consolidated results of operations or financial position for any period, including the years ending December 31, 2012, 2011 and 2010, and did not impact cash flows from operations in any period.  The Company increased its accumulated deficit by $3.0 million as of January 1, 2010 to reflect the net cumulative effect of the adoption of ASU 2012-01.

The financial statements included in this filing have been revised to reflect this change in accounting, the effects of which have been summarized below (dollars in thousands):

	As of and for the Year Ended December 31, 2012
	As Reported			Adjustment			As Adjusted
Consolidated Balance Sheets
Refundable entrance fees and deferred revenue	$	361,360		$	9,395		$	370,755
Deferred tax liability		99,851			(3,664	)		96,187
Accumulated deficit		(949,696	)		(5,731	)		(955,427	)
Consolidated Statements of Operations
Resident fees	$	2,414,283		$	(1,347	)	$	2,412,936
Total revenue		2,770,085			(1,347	)		2,768,738
Loss before income taxes		(63,601	)		(1,347	)		(64,948	)
Provision for income taxes		(2,044	)		525			(1,519	)
Net loss		(65,645	)		(822	)		(66,467	)
Basic and diluted net loss per share		(0.54	)		—			(0.54	)
Consolidated Statements of Cash Flows
Net loss	$	(65,645	)	$	(822	)	$	(66,467	)
Amortization of entrance fees		(26,709	)		1,347			(25,362	)
Deferred income tax benefit		—			(525	)		(525	)

	As of and for the Year Ended December 31, 2011
	As Reported			Adjustment			As Adjusted
Consolidated Balance Sheets
Refundable entrance fees and deferred revenue	$	327,808		$	8,048		$	335,856
Deferred tax liability		112,736			(3,139	)		109,597
Accumulated deficit		(884,051	)		(4,909	)		(888,960	)
Consolidated Statements of Operations
Resident fees	$	2,291,757		$	(1,435	)	$	2,290,322
Total revenue		2,457,918			(1,435	)		2,456,483
Loss before income taxes		(65,835	)		(1,435	)		(67,270	)
Provision for income taxes		(2,340	)		560			(1,780	)
Net loss		(68,175	)		(875	)		(69,050	)
Basic and diluted net loss per share		(0.56	)		(0.01	)		(0.57	)
Consolidated Statements of Cash Flows
Net loss	$	(68,175	)	$	(875	)	$	(69,050	)
Amortization of entrance fees		(25,401	)		1,435			(23,966	)
Deferred income tax provision		943			(560	)		383

	Year Ended December 31, 2010
	As Reported			Adjustment			As Adjusted
Consolidated Statements of Operations
Resident fees	$	2,207,673		$	(1,615	)	$	2,206,058
Total revenue		2,280,535			(1,615	)		2,278,920
Loss before income taxes		(80,333	)		(1,615	)		(81,948	)
Benefit for income taxes		31,432			630			32,062
Net loss		(48,901	)		(985	)		(49,886	)
Basic and diluted net loss per share		(0.41	)		(0.01	)		(0.42	)
Consolidated Statements of Cash Flows
Net loss	$	(48,901	)	$	(985	)	$	(49,886	)
Amortization of entrance fees		(24,397	)		1,615			(22,782	)
Deferred income tax benefit		(33,295	)		(630	)		(33,925	)

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Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Leased Assets [Line Items]
Number of corporate office lease agreements	3
Facility lease expense	$ 4,100,000	$ 3,700,000	$ 2,900,000
Future minimum operating lease payments [Abstract]
2013	277,684,000
2014	268,164,000
2015	259,624,000
2016	256,463,000
2017	232,445,000
Thereafter	684,536,000
Total	$ 1,978,916,000
Corporate office lease A [Member]
Operating Leased Assets [Line Items]
Square footage of operating lease (in square feet)	10,655
Maturity date of office lease	Dec. 31, 2015
Corporate office lease B [Member]
Operating Leased Assets [Line Items]
Square footage of operating lease (in square feet)	74,593
Maturity date of office lease	Dec. 31, 2019
Corporate office lease C [Member]
Operating Leased Assets [Line Items]
Square footage of operating lease (in square feet)	117,609
Maturity date of office lease	Dec. 31, 2024

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Investment in Unconsolidated Ventures (Tables)

12 Months Ended

Dec. 31, 2012

Investment in Unconsolidated Ventures [Abstract]

Summarized financial data for investments in unconsolidated ventures

Combined summarized financial information of the unconsolidated joint ventures accounted for using the equity method as of December 31, and for the years then ended are as follows (dollars in thousands):

Statement of Operations Data	2012			2011			2010
Total revenue	$	295,539		$	154,964		$	84,689
Expense
Facility operating expense		202,855			103,611			54,766
Depreciation and amortization		49,142			23,923			12,730
Interest expense		50,825			27,072			13,153
Other expense		28,112			6,885			4,585
Total expense		330,934			161,491			85,234
Interest income		123			108			24
Net loss	$	(35,272	)	$	(6,419	)	$	(521	)

Balance Sheet Data	2012			2011
Cash and cash equivalents	$	16,578		$	15,255
Property, plant and equipment, net		1,073,610			1,012,941
Other		148,960			184,052
Total assets	$	1,239,148		$	1,212,248
Accounts payable and accrued expenses	$	66,841		$	61,199
Long-term debt		892,463			900,091
Members' equity		279,844			250,958
Total liabilities and members' equity	$	1,239,148		$	1,212,248
Members' equity consists of:
Invested capital	$	582,360		$	403,625
Cumulative net loss		(55,942	)		(25,810	)
Cumulative distributions		(246,574	)		(126,857	)
Members' equity	$	279,844		$	250,958

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Supplemental Disclosure of Cash Flow Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Supplemental Disclosure of Cash Flow Information [Abstract]
Interest paid	$ 130,009	$ 125,047	$ 132,425
Income taxes paid	2,658	2,431	2,223
Write-off of deferred financing costs	744	2,080	2,878
Reinvested income on marketable securities-restricted	1,156	1,426	0
Acquisition of assets, net of related payables and cash received [Member]
Supplemental Schedule of Non-cash Operating, Investing, and Financing Activities [Abstract]
Cash and escrow deposits - restricted	2,169	0	0
Prepaid expenses and other current assets, net	(2,817)	0	0
Property, plant and equipment and leasehold intangibles, net	257,772	80,514	52,900
Other intangible assets, net	9,575	4,244	7,963
Other assets, net	(7,327)	3,955	(2,870)
Accrued expenses	(573)	(31)	(45)
Other liabilities	3,601	0	0
Long-term debt, less current portion	10,123	0	0
Net	272,523	88,682	57,948
Horizon Bay Realty LLC [Member]
Supplemental Schedule of Non-cash Operating, Investing, and Financing Activities [Abstract]
Cash and escrow deposits - restricted	0	10,702	0
Accounts receivable, net	0	2,479	0
Property, plant and equipment and leasehold intangibles, net	0	8,132	0
Accrued expenses	0	(15,141)	0
Other liabilities	0	(6,347)	0
Long-term debt, less current portion	0	(1,821)	0
Common stock	0	(1)	0
Additional paid-in-capital	0	(1,537)	0
Accumulated earnings	0	(1,982)	0
Net	0	(5,516)	0
Capital leases: [Member]
Supplemental Schedule of Non-cash Operating, Investing, and Financing Activities [Abstract]
Property, plant and equipment and leasehold intangibles, net	13,852	0	5,791
Long-term debt, less current portion	(13,852)	0	(5,791)
Net	$ 0	$ 0	$ 0

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Acquisitions and Dispositions (Details) (USD $)	12 Months Ended					12 Months Ended			12 Months Ended						12 Months Ended		12 Months Ended		12 Months Ended			12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Acquisition of Nine Communities [Member]	Feb. 02, 2012 Acquisition of Nine Communities [Member]	Dec. 31, 2012 Acquisition of Twelve Communities [Member]	Dec. 31, 2011 Acquisition of Twelve Communities [Member]	Jan. 13, 2011 Acquisition of Twelve Communities [Member]	Dec. 31, 2012 Home Health Agencies [Member]	Dec. 31, 2011 Home Health Agencies [Member]	Dec. 31, 2012 Communities sold [Member]	Dec. 31, 2011 Communities sold [Member]	Dec. 31, 2011 One (Real Estate Interest) Assisted Living Community [Member]	Feb. 01, 2011 One (Real Estate Interest) Assisted Living Community [Member]	Dec. 31, 2011 One Assisted Living Community [Member]	Feb. 01, 2011 One Assisted Living Community [Member]	Dec. 31, 2011 One Assisted Living Community, Previously Managed [Member]	Nov. 01, 2011 One Assisted Living Community, Previously Managed [Member]	Dec. 31, 2012 Horizon Bay Realty LLC [Member]	Dec. 31, 2011 Horizon Bay Realty LLC [Member]	Sep. 01, 2011 Horizon Bay Realty LLC [Member]	Dec. 31, 2012 First Mortgage Financing [Member] Acquisition of Nine Communities [Member]	Feb. 02, 2012 First Mortgage Financing [Member] Acquisition of Nine Communities [Member]	Dec. 31, 2012 Seller-financing [Member] Acquisition of Nine Communities [Member]	Feb. 02, 2012 Seller-financing [Member] Acquisition of Nine Communities [Member]
Schedule of Acquisitions and Disposals [Line Items]
Number of communities purchased or sold					9	12		12	4	3	1	4		1		1		1
Aggregate purchase price				$ 121,300,000		$ 162,100,000	$ 31,300,000		$ 7,000,000	$ 4,200,000			$ 9,800,000		$ 9,200,000		$ 30,200,000
Acquisition purchase price, amount financed																						77,900,000		15,000,000
Number of communities securing acquisition financing																							7		2
Gain on facility lease termination	(11,584,000)	0	4,608,000
Aggregate selling price											8,900,000	30,800,000
Percentage of equity agreed to acquire (in hundredths)																					100.00%
Number of communities previously leased to Horizon Bay from HCP, Inc.																					33
Number of communities owned and operated through joint venture with HCP, Inc.																					21
Number of communities leased from HCP, Inc																					12
Number of communities where the HCP, Inc. pre-existing lease was assumed																					8
Number of communities where new lease was entered into																					4
Percentage of interest acquired in joint venture																					10.00%
Management agreement of joint venture (in years)																					10
Number of five-year renewal options under the management agreement																					4
Fair value of consideration transferred [Abstract]
Cash																					6,500,000
Common stock, value																					1,538,000
Contingent consideration, at fair value																					2,708,000
Total aggregate fair value of purchase consideration transferred																					10,746,000
Common stock, shares																				96,862
Maximum contingent consideration																					3,400,000
Contingent consideration paid																			1,200,000
Contingent consideration arrangements description																				The aggregate acquisition-date fair value of the purchase consideration transferred for the acquisition of Horizon Bay included $2.7 million of contingent consideration. The contingent consideration arrangement requires the Company to pay up to a maximum of approximately $3.4 million to Horizon Bay's former members. The Company estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model.
Purchase price allocation [Abstract]
Current assets																					24,064,000
Property and equipment																					2,167,000
Acquired lease intangibles																					5,965,000
Current liabilities																					15,979,000
Long-term debt																					1,821,000
Other liabilities																					1,482,000
Deferred tax liability																					822,000
Gain on acquisition	(636,000)	1,982,000	0																	1,346,000
Total purchase price allocation																					10,746,000
Adjustment to gain on acquisition																			600,000
Original gain on acquisition																				2,000,000
Direct and indirect acquisition costs		14,400,000
Amount contributed to formation of joint venture																			$ 13,700,000

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Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2012

Quarterly Results of Operations (Unaudited) [Abstract]

Quarterly results of operations

The following is a summary of quarterly results of operations for each of the fiscal quarters in 2012 and 2011 (in thousands, except per share amounts):

	For the Quarters Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
Revenues	$	682,708		$	690,473		$	696,145		$	699,412
Income from operations(1)		26,523			18,528			24,269			11,619
Loss before income taxes		(9,614	)		(18,133	)		(11,469	)		(25,732	)
Net loss		(10,544	)		(19,015	)		(12,216	)		(24,692	)
Weighted average basic and diluted loss per share	$	(0.09	)	$	(0.16	)	$	(0.10	)	$	(0.20	)
Weighted average shares used in computing basic and diluted loss per share		121,145			121,708			122,493			122,608

	For the Quarters Ended
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011
Revenues	$	586,557		$	582,936		$	615,365		$	671,625
Income from operations(1)		11,637			28,500			29,142			19,466
Loss before income taxes		(23,822	)		(21,594	)		(6,886	)		(14,968	)
Net loss		(12,526	)		(34,181	)		(7,257	)		(15,086	)
Weighted average basic and diluted loss per share	$	(0.10	)	$	(0.28	)	$	(0.06	)	$	(0.12	)
Weighted average shares used in computing basic and diluted loss per share		120,792			121,280			121,616			120,951

(1) Fourth quarter 2012 and 2011 results include non-cash impairment charges of $19.3 million and $2.0 million, respectively. Second quarter 2012 results include non-cash impairment charges of $7.2 million. First quarter 2012 and 2011 results include non-cash impairment charges of $1.1 million and $14.8 million, respectively.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Measurements [Abstract]

Fair value of derivative liabilities and marketable securities

The following table provides the Company's derivative assets and liabilities carried at fair value as measured on a

recurring basis as of December 31, 2012 (dollars in thousands):

	Total Carrying Value at December 31, 2012			Quoted prices in active markets (Level 1)		Significant Other Observable inputs (Level 2)			Significant Unobservable inputs (Level 3)
Derivative assets	$	495		$	—	$	495		$	—
Derivative liabilities		(1,833	)		—		(1,833	)		—
	$	(1,338	)	$	—	$	(1,338	)	$	—

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
CONSOLIDATED BALANCE SHEETS (Parenthetical) [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued (in shares)	129,117,946	127,782,538
Common stock, shares outstanding (in shares)	126,689,545	125,354,137
Common stock, unvested restricted shares (in shares)	3,951,950	4,221,598
Treasury stock, shares (in shares)	2,428,401	2,428,401

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Property, Plant and Equipment and Leasehold Intangibles, Net

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment and Leasehold Intangibles, Net [Abstract]

Property, Plant and Equipment and Leasehold Intangibles, Net

6.Property, Plant and Equipment and Leasehold Intangibles, Net

As of December 31, 2012 and 2011, net property, plant and equipment and leasehold intangibles, which include assets under capital leases, consisted of the following (dollars in thousands):

	2012			2011
Land	$	296,314		$	275,277
Buildings and improvements		3,391,667			3,083,316
Leasehold improvements		60,186			62,494
Furniture and equipment		541,585			450,179
Resident and leasehold operating intangibles		441,603			527,571
Construction in progress		75,419			39,600
Assets under capital and financing leases		674,492			667,239
		5,481,266			5,105,676
Accumulated depreciation and amortization		(1,601,289	)		(1,411,612	)
Property, plant and equipment and leasehold intangibles, net	$	3,879,977		$	3,694,064

Long-lived assets with definite useful lives are depreciated or amortized on a straight-line basis over their estimated useful lives (or, in certain cases, the shorter of their estimated useful lives or the lease term) and are tested for impairment whenever indicators of impairment arise.

During the years ended December 31, 2012, 2011 and 2010, the Company evaluated property, plant and equipment and leasehold intangibles for impairment.  The Company compared the estimated fair value of the assets to their carrying value for properties with impairment indicators and recorded an impairment charge for the excess of carrying value over fair value.  For the years ended December 31, 2012, 2011 and 2010, $27.7 million primarily within the Retirement Centers and Assisted Living segments, $16.9 million within the Retirement Centers and Assisted Living segments and $13.1 million within the Retirement Centers and Assisted Living segments, respectively, of non-cash charges were recorded in the Company's operating results.  These impairment charges are primarily due to the amount by which the carrying values of the assets exceed the estimated fair value or estimated selling prices.

For the years ended December 31, 2012, 2011 and 2010, the Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $248.5 million, $247.1 million and $258.0 million, respectively.

Future amortization expense for resident and leasehold operating intangibles is estimated to be as follows (dollars in thousands):

Year Ending December 31,	Future Amortization
2013	$	26,900
2014		22,248
2015		20,613
2016		19,137
2017		12,272
Thereafter		14,083
Total	$	115,253

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CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) [Abstract]
Depreciation and amortization	$ 229,072	$ 230,414	$ 242,050
Non-cash stock-based compensation expense	$ 25,520	$ 19,856	$ 20,759

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Goodwill and Other Intangible Assets, Net (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Goodwill [Line Items]
Gross Carrying Amount	$ 325,321,000	$ 325,321,000
Adjustment	140,000	140,000
Accumulated Impairment and Other Charges	215,628,000	215,628,000
Net	109,553,000	109,553,000
Schedule of Intangible Assets by Major Class [Line Items]
Gross Carrying Amount	339,318,000	329,743,000
Accumulated Amortization	179,376,000	175,607,000
Net	159,942,000	154,136,000
Amortization expense related to definite-lived intangible assets	3,800,000	21,300,000	34,800,000
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months	4,560,000
Finite-Lived Intangible Assets, Amortization Expense, Year Two	4,560,000
Finite-Lived Intangible Assets, Amortization Expense, Year Three	4,488,000
Finite-Lived Intangible Assets, Amortization Expense, Year Four	3,698,000
Finite-Lived Intangible Assets, Amortization Expense, Year Five	3,698,000
Finite-Lived Intangible Assets, Amortization Expense, after Year Five	107,856,000
Finite-Lived Intangible Assets, Net, Total	128,860,000
Community Purchase Options [Member]
Schedule of Intangible Assets by Major Class [Line Items]
Gross Carrying Amount	147,610,000	147,610,000
Accumulated Amortization	21,263,000	17,566,000
Net	126,347,000	130,044,000
Management contracts and other [Member]
Schedule of Intangible Assets by Major Class [Line Items]
Gross Carrying Amount	160,626,000	158,041,000
Accumulated Amortization	158,113,000	158,041,000
Net	2,513,000	0
Health care licenses [Member]
Schedule of Intangible Assets by Major Class [Line Items]
Gross Carrying Amount	31,082,000	24,092,000
Accumulated Amortization	0	0
Net	31,082,000	24,092,000
Retirement Centers [Member]
Goodwill [Line Items]
Gross Carrying Amount	7,642,000	7,642,000
Adjustment	34,000	34,000
Accumulated Impairment and Other Charges	487,000	487,000
Net	7,121,000	7,121,000
Assisted Living [Member]
Goodwill [Line Items]
Gross Carrying Amount	102,680,000	102,680,000
Adjustment	106,000	106,000
Accumulated Impairment and Other Charges	142,000	142,000
Net	102,432,000	102,432,000
CCRCs - Rental [Member]
Goodwill [Line Items]
Gross Carrying Amount	56,281,000	56,281,000
Adjustment	0	0
Accumulated Impairment and Other Charges	56,281,000	56,281,000
Net	0	0
CCRCs - Entry Fee [Member]
Goodwill [Line Items]
Gross Carrying Amount	158,718,000	158,718,000
Adjustment	0	0
Accumulated Impairment and Other Charges	158,718,000	158,718,000
Net	$ 0	$ 0

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets
Cash and cash equivalents	$ 69,240	$ 30,836
Cash and escrow deposits - restricted	43,096	45,903
Accounts receivable, net	100,401	98,697
Deferred tax asset	13,377	11,776
Prepaid expenses and other current assets, net	82,924	93,663
Total current assets	309,038	280,875
Property, plant and equipment and leasehold intangibles, net	3,879,977	3,694,064
Cash and escrow deposits - restricted	62,767	52,980
Marketable securities - restricted	0	31,721
Investment in unconsolidated ventures	31,386	32,798
Goodwill	109,553	109,553
Other intangible assets, net	159,942	154,136
Other assets, net	113,315	109,934
Total assets	4,665,978	4,466,061
Current liabilities
Current portion of long-term debt	509,543	47,654
Trade accounts payable	43,184	54,134
Accrued expenses	200,895	183,634
Refundable entrance fees and deferred revenue	370,755	335,856
Tenant security deposits	6,521	7,720
Total current liabilities	1,130,898	628,998
Long-term debt, less current portion	2,089,826	2,350,971
Line of credit	80,000	65,000
Deferred entrance fee revenue	79,010	72,485
Deferred liabilities	150,788	161,185
Deferred tax liability	96,187	109,597
Other liabilities	42,283	42,526
Total liabilities	3,668,992	3,430,762
Stockholders' Equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized at December 31, 2012 and 2011; no shares issued and outstanding	0	0
Common stock, $0.01 par value, 200,000,000 shares authorized at December 31, 2012 and 2011; 129,117,946 and 127,782,538 shares issued and 126,689,545 and 125,354,137 shares outstanding (including 3,951,950 and 4,221,598 unvested restricted shares), respectively	1,267	1,254
Additional paid-in-capital	1,997,946	1,970,820
Treasury stock, at cost; 2,428,401 shares at December 31, 2012 and 2011	(46,800)	(46,800)
Accumulated deficit	(955,427)	(888,960)
Accumulated other comprehensive loss	0	(1,015)
Total stockholders' equity	996,986	1,035,299
Total liabilities and stockholders' equity	$ 4,665,978	$ 4,466,061

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Cumulative Effect Adjustment (Tables)

12 Months Ended

Dec. 31, 2012

Cumulative Effect Adjustment [Abstract]

Cumulative Effect Adjustment [Table Text Block]

The financial statements included in this filing have been revised to reflect this change in accounting, the effects of which have been summarized below (dollars in thousands):

	As of and for the Year Ended December 31, 2012
	As Reported			Adjustment			As Adjusted
Consolidated Balance Sheets
Refundable entrance fees and deferred revenue	$	361,360		$	9,395		$	370,755
Deferred tax liability		99,851			(3,664	)		96,187
Accumulated deficit		(949,696	)		(5,731	)		(955,427	)
Consolidated Statements of Operations
Resident fees	$	2,414,283		$	(1,347	)	$	2,412,936
Total revenue		2,770,085			(1,347	)		2,768,738
Loss before income taxes		(63,601	)		(1,347	)		(64,948	)
Provision for income taxes		(2,044	)		525			(1,519	)
Net loss		(65,645	)		(822	)		(66,467	)
Basic and diluted net loss per share		(0.54	)		—			(0.54	)
Consolidated Statements of Cash Flows
Net loss	$	(65,645	)	$	(822	)	$	(66,467	)
Amortization of entrance fees		(26,709	)		1,347			(25,362	)
Deferred income tax benefit		—			(525	)		(525	)

	As of and for the Year Ended December 31, 2011
	As Reported			Adjustment			As Adjusted
Consolidated Balance Sheets
Refundable entrance fees and deferred revenue	$	327,808		$	8,048		$	335,856
Deferred tax liability		112,736			(3,139	)		109,597
Accumulated deficit		(884,051	)		(4,909	)		(888,960	)
Consolidated Statements of Operations
Resident fees	$	2,291,757		$	(1,435	)	$	2,290,322
Total revenue		2,457,918			(1,435	)		2,456,483
Loss before income taxes		(65,835	)		(1,435	)		(67,270	)
Provision for income taxes		(2,340	)		560			(1,780	)
Net loss		(68,175	)		(875	)		(69,050	)
Basic and diluted net loss per share		(0.56	)		(0.01	)		(0.57	)
Consolidated Statements of Cash Flows
Net loss	$	(68,175	)	$	(875	)	$	(69,050	)
Amortization of entrance fees		(25,401	)		1,435			(23,966	)
Deferred income tax provision		943			(560	)		383

	Year Ended December 31, 2010
	As Reported			Adjustment			As Adjusted
Consolidated Statements of Operations
Resident fees	$	2,207,673		$	(1,615	)	$	2,206,058
Total revenue		2,280,535			(1,615	)		2,278,920
Loss before income taxes		(80,333	)		(1,615	)		(81,948	)
Benefit for income taxes		31,432			630			32,062
Net loss		(48,901	)		(985	)		(49,886	)
Basic and diluted net loss per share		(0.41	)		(0.01	)		(0.42	)
Consolidated Statements of Cash Flows
Net loss	$	(48,901	)	$	(985	)	$	(49,886	)
Amortization of entrance fees		(24,397	)		1,615			(22,782	)
Deferred income tax benefit		(33,295	)		(630	)		(33,925	)

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VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Operating Loss Carryforwards [Line Items]
Net operating losses, valuation allowance	$ 49,600
Tax Credit Carryforward [Line Items]
Tax credits, valuation allowance	8,500		8,100
State [Member]
Operating Loss Carryforwards [Line Items]
Net operating losses, valuation allowance	2,540		1,141		137
Tax Credit Carryforward [Line Items]
Tax credits, valuation allowance			514
Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating losses, valuation allowance	26,589		22,940
Tax Credit Carryforward [Line Items]
Tax credits, valuation allowance	400		6,408
Deferred Tax Valuation Account [Member]
Valuation and qualifying accounts [Roll forward]
Balance at Beginning of Period	40,820		10,845		10,708
Charged to costs and expenses	26,989	[1]	29,348	[2]	0
Charged To other Accounts	(2,540)	[3]	1,141	[4]	137	[5]
Deductions	0		(514)	[6]	0
Balance at End of Period	65,269		40,820		10,845
Allowance For Doubtful Accounts [Member]
Valuation and qualifying accounts [Roll forward]
Balance at Beginning of Period	16,972		14,464		13,907
Charged to costs and expenses	15,683		16,796		13,816
Charged To other Accounts	660		1,817		179
Deductions	(18,053)		(16,105)		(13,438)
Balance at End of Period	$ 15,262		$ 16,972		$ 14,464

[1] Adjustment to valuation allowance for federal net operating losses and federal credits of $26,589, and $400, respectively.

[2] Adjustment to valuation allowance for federal net operating losses and federal credits of $22,940 and $6,408, respectively.

[3] Adjustment to valuation allowance for state net operating losses of $(2,540).

[4] Adjustment to valuation allowance for state net operating losses of $1,141.

[5] Adjustment to valuation allowance for state net operating losses of $137.

[6] Adjustment to valuation allowance for state credits of $514.

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Litigation

12 Months Ended

Dec. 31, 2012

Legal Matters And Contingencies Disclosure [Abstract]

Litigation

21.Litigation

The Company has been and is currently involved in litigation and claims incidental to the conduct of its business which are comparable to other companies in the senior living industry. Certain claims and lawsuits allege large damage amounts and may require significant costs to defend and resolve. Similarly, the senior living industry is continuously subject to scrutiny by governmental regulators, which could result in litigation related to regulatory compliance matters. As a result, the Company maintains general liability and professional liability insurance policies in amounts and with coverage and deductibles the Company believes are adequate, based on the nature and risks of its business, historical experience and industry standards.  The Company's current policies provide for deductibles for each claim.  Accordingly, the Company is, in effect, self-insured for claims that are less than the deductible amounts.

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

15.Stock-Based Compensation

The Company follows ASC 718 in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee's requisite service period.  Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred.

For all awards with graded vesting other than awards with performance-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period.  For graded-vesting awards with performance-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement.  Performance goals are evaluated quarterly.  If such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed.

The Company has issued restricted stock units to its Chief Executive Officer.  Under the terms of the award agreement, upon vesting, each restricted stock unit represents the right to receive one share of the Company's common stock.

The following table sets forth information about the Company's restricted stock awards (excluding restricted stock units) (amounts in thousands):

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding on January 1, 2010		3,915		$	14.62
Granted		1,341		$	16.92
Vested		(1,423	)	$	16.90
Cancelled/forfeited		(293	)	$	15.93
Outstanding on December 31, 2010		3,540		$	14.76
Granted		2,091		$	16.20
Vested		(1,207	)	$	16.43
Cancelled/forfeited		(202	)	$	15.34
Outstanding on December 31, 2011		4,222		$	14.93
Granted		1,592		$	19.20
Vested		(1,435	)	$	14.28
Cancelled/forfeited		(427	)	$	15.62
Outstanding on December 31, 2012		3,952		$	16.67

As of December 31, 2012, there was $44.2 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted.  That cost is expected to be recognized over a weighted-average period of 2.4 years and is based on grant date fair value, net of forfeiture estimates. The compensation cost reflects an initial estimated cumulative forfeiture rate from 0% to 10% over the requisite service period of the awards. That estimate is revised if subsequent information indicates that the actual number of awards expected to vest is likely to differ from previous estimates.

Current year grants of restricted shares under the Company's Omnibus Stock Incentive Plan were as follows (amounts in thousands except for value per share):

	Shares Granted		Value Per Share		Total Value
Three months ended March 31, 2012		1,286		$17.39 – $19.07	$	24,524
Three months ended June 30, 2012		85		$18.72 − $19.55	$	1,666
Three months ended September 30, 2012		128		$16.66 − $17.74	$	2,135
Three months ended December 31, 2012		93		$23.31 − $23.99	$	2,231

The Company has an employee stock purchase plan for all eligible employees.  The plan became effective on October 1, 2008.  Under the plan, eligible employees of the Company can purchase shares of the Company's common stock on a quarterly basis at a discounted price through accumulated payroll deductions.  Each eligible employee may elect to deduct up to 15% of his or her base pay each quarter.  Subject to certain limitations specified in the plan, on the last trading date of each calendar quarter, the amount deducted from each participant's pay over the course of the quarter will be used to purchase whole shares of the Company's common stock at a purchase price equal to 90% of the closing market price on the New York Stock Exchange on that date.  Initially, the Company reserved 1,000,000 shares of common stock for issuance under the plan.  The employee stock purchase plan also contains an "evergreen" provision that automatically increases the number of shares reserved for issuance under the plan by 200,000 shares on the first day of each calendar year beginning January 1, 2010.  The impact on the Company's current year consolidated financial statements is not material.

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2012

Stock-Based Compensation [Abstract]

Restricted stock awards

The following table sets forth information about the Company's restricted stock awards (excluding restricted stock units) (amounts in thousands):

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding on January 1, 2010		3,915		$	14.62
Granted		1,341		$	16.92
Vested		(1,423	)	$	16.90
Cancelled/forfeited		(293	)	$	15.93
Outstanding on December 31, 2010		3,540		$	14.76
Granted		2,091		$	16.20
Vested		(1,207	)	$	16.43
Cancelled/forfeited		(202	)	$	15.34
Outstanding on December 31, 2011		4,222		$	14.93
Granted		1,592		$	19.20
Vested		(1,435	)	$	14.28
Cancelled/forfeited		(427	)	$	15.62
Outstanding on December 31, 2012		3,952		$	16.67

Current year grants of restricted shares and restricted stock units

Current year grants of restricted shares under the Company's Omnibus Stock Incentive Plan were as follows (amounts in thousands except for value per share):

	Shares Granted		Value Per Share		Total Value
Three months ended March 31, 2012		1,286		$17.39 – $19.07	$	24,524
Three months ended June 30, 2012		85		$18.72 − $19.55	$	1,666
Three months ended September 30, 2012		128		$16.66 − $17.74	$	2,135
Three months ended December 31, 2012		93		$23.31 − $23.99	$	2,231

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Earnings Per Share (Details) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	1.2	1.3	1.5

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Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2010
Related Party Transaction [Line Items]
Public equity offering expenses	$ 0.6

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Goodwill and Other Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill and Other Intangible Assets, Net [Abstract]

Summary of changes in the carrying amount of goodwill

The following is a summary of changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 presented on an operating segment basis (dollars in thousands):

	December 31, 2012										December 31, 2011
	Gross Carrying Amount		Adjustment			Accumulated Impairment and Other Charges			Net		Gross Carrying Amount		Adjustment			Accumulated Impairment and Other Charges			Net
Retirement Centers	$	7,642	$	(34	)	$	(487	)	$	7,121	$	7,642	$	(34	)	$	(487	)	$	7,121
Assisted Living		102,680		(106	)		(142	)		102,432		102,680		(106	)		(142	)		102,432
CCRCs – Rental		56,281		—			(56,281	)		—		56,281		—			(56,281	)		—
CCRCs – Entry Fee		158,718		—			(158,718	)		—		158,718		—			(158,718	)		—
Total	$	325,321	$	(140	)	$	(215,628	)	$	109,553	$	325,321	$	(140	)	$	(215,628	)	$	109,553

Other intangible assets

	December 31, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Community purchase options	$	147,610	$	(21,263	)	$	126,347	$	147,610	$	(17,566	)	$	130,044
Health care licenses		31,082		—			31,082		24,092		—			24,092
Management contracts and other		160,626		(158,113	)		2,513		158,041		(158,041	)		—
Total	$	339,318	$	(179,376	)	$	159,942	$	329,743	$	(175,607	)	$	154,136

Finite-Lived Intangible Assets, Future Amortization Expense

Estimated amortization expense related to intangible assets with definite lives at December 31, 2012, for each of the years in the five-year period ending December 31, 2017 and thereafter is as follows (dollars in thousands):

Year Ending December 31,	Future Amortization
2013	$	4,560
2014		4,560
2015		4,488
2016		3,698
2017		3,698
Thereafter		107,856
Total	$	128,860

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Cash and escrow deposits - restricted

Cash and escrow deposits - restricted consist principally of deposits required by certain lenders and lessors pursuant to the applicable agreement and consist of the following (dollars in thousands):

	December 31,
	2012		2011
Current:
Real estate taxes	$	11,502	$	12,541
Tenant security deposits		2,015		4,374
Insurance reserves		12,892		12,904
Entrance fees		4,159		4,891
Replacement reserve and other		12,528		11,193
Subtotal		43,096		45,903
Long term:
Insurance reserves		5,188		5,412
Debt service and other deposits		57,579		47,568
Subtotal		62,767		52,980
Total	$	105,863	$	98,883

Property, plant and equipment, useful lives

Property, plant and equipment and leasehold intangibles, which include amounts recorded under capital leases, are recorded at cost.  Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Category	Estimated Useful Life (in years)
Buildings and improvements	40
Furniture and equipment	3 – 7
Resident lease intangibles	1 – 4
Leasehold improvements	Shorter of the lease term or asset useful life
Leasehold operating intangibles	Shorter of the lease term or asset useful life
Assets under capital and financing leases	Shorter of the lease term or asset useful life

Definite lived intangible assets, useful lives

Amortization of the Company's definite lived intangible assets is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Category	Estimated Useful Life (in years)
Community purchase options	40
Management contracts and other	3 – 5

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Acquisitions and Dispositions (Tables)

12 Months Ended

Dec. 31, 2012

Acquisitions and Dispositions [Abstract]

Schedule of fair value of consideration transferred

The aggregate acquisition-date fair value of the purchase consideration transferred for the acquisition of Horizon Bay was approximately $10.7 million which consisted of the following (dollars in thousands):

Fair value of consideration transferred
Cash	$	6,500
Common stock (96,862 shares)		1,538
Contingent consideration		2,708
Total	$	10,746

Schedule of purchase price allocation

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (dollars in thousands):

Purchase price allocation
Current assets	$	24,064
Property and equipment		2,167
Acquired lease intangibles		5,965
Current liabilities		(15,979	)
Long-term debt		(1,821	)
Other liabilities		(1,482	)
Deferred tax liability		(822	)
Gain on acquisition		(1,346	)
Total	$	10,746

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Investment in Unconsolidated Ventures

12 Months Ended

Dec. 31, 2012

Investment in Unconsolidated Ventures [Abstract]

Investment in Unconsolidated Ventures

5.Investment in Unconsolidated Ventures

The Company had investments in unconsolidated joint ventures of 20% and 10% in ventures owning 13 and 21 communities, respectively, at December 31, 2012 and 2011.

Combined summarized financial information of the unconsolidated joint ventures accounted for using the equity method as of December 31, and for the years then ended are as follows (dollars in thousands):

Statement of Operations Data	2012			2011			2010
Total revenue	$	295,539		$	154,964		$	84,689
Expense
Facility operating expense		202,855			103,611			54,766
Depreciation and amortization		49,142			23,923			12,730
Interest expense		50,825			27,072			13,153
Other expense		28,112			6,885			4,585
Total expense		330,934			161,491			85,234
Interest income		123			108			24
Net loss	$	(35,272	)	$	(6,419	)	$	(521	)

Balance Sheet Data	2012			2011
Cash and cash equivalents	$	16,578		$	15,255
Property, plant and equipment, net		1,073,610			1,012,941
Other		148,960			184,052
Total assets	$	1,239,148		$	1,212,248
Accounts payable and accrued expenses	$	66,841		$	61,199
Long-term debt		892,463			900,091
Members' equity		279,844			250,958
Total liabilities and members' equity	$	1,239,148		$	1,212,248
Members' equity consists of:
Invested capital	$	582,360		$	403,625
Cumulative net loss		(55,942	)		(25,810	)
Cumulative distributions		(246,574	)		(126,857	)
Members' equity	$	279,844		$	250,958

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Facility Operating Leases (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Facility Operating Leases [Abstract]
Initial lease terms, minimum (in years)	10
Initial lease terms, maximum (in years)	20
Renewal options, minimum (in years)	5
Renewal options, maximum (in years)	30
Number of communities operated under long-term leases	329	350
Number of operating leases	275
Number of capital and financing leases	54
Remaining base lease terms, minimum (in years)	1
Remaining base lease terms, maximum (in years)	14
Number of leases requiring a lease security deposit that will be released upon achieiving certain lease coverage ratios.	1
Amount of capital improvements per unit per year, minimum (in dollars per unit)	$ 450
Amount used by lessor to reduce security deposit per unit per year, maximum (in dollars per unit)	600
Amount used by Lessor to reduce security deposit	2,700,000
Refunds from lease security deposit	100,000	2,600,000	2,700,000
Schedule of facility operating lease expense [Abstract]
Cash basis payment	281,729,000	270,623,000	264,727,000
Straight-line expense	6,668,000	8,608,000	10,521,000
Amortization of deferred gain	(4,372,000)	(4,373,000)	(4,343,000)
Facility lease expense	$ 284,025,000	$ 274,858,000	$ 270,905,000

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Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Segment Information

22.Segment Information

Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

During the year ended December 31, 2012, the Company changed the composition of its operating segments from four reportable segments to six reportable segments.  This change was made to align operating segments with the basis that the chief operating decision maker uses to review financial information to make operating decisions, assess performance, develop strategy and allocate capital resources.  All prior period disclosures below have been recast to present results on a comparable basis.

Retirement Centers.  The Company's Retirement Centers segment includes owned or leased communities that are primarily designed for middle to upper income senior citizens age 75 and older who desire an upscale residential environment providing the highest quality of service.  The majority of the Company's retirement center communities consist of both independent living and assisted living units in a single community, which allows residents to "age-in-place" by providing them with a continuum of senior independent and assisted living services.

Assisted Living.  The Company's Assisted Living segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily life to mid-acuity frail and elderly residents.  Assisted living communities include both freestanding, multi-story communities and freestanding single story communities.  The Company also operates memory care communities, which are freestanding assisted living communities specially designed for residents with Alzheimer's disease and other dementias.

CCRCs - Rental.  The Company's CCRCs - Rental segment includes large owned or leased communities that offer a variety of living arrangements and services to accommodate all levels of physical ability and health.  Most of the Company's CCRCs have independent living, assisted living and skilled nursing available on one campus or within the immediate market, and some also include memory care/Alzheimer's units.

CCRCs - Entry Fee.  The communities in the Company's CCRCs - Entry Fee segment are similar to those in the Company's CCRCs - Rental segment but allow for residents in the independent living apartment units to pay a one-time upfront entrance fee, which is partially refundable in certain circumstances.  The amount of the entrance fee varies depending upon the type and size of the dwelling unit, the type of contract plan selected, whether the contract contains a lifecare benefit for the resident, the amount and timing of refund, and other variables.  In addition to the initial entrance fee, residents under all entrance fee agreements also pay a monthly service fee, which entitles them to the use of certain amenities and services.  Since entrance fees are received upon initial occupancy, the monthly fees are generally less than fees at a comparable rental community.

ISC.  The Company's ISC segment includes the outpatient therapy, home health and hospice services provided to

residents of many of the Company's communities, to other senior living communities that the Company does not own or operate and to seniors living outside of the Company's communities.  The ISC segment does not include the therapy services provided in the Company's skilled nursing units, which are included in the Company's CCRCs - Rental and CCRCs - Entry Fee segments.

Management Services.  The Company's management services segment includes communities operated by the Company pursuant to management agreements.  In some of the cases, the controlling financial interest in the community is held by third parties and, in other cases, the community is owned in a joint venture structure in which the Company has an ownership interest.  Under the management agreements for these communities, the Company receives management fees as well as reimbursed expenses, which represent the reimbursement of expenses it incurs on behalf of the owners.

The accounting policies of the Company's reportable segments are the same as those described in the summary of significant accounting policies.

The following table sets forth selected segment financial and operating data (dollars in thousands):

	For the Years Ended December 31,
	2012		2011		2010
Revenue(1):
Retirement Centers	$	503,902	$	473,842	$	463,260
Assisted Living		1,013,337		964,585		945,469
CCRCs - Rental		385,479		364,095		339,920
CCRCs - Entry Fee		285,701		282,020		267,441
ISC		224,517		205,780		189,968
Management Services(2)		355,802		166,161		72,862
	$	2,768,738	$	2,456,483	$	2,278,920
Segment Operating Income(3):
Retirement Centers	$	205,585	$	198,439	$	196,647
Assisted Living		361,184		339,928		331,220
CCRCs - Rental		106,063		116,849		108,929
CCRCs - Entry Fee		61,405		68,550		64,470
ISC		47,780		57,985		66,862
Management Services		30,786		13,595		5,591
		812,803		795,346		773,719

General and administrative (including non-cash stock-based compensation expense)	178,829	148,327	131,709
Facility lease expense	284,025	274,858	270,905
Depreciation and amortization:
Retirement Centers	61,060	60,275	60,869
Assisted Living	81,801	82,843	93,066
CCRCs - Rental	31,205	30,776	30,655
CCRCs - Entry Fee	52,840	54,794	56,006
ISC	2,220	1,699	1,169

Corporate and Management Services		23,155			38,119			50,576
Gain on sale of communities, net		—			—			(3,298	)
Asset impairment		27,677			16,892			13,075
Loss (gain) on acquisition		636			(1,982	)		―
(Gain) loss on facility lease termination		(11,584	)		—			4,608
Income from operations	$	80,939		$	88,745		$	64,379
Total interest income:
Retirement Centers	$	184		$	311		$	19
Assisted Living		9			18			17
CCRCs - Rental		28			35			29
CCRCs - Entry Fee		3,378			2,263			941
ISC		—			—			—
Corporate and Management Services		413			911			1,232
	$	4,012		$	3,538		$	2,238
Total interest expense:
Retirement Centers	$	29,025		$	28,444		$	33,298
Assisted Living		57,634			58,453			65,086
CCRCs - Rental		17,336			15,324			15,433
CCRCs - Entry Fee		13,792			20,316			23,867
ISC		—			—			—
Corporate and Management Services		28,996			19,641			8,038
	$	146,783		$	142,178		$	145,722
Total expenditures for property, plant and equipment, and leasehold intangibles:
Retirement Centers	$	58,876		$	45,891		$	22,760
Assisted Living		68,675			43,955			24,687
CCRCs - Rental		21,916			20,615			12,077
CCRCs - Entry Fee		24,890			16,255			16,314
ISC		6,037			2,715			4,260
Corporate and Management Services		28,018			30,700			13,583
	$	208,412		$	160,131		$	93,681
	As of December 31,
		2012			2011			2010
Total assets:
Retirement Centers	$	1,256,497		$	1,047,388		$	1,080,410
Assisted Living		1,438,934			1,451,612			1,448,029
CCRCs - Rental		534,220			518,993			529,428
CCRCs - Entry Fee		951,584			1,021,938			1,096,714
ISC		90,357			78,137			67,845
Corporate and Management Services		394,386			347,993			308,044
	$	4,665,978		$	4,466,061		$	4,530,470

(1) All revenue is earned from external third parties in the United States.

(2) Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities.

(3) Segment operating income is defined as segment revenues less segment operating expenses (excluding depreciation and amortization).

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Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2012

Accrued Expenses [Abstract]

Accrued Expenses

Accrued expenses consist of the following components as of December 31, (dollars in thousands):

	2012		2011
Salaries and wages	$	71,567	$	52,268
Insurance reserves		37,717		35,066
Vacation		24,697		23,565
Real estate taxes		22,178		22,690
Lease payable		8,915		9,017
Interest		7,644		7,782
Income taxes		2,469		1,919
Other		25,708		31,327
Total	$	200,895	$	183,634

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Other Assets

12 Months Ended

Dec. 31, 2012

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

8.Other Assets

Other assets consist of the following components as of December 31, (dollars in thousands):

	2012		2011
Notes receivable	$	34,968	$	32,844
Deferred costs, net		24,517		26,032
Lease security deposits		38,544		36,748
Other		15,286		14,310
Total	$	113,315	$	109,934

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Cumulative Effect Adjustment (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Consolidated Balance Sheets [Abstract]
Refundable entrance fees and deferred revenue	$ 370,755				$ 335,856				$ 370,755	$ 335,856
Deferred tax liability	96,187				109,597				96,187	109,597
Accumulated deficit	(955,427)				(888,960)				(955,427)	(888,960)
Consolidated Statements of Operations [Abstract]
Resident fees									2,412,936	2,290,322	2,206,058
Total revenue	699,412	696,145	690,473	682,708	671,625	615,365	582,936	586,557	2,768,738	2,456,483	2,278,920
Loss before income taxes	(25,732)	(11,469)	(18,133)	(9,614)	(14,968)	(6,886)	(21,594)	(23,822)	(64,948)	(67,270)	(81,948)
(Provision) benefit for income taxes									(1,519)	(1,780)	32,062
Net loss	(24,692)	(12,216)	(19,015)	(10,544)	(15,086)	(7,257)	(34,181)	(12,526)	(66,467)	(69,050)	(49,886)
Basic and diluted net loss per share	$ (0.2)	$ (0.1)	$ (0.16)	$ (0.09)	$ (0.12)	$ (0.06)	$ (0.28)	$ (0.1)	$ (0.54)	$ (0.57)	$ (0.42)
Consolidated Statements of Cash Flows [Abstract]
Net loss	(24,692)	(12,216)	(19,015)	(10,544)	(15,086)	(7,257)	(34,181)	(12,526)	(66,467)	(69,050)	(49,886)
Amortization of entrance fees									(25,362)	(23,966)	(22,782)
Deferred income tax (benefit) provision									(525)	383	(33,925)
As Reported [Member]
Consolidated Balance Sheets [Abstract]
Refundable entrance fees and deferred revenue	361,360				327,808				361,360	327,808
Deferred tax liability	99,851				112,736				99,851	112,736
Accumulated deficit	(949,696)				(884,051)				(949,696)	(884,051)
Consolidated Statements of Operations [Abstract]
Resident fees									2,414,283	2,291,757	2,207,673
Total revenue									2,770,085	2,457,918	2,280,535
Loss before income taxes									(63,601)	(65,835)	(80,333)
(Provision) benefit for income taxes									(2,044)	(2,340)	31,432
Net loss									(65,645)	(68,175)	(48,901)
Basic and diluted net loss per share									$ (0.54)	$ (0.56)	$ (0.41)
Consolidated Statements of Cash Flows [Abstract]
Net loss									(65,645)	(68,175)	(48,901)
Amortization of entrance fees									(26,709)	(25,401)	(24,397)
Deferred income tax (benefit) provision									0	943	(33,295)
Adjustment [Member]
Consolidated Balance Sheets [Abstract]
Refundable entrance fees and deferred revenue	9,395				8,048				9,395	8,048
Deferred tax liability	(3,664)				(3,139)				(3,664)	(3,139)
Accumulated deficit	(5,731)				(4,909)				(5,731)	(4,909)
Consolidated Statements of Operations [Abstract]
Resident fees									(1,347)	(1,435)	(1,615)
Total revenue									(1,347)	(1,435)	(1,615)
Loss before income taxes									(1,347)	(1,435)	(1,615)
(Provision) benefit for income taxes									525	560	630
Net loss									(822)	(875)	(985)
Basic and diluted net loss per share									$ 0	$ (0.01)	$ (0.01)
Consolidated Statements of Cash Flows [Abstract]
Net loss									(822)	(875)	(985)
Amortization of entrance fees									1,347	1,435	1,615
Deferred income tax (benefit) provision									$ (525)	$ (560)	$ (630)

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Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2012

Acquisitions and Dispositions [Abstract]

Acquisitions and Dispositions

4.Acquisitions and Dispositions

2012 Acquisitions and Dispositions

Effective February 2, 2012, the Company acquired the underlying real estate associated with nine communities that were previously leased for an aggregate purchase price of $121.3 million. The results of operations of these communities, prior and subsequent to the acquisition, are reported in the Retirement Centers segment. The Company financed the transaction with $77.9 million of first mortgage financing secured by seven of the communities and $15.0 million of seller-financing secured by two of the communities (Note 9).  The purchase price of the acquisitions has primarily been ascribed to the basis of the buildings acquired and recorded on the consolidated balance sheet under property, plant and equipment and leasehold intangibles, net.

During the month ended December 31, 2012, the Company acquired the underlying real estate interest in 12 communities that the Company previously leased for an aggregate purchase price of $162.1 million.  The results of operations of the previously leased communities are included in the consolidated financial statements from the effective dates of the respective lease agreements and are reported in the Assisted Living and Retirement Centers segments.  The purchase price of the acquisitions has primarily been ascribed to the basis of the buildings acquired and recorded on the consolidated balance sheet under property, plant and equipment and leasehold intangibles, net.

During the year ended December 31, 2012, the Company recognized an $11.6 million net gain on facility lease termination from the reversal of deferred lease liabilities associated with the termination of operating lease contracts in connection with the acquisition of the underlying real estate of the previously leased communities.

During the year ended December 31, 2012, the Company purchased four home health agencies and an existing skilled nursing facility as part of its growth strategy for an aggregate purchase price of approximately $7.0 million.  The purchase price of the acquisitions has primarily been ascribed to an indefinite useful life intangible asset and recorded on the consolidated balance sheet under other intangible assets, net.

During the year ended December 31, 2012, the Company sold one community for an aggregate selling price of $8.9 million.  The results of operations of the community were previously reported in the Assisted Living segment.

2011 Acquisitions and Dispositions

Effective January 13, 2011, the Company acquired the underlying real estate interest in 12 assisted living communities that the Company previously leased for an aggregate purchase price of $31.3 million, which was paid from cash on hand.  The results of operations of the previously leased communities are included in the consolidated financial statements from the effective date of the lease agreement and are reported in the Assisted Living segment.

Effective February 1, 2011, the Company acquired the underlying real estate interest in one assisted living community that the Company previously leased for an aggregate purchase price of $9.8 million, which was paid from cash on hand.  The results of operations of the previously leased community are included in the consolidated financial statements from the effective date of the lease agreement and are reported in the Assisted Living segment.

Effective February 1, 2011, the Company acquired one assisted living community for an aggregate purchase price of $9.2 million, which was paid from cash on hand.  The results of operations of the acquired community are included in the consolidated financial statements from the effective date of the acquisition and are reported in the Assisted Living segment.

Effective November 1, 2011, the Company acquired one assisted living community that the Company previously managed for an aggregate purchase price of $30.2 million, which was paid from cash on hand.  A former executive officer of the Company had an ownership interest in the community prior to the acquisition.  The results of operations of the acquired community are included in the consolidated financial statements from the effective date of the acquisition and are reported in the Assisted Living segment.

During the year ended December 31, 2011, the Company purchased three home health agencies as part of its growth strategy for an aggregate purchase price of approximately $4.2 million.  The entire purchase price of the acquisitions has been ascribed to an indefinite useful life intangible asset and recorded on the consolidated balance sheet under other intangible assets, net.

During the year ended December 31, 2011, the Company sold four communities for an aggregate selling price of $30.8 million.  The results of operations of the communities were previously reported in the Retirement Centers and Assisted Living segments.

Horizon Bay/HCP Transactions

On September 1, 2011, the Company acquired 100% of the equity and voting interests in Horizon Bay Realty, L.L.C. ("Horizon Bay").  The results of Horizon Bay's operations have been included in the consolidated financial statements since that date.  Horizon Bay is a seniors housing management company primarily focused on managing large portfolios of retirement communities across the United States for institutional real estate investors.  In connection with the acquisition, the Company also restructured Horizon Bay's existing relationship with HCP, Inc. ("HCP") relating to 33 communities that Horizon Bay leased from HCP. In particular, the Company (i) formed a joint venture with HCP to own and operate 21 communities (the "HCP RIDEA JV"), and (ii) leased the remaining 12 communities from HCP under long-term, triple net leases. Of these 12 communities, the Company assumed the pre-existing lease for eight communities and entered into a new lease for the remaining four communities.  The joint venture with HCP utilizes a RIDEA structure with the Company having acquired a 10% non-controlling interest in the joint venture. The Company also manages the communities under a ten-year management agreement with four five-year renewal options and retains all ancillary services operations.

As part of the transactions, the Company entered into an agreement to restructure Horizon Bay's management arrangements with Chartwell Seniors Housing Real Estate Investment Trust ("Chartwell").  Certain elements of the Chartwell management arrangement restructuring are subject to lender and other third party approvals. Until such approvals are received, the Company will operate Chartwell's properties under the existing management contracts.

The aggregate acquisition-date fair value of the purchase consideration transferred for the acquisition of Horizon Bay was approximately $10.7 million which consisted of the following (dollars in thousands):

Fair value of consideration transferred
Cash	$	6,500
Common stock (96,862 shares)		1,538
Contingent consideration		2,708
Total	$	10,746

The fair value of the 96,862 common shares issued was determined based on the closing market price of the Company's common shares on the acquisition date.

The aggregate acquisition-date fair value of the purchase consideration transferred for the acquisition of Horizon Bay included $2.7 million of contingent consideration. The contingent consideration arrangement requires the Company to pay up to a maximum of approximately $3.4 million to Horizon Bay's former members.  The Company estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model.  This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. The key assumption in applying the income approach was the assignment of probabilities to the various possible outcomes.  During the year ended December 31, 2012, the Company paid approximately $1.2 million in contingent consideration.  As of December 31, 2012, there were no significant changes in the range of outcomes for the contingent consideration recognized as a result of the acquisition of

Horizon Bay.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (dollars in thousands):

Purchase price allocation
Current assets	$	24,064
Property and equipment		2,167
Acquired lease intangibles		5,965
Current liabilities		(15,979	)
Long-term debt		(1,821	)
Other liabilities		(1,482	)
Deferred tax liability		(822	)
Gain on acquisition		(1,346	)
Total	$	10,746

The Company purchased 100% of Horizon Bay in a transaction that involved the restructuring of certain leases and other elements of Horizon Bay's capital structure.  The fair value of identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration transferred.  Consequently, the Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that all acquired assets and assumed liabilities were recognized and that the valuation procedures and resulting measures were appropriate.  As a result, the Company recognized a net non-cash gain of $2.0 million during the year ended December 31, 2011 which was subsequently reduced by approximately $0.6 million during the year ended December 31, 2012 due to adjustments related to pre-acquisition self-insurance reserves.

The Company recognized $14.4 million of integration and transaction-related costs that were expensed in 2011.  These costs are included in the consolidated statements of operations in the line item entitled "general and administrative expenses."

In connection with the formation of the HCP RIDEA JV, the Company contributed cash of $13.7 million for a 10% interest in the joint venture.  The Company has accounted for this interest under the equity method of accounting.

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CONSOLIDATED STATEMENTS OF EQUITY (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balances at beginning of period at Dec. 31, 2009 (as previously reported [Member])	$ 1,086,582	$ 1,232	$ 1,882,377	$ (29,187)	$ (766,975)	$ (865)
Balances at beginning of period at Dec. 31, 2009	1,083,533	1,232	1,882,377	(29,187)	(770,024)	(865)
Balances at beginning of period - shares (in share) at Dec. 31, 2009	123,206,000
Compensation expense related to restricted stock grants	20,759	0	20,759	0	0	0
Net loss	(49,886)	0	0	0	(49,886)	0
Net loss at Jan. 01, 2010 (as previously reported [Member])	(48,901)
Issuance of common stock under Associate Stock Purchase Plan	1,020	1	1,019	0	0	0
Issuance of common stock under Associate Stock Purchase Plan - shares (in shares)	63,000
Restricted stock, net	0	10	(10)	0	0	0
Restricted stock, net - shares (in shares)	1,048,000
Reclassification of realized gain on marketable securities - restricted into earnings	0
Reclassification of net gains on derivatives into earnings	505	0	0	0	0	505
Amortization of payments from settlement of forward interest rate swaps	376	0	0	0	0	376
Other	344	0	1	0	0	343
Balances at end of period at Dec. 31, 2010	1,055,963	1,243	1,904,144	(29,187)	(819,910)	(327)
Balances at end of period - shares (in shares) at Dec. 31, 2010	124,317,000
Compensation expense related to restricted stock grants	19,856	0	19,856	0	0	0
Net loss	(69,050)	0	0	0	(69,050)	0
Net loss at Jan. 01, 2011 (as previously reported [Member])	(68,175)
Common stock issued in connection with an acquisition	1,538	1	1,537	0	0	0
Common stock issued in connection with an acquisition (in shares)	97,000
Equity component of convertible notes, net	76,801	0	76,801	0	0	0
Adjustments to additional paid in capital purchase of bond hedge	(77,007)	0	(77,007)	0	0	0
Issuance of warrants	45,066	0	45,066	0	0	0
Issuance of common stock under Associate Stock Purchase Plan	1,258	0	1,258	0	0	0
Issuance of common stock under Associate Stock Purchase Plan - shares (in shares)	68,000
Restricted stock, net	0	10	(10)	0	0	0
Restricted stock, net - shares (in shares)	2,089,000
Unrealized loss on marketable securities - restricted	(998)	0	0	0	0	(998)
Reclassification of realized gain on marketable securities - restricted into earnings	0
Reclassification of net gains on derivatives into earnings	134	0	0	0	0	134
Amortization of payments from settlement of forward interest rate swaps	376	0	0	0	0	376
Purchase of treasury stock	17,613	0	0	17,613	0	0
Purchase of treasury stock (in shares)	1,217,100
Other	1,025	0	825	0	0	200
Balances at end of period at Dec. 31, 2011	1,035,299	1,254	1,970,820	(46,800)	(888,960)	(1,015)
Balances at end of period - shares (in shares) at Dec. 31, 2011	125,354,137
Compensation expense related to restricted stock grants	25,520	0	25,520	0	0	0
Net loss	(66,467)	0	0	0	(66,467)	0
Net loss at Jan. 01, 2012 (as previously reported [Member])	(65,645)
Issuance of common stock under Associate Stock Purchase Plan	1,401	0	1,401	0	0	0
Issuance of common stock under Associate Stock Purchase Plan - shares (in shares)	74,000
Restricted stock, net	(87)	13	(100)	0	0	0
Restricted stock, net - shares (in shares)	1,261,000
Unrealized loss on marketable securities - restricted	1,846	0	0	0	0	1,846
Reclassification of realized gain on marketable securities - restricted into earnings	(848)	0	0	0	0	(848)
Reclassification of net gains on derivatives into earnings	(79)	0	0	0	0	(79)
Amortization of payments from settlement of forward interest rate swaps	179	0	0	0	0	179
Other	(222)	0	(305)	0	0	83
Balances at end of period at Dec. 31, 2012	$ 996,986	$ 1,267	$ 1,997,946	$ (46,800)	$ (955,427)	$ 0
Balances at end of period - shares (in shares) at Dec. 31, 2012	126,689,545

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Description of Business and Organization (Details)	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2005	Jun. 28, 2005
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Common stock, shares authorized (in shares)	200,000,000	200,000,000	200,000,000	5,000,000
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000	50,000,000	5,000,000

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Supplemental Disclosure of Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2012

Supplemental Disclosure of Cash Flow Information [Abstract]

Supplemental cash flow information

19.Supplemental Disclosure of Cash Flow Information

(dollars in thousands)	For the Years Ended December 31,
	2012		2011		2010
Interest paid	$	130,009	$	125,047	$	132,425
Income taxes paid	$	2,658	$	2,431	$	2,223
Write-off of deferred financing costs	$	744	$	2,080	$	2,878

Acquisitions of assets, net of related payables and cash received, net:
Cash and escrow deposits-restricted	$	2,169		$	—	$	—
Prepaid expenses and other current assets		(2,817	)		—		—

Property, plant and equipment and leasehold intangibles		257,772			80,514			52,900
Other intangible assets, net		9,575			4,244			7,963
Other assets, net		(7,327	)		3,955			(2,870	)
Accrued expenses		(573	)		(31	)		(45	)
Other liabilities		3,601			—			—
Long-term debt and capital and financing lease obligations		10,123			—			—
Net	$	272,523		$	88,682		$	57,948
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired:
Property, plant and equipment and leasehold intangibles, net	$	—		$	8,132		$	—
Cash and escrow deposits—restricted		—			10,702			—
Accounts receivable, net		—			2,479			—
Long-term debt, less current portion		—			(1,821	)		—
Accrued expenses		—			(15,141	)		—
Other liabilities		—			(6,347	)		—
Common Stock		—			(1	)		—
Additional paid-in-capital		—			(1,537	)		—
Accumulated earnings		—			(1,982	)		—
Net	$	—		$	(5,516	)	$	—
Reinvested income on marketable securities - restricted	$	1,156		$	$1,426		$	—
Supplemental Schedule of Noncash Operating, Investing and Financing Activities:
Capital leases:
Property, plant and equipment and leasehold intangibles, net	$	13,852		$	―		$	5,791
Long-term debt		(13,852	)		―			(5,791	)
Net	$	—		$	—		$	—

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VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2012

VALUATION AND QUALIFYING ACCOUNTS [Abstract]

VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

December 31, 2012

(In thousands)

			Additions
Description	Balance atbeginning ofperiod		Charged tocosts andexpenses			Chargedto otheraccounts			Deductions			Balance atend ofperiod
Allowance for Doubtful Accounts:
Year ended December 31, 2010	$	13,907	$	13,816		$	179		$	(13,438	)	$	14,464
Year ended December 31, 2011	$	14,464	$	16,796		$	1,817		$	(16,105	)	$	16,972
Year ended December 31, 2012	$	16,972	$	15,683		$	660		$	(18,053	)	$	15,262
Deferred Tax Valuation Allowance: Account:
Year ended December 31, 2010	$	10,708	$	―		$	137	(1)	$	—		$	10,845
Year ended December 31, 2011	$	10,845	$	29,348	(2)	$	1,141	(3)	$	(514	)(4)	$	40,820
Year ended December 31, 2012	$	40,820	$	26,989	(5)	$	(2,540	)(6)	$	—		$	65,269

(1) Adjustment to valuation allowance for state net operating losses of $137.

(2) Adjustment to valuation allowance for federal net operating losses and federal credits of $22,940 and $6,408, respectively.

(3) Adjustment to valuation allowance for state net operating losses of $1,141.

(4) Adjustment to valuation allowance for state credits of $514.

(5) Adjustment to valuation allowance for federal net operating losses and federal credits of $26,589, and $400, respectively.

(6) Adjustment to valuation allowance for state net operating losses of $(2,540).

See accompanying report of independent registered public accounting firm

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Stock-Based Compensation (Details) (USD $)	12 Months Ended				3 Months Ended				12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2012 Restricted Stock [Member]	Sep. 30, 2012 Restricted Stock [Member]	Jun. 30, 2012 Restricted Stock [Member]	Mar. 31, 2012 Restricted Stock [Member]	Dec. 31, 2012 Employee Stock Purchase Plan [Member]
Restricted stock awards [Roll Forward]
Balance (in shares)	3,952,000	4,222,000	3,540,000	3,915,000
Granted (in shares)	1,592,000	2,091,000	1,341,000		93,000	128,000	85,000	1,286,000
Vested (in shares)	(1,435,000)	(1,207,000)	(1,423,000)
Cancelled or forfeited (in shares)	(427,000)	(202,000)	(293,000)
Weighted-average grant-date fair value of restricted shares and restricted stock units granted (in dollars per share)	$ 19.20	$ 16.20	$ 16.92
Weighted-average grant-date fair value of restricted shares and restricted stock units vested (in dollars per share)	$ 14.28	$ 16.43	$ 16.90
Weighted-average grant-date fair value of restricted shares and restricted stock units cancelled/forfeited (in dollars per share)	$ 15.62	$ 15.34	$ 15.93
Weighted-average grant-date fair value of restricted shares and restricted stock units unvested (in dollars per share)	$ 16.67	$ 14.93	$ 14.76	$ 14.62
Unrecognized compensation cost related to nonvested share-based compensation arrangements granted	$ 44,200,000
Period over which cost is expected to be recognized (in years)	2 years 5 months
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Shares Granted (in shares)	1,592,000	2,091,000	1,341,000		93,000	128,000	85,000	1,286,000
Value Per Share minimum (in dollars per share)					$ 23.31	$ 16.66	$ 18.72	$ 17.39
Value Per Share maximum (in dollars per share)					$ 23.99	$ 17.74	$ 19.55	$ 19.07
Total value of restricted shares granted					$ 2,231,000	$ 2,135,000	$ 1,666,000	$ 24,524,000
Percentage of estimated forfeitures, minimum	0.00%
Percentage of estimated forfeitures, maximum	10.00%
Percentage payroll deduction that each employee may deduct									15.00%
Percentage of closing market price paid for purchase of whole shares									90.00%
Initial number of shares reserved (in shares)									1,000,000
Annual increase in number of shares available for issuance (in shares)									200,000

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Other Assets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Notes receivable	$ 34,968	$ 32,844
Deferred costs, net	24,517	26,032
Lease security deposits	38,544	36,748
Other	15,286	14,310
Total	$ 113,315	$ 109,934

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Facility Operating Leases

12 Months Ended

Dec. 31, 2012

Facility Operating Leases [Abstract]

Facility Operating Leases

11.Facility Operating Leases

The Company has entered into sale leaseback and lease agreements with certain real estate investment trusts (REITs). Under these agreements communities are either sold to the REIT and leased back or a long-term lease agreement is entered into for the communities. The initial lease terms vary from 10 to 20 years and include renewal options ranging from 5 to 30 years.  The Company is responsible for all operating costs, including repairs, property taxes and insurance. The substantial majority of the Company's lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease.  The Company typically guarantees its performance and the lease payments under the master lease and the lease may include performance covenants, such as net worth, minimum capital expenditure requirements per community per annum and minimum lease coverage ratios.  Failure to comply with these covenants could result in an event of default.  Certain leases contain cure provisions generally requiring the posting of an additional lease security deposit if the required covenant is not met.

As of December 31, 2012 and 2011, the Company operated 329 and 350 communities, respectively, under long-term leases (275 operating leases and 54 capital and financing leases at December 31, 2012).  The remaining base lease terms vary from one year to 14 years and generally provide for renewal, extension and purchase options. The Company expects to renew, extend or exercise purchase options in the normal course of business; however, there can be no assurance that these rights will be exercised in the future.

One lease required posting of a lease security deposit in an interest bearing account at closing.  The lease security deposit will be released upon achieving certain lease coverage ratios.  The Company agreed to spend a minimum of $450 per unit per year on capital improvements of which the lessor will reduce the security deposit by the same amount up to $600 per unit, or $2.7 million per year. For the years ended December 31, 2012, 2011 and 2010, a release of $0.1 million, $2.6 million and $2.7 million, respectively, was received related to this lease security deposit.

A summary of facility lease expense and the impact of straight-line adjustment and amortization of deferred gains are as follows (dollars in thousands):

	For the Years Ended December 31,
	2012			2011			2010
Cash basis payment	$	281,729		$	270,623		$	264,727
Straight-line expense		6,668			8,608			10,521
Amortization of deferred gain		(4,372	)		(4,373	)		(4,343	)
Facility lease expense	$	284,025		$	274,858		$	270,905

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Goodwill and Other Intangible Assets, Net

12 Months Ended

Dec. 31, 2012

Goodwill and Other Intangible Assets, Net [Abstract]

Goodwill and Other Intangible Assets, Net

7.Goodwill and Other Intangible Assets, Net

The following is a summary of changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 presented on an operating segment basis (dollars in thousands):

	December 31, 2012										December 31, 2011
	Gross Carrying Amount		Adjustment			Accumulated Impairment and Other Charges			Net		Gross Carrying Amount		Adjustment			Accumulated Impairment and Other Charges			Net
Retirement Centers	$	7,642	$	(34	)	$	(487	)	$	7,121	$	7,642	$	(34	)	$	(487	)	$	7,121
Assisted Living		102,680		(106	)		(142	)		102,432		102,680		(106	)		(142	)		102,432
CCRCs – Rental		56,281		—			(56,281	)		—		56,281		—			(56,281	)		—
CCRCs – Entry Fee		158,718		—			(158,718	)		—		158,718		—			(158,718	)		—
Total	$	325,321	$	(140	)	$	(215,628	)	$	109,553	$	325,321	$	(140	)	$	(215,628	)	$	109,553

The following is a summary of other intangible assets at December 31, 2012 and 2011 (dollars in thousands):

	December 31, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Community purchase options	$	147,610	$	(21,263	)	$	126,347	$	147,610	$	(17,566	)	$	130,044
Health care licenses		31,082		—			31,082		24,092		—			24,092
Management contracts and other		160,626		(158,113	)		2,513		158,041		(158,041	)		—
Total	$	339,318	$	(179,376	)	$	159,942	$	329,743	$	(175,607	)	$	154,136

Amortization expense related to definite-lived intangible assets for the years ended December 31, 2012, 2011 and 2010 was $3.8 million, $21.3 million and $34.8 million, respectively.

Estimated amortization expense related to intangible assets with definite lives at December 31, 2012, for each of the years in the five-year period ending December 31, 2017 and thereafter is as follows (dollars in thousands):

Year Ending December 31,	Future Amortization
2013	$	4,560
2014		4,560
2015		4,488
2016		3,698
2017		3,698
Thereafter		107,856
Total	$	128,860

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Share Repurchase Program (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Share Repurchase Program [Abstract]
Authorized share repurchased program amount	$ 100,000,000
Repurchased shares (in shares)		1,217,100
Cost of repurchased shares		17,613,000
Amount available under the share repurchase program	$ 82,400,000

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Related Party Transactions

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions

14.Related Party Transactions

Under the terms of the registration rights provisions of the Company's Stockholders Agreement, the Company is generally obligated to pay all fees and expenses incurred in connection with certain public offerings by affiliates of Fortress Investment Group LLC ("Fortress") (other than underwriting discounts, commissions and transfer taxes).  In connection with the Company's obligations thereunder, the Company incurred approximately $0.6 million of expenses in 2010 related to the public equity offerings of Company shares by Fortress affiliates.

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Self-Insurance

12 Months Ended

Dec. 31, 2012

Self-Insurance [Abstract]

Self-Insurance

12.Self-Insurance

The Company obtains various insurance coverages from commercial carriers at stated amounts as defined in the applicable policy. Losses related to deductible amounts are accrued based on the Company's estimate of expected losses plus incurred but not reported claims. As of December 31, 2012 and 2011, the Company accrued $77.7 million and $72.8 million, respectively, for the self-insured portions of these programs, of which $40.0 million and $37.7 million is classified as long-term as of December 31, 2012 and 2011, respectively.

The Company has secured self-insured retention risk under workers' compensation and general liability and professional liability programs with cash and letters of credit.  Cash securing the programs aggregated $16.1 million and $17.3 million as of December 31, 2012 and 2011, respectively. Letters of credit securing the programs aggregated $40.7 million as of December 31, 2012 and 2011.

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Document and Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Feb. 14, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Brookdale Senior Living Inc.
Entity Central Index Key	0001332349
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1.5
Entity Common Stock, Shares Outstanding		122,737,924
Document Type	8-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012

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Retirement Plans

12 Months Ended

Dec. 31, 2012

Retirement Plans [Abstract]

Retirement Plans

13.Retirement Plans

The Company maintains a 401(k) Retirement Savings Plan for all employees that meet minimum employment criteria. The plan provides that the participants may defer eligible compensation on a pre-tax basis subject to certain Internal Revenue Code maximum amounts.  Effective January 1, 2010, the Company began making matching contributions in amounts equal to 12.5% of the employee's contribution to the plan, up to a maximum of 4.0% of contributed compensation and, effective January 1, 2011, the Company's matching contribution was raised to 25% of the employee's contribution to the plan subject to the same limit.  An additional matching contribution of 12.5%, subject to the same limit on contributed compensation, may be made at the discretion of the Company, based upon the Company's performance.  For the years ended December 31, 2012, 2011 and 2010, the Company's expense to the plan was $4.8 million, $3.1 million and $2.3 million, respectively.

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Accrued Expenses (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Accrued Expenses [Abstract]
Salaries and wages	$ 71,567	$ 52,268
Insurance reserves	37,717	35,066
Vacation	24,697	23,565
Real estate taxes	22,178	22,690
Lease payable	8,915	9,017
Interest	7,644	7,782
Income taxes	2,469	1,919
Other	25,708	31,327
Total	$ 200,895	$ 183,634

XML

Debt (Details) (USD $)	12 Months Ended							12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		3 Months Ended	12 Months Ended				12 Months Ended			12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Line of Credit [Member]	Feb. 23, 2011 Line of Credit [Member]	Jan. 31, 2011 Line of Credit [Member]	Dec. 31, 2012 Secured and unsecured letter of credit facilities	Dec. 31, 2012 Interest Rate Swap [Member]	Dec. 31, 2011 Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Cap [Member]	Dec. 31, 2011 Interest Rate Cap [Member]	Dec. 31, 2012 Mortgages Payable [Member]	Dec. 31, 2011 Mortgages Payable [Member]	Dec. 31, 2012 $150 Million Series A Notes Payable [Member]	Dec. 31, 2011 $150 Million Series A Notes Payable [Member]	Dec. 31, 2012 Discount Mortgage Note payable due June 2013 [Member]	Dec. 31, 2011 Discount Mortgage Note payable due June 2013 [Member]	Dec. 31, 2012 Variable rate tax exempt bonds [Member]	Dec. 31, 2011 Variable rate tax exempt bonds [Member]	Dec. 31, 2012 Capital Lease Obligations [Member]	Dec. 31, 2011 Capital Lease Obligations [Member]	Jun. 30, 2011 Convertible Debt [Member]	Dec. 31, 2012 Convertible Debt [Member]	Dec. 31, 2011 Convertible Debt [Member]	Dec. 31, 2012 Construction Financing [Member]	Dec. 31, 2011 Construction Financing [Member]	Dec. 31, 2012 Notes Payable, Insurance Premiums Due 2013 [Member]	Dec. 31, 2011 Notes Payable, Insurance Premiums Due 2013 [Member]	Dec. 31, 2012 Long-term Debt [Member]	Dec. 31, 2012 First mortgage loan issued in January 2012 [Member]	Jan. 05, 2012 First mortgage loan issued in January 2012 [Member]	Dec. 31, 2012 First mortgage loan issued in February 2012 [Member]	Feb. 29, 2012 First mortgage loan issued in February 2012 [Member]	Dec. 31, 2012 Mortgage Loan Issued to Finance Acquisition [Member]	Feb. 02, 2012 Mortgage Loan Issued to Finance Acquisition [Member]	Dec. 31, 2012 Seller-Financed Debt [Member]	Feb. 02, 2012 Seller-Financed Debt [Member]	Dec. 31, 2012 First mortgage loan issued in June 2012 [Member]	Jun. 29, 2012 First mortgage loan issued in June 2012 [Member]	Dec. 31, 2012 First mortgage loan issued in December 2012 [Member]	Dec. 28, 2012 First mortgage loan issued in December 2012 [Member]	Dec. 31, 2011 First mortgage loan issued in March 2011 [Member]	Mar. 29, 2011 First mortgage loan issued in March 2011 [Member]	Dec. 31, 2011 Subsequent debt under master Credit Facility [Member]	Jul. 29, 2011 Subsequent debt under master Credit Facility [Member]
Debt Instrument [Line Items]
Debt	$ 2,599,369,000	$ 2,398,625,000										$ 1,701,515,000	$ 1,470,462,000	$ 144,384,000	$ 148,601,000	$ 80,533,000	$ 79,911,000	$ 99,847,000	$ 100,423,000	$ 319,745,000	$ 348,195,000		$ 251,312,000	$ 241,897,000	$ 1,280,000	$ 6,591,000	$ 753,000	$ 2,545,000	$ 2,279,624,000
Less current portion	509,543,000	47,654,000
Long-term debt	2,089,826,000	2,350,971,000
Maturity date				Jan. 31, 2016										Aug. 31, 2013		Jun. 30, 2013		Dec. 31, 2032		Dec. 31, 2026			Jun. 30, 2018				Dec. 31, 2013			Jan. 31, 2017		Feb. 28, 2017						Jun. 30, 2017				Mar. 31, 2016		Aug. 31, 2018
Maturity date, start												Dec. 31, 2013													Dec. 31, 2017
Maturity date, end												Dec. 31, 2022													Dec. 31, 2024
Weighted average interest rate												4.62%	5.04%			2.56%	2.52%	1.65%	1.65%	8.16%	8.61%		2.75%	2.75%	8.00%	7.00%	2.81%	3.11%
Unamortized debt discount	66,267,000											300,000				1,000,000	3,000,000			0			65,000,000	74,400,000					66,267,000
Number of communities securing debt (in number of communities)														5																								2		9				44
Amount of cash collateral securing debt														3,000,000
Description of variable rate basis														LIBOR plus 0.88%																variable rate equal to 30-day LIBOR plus a margin of 300 basis points		variable rate equal to 30-day LIBOR plus a margin of 275 basis points						bears interest at a variable rate equal to 30-day LIBOR plus a margin of 425 basis points		variable rate equal to 30-day LIBOR plus a margin of 259 basis points
Basis spread on variable rate basis														0.88%																	3.00%		2.75%						4.25%		2.59%
Principal																						316,300,000	316,300,000								63,000,000		20,000,000		77,900,000		15,000,000		15,000,000		171,300,000		28,000,000		437,800,000
Current Portion of Mortgage Loans	465,600,000
Current Portion of Mortgage Loans with Extension Options	205,500,000
Minimum Term of Debt Extension (in years)	5
Maximum Term of Debt Extension (in years)	7
Net proceeds from issuance																						308,200,000
Initial conversion rate (in shares per $1,000 of principal)																						34.1006
Equivalent initial conversion price (in dollars per share)																						$ 29.325
Conversion terms																						The Notes are convertible at an initial conversion rate of 34.1006 shares of Company common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $29.325 per share), subject to adjustment. Holders may convert their Notes at their option prior to the close of business on the second trading day immediately preceding the stated maturity date only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending September 30, 2011, if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the "measurement period"), in which the trading price per $1,000 principal amount of notes for each trading day of that measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the applicable conversion rate on each such day; or (iii) upon the occurrence of specified corporate events. On and after March 15, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Unconverted Notes mature at par in June 2018.
Imputed interest rate																						7.50%
Expected life of convertible debt																						7 years
Coupon interest	128,338,000	124,873,000	132,641,000																				8,697,000	4,759,000
Amortization of discount																							9,415,000	4,456,000
Interest Expense																							18,112,000	9,215,000
Number of shares of common stock covered by hedging transactions (in shares)																						10,784,315
Number of warrants to acquire common stock sold to Hedge Counterparties (in shares)																						10,784,315
Strike price of warrants (in dollars per share)																						$ 40.25
Net cost of hedging transaction																						31,900,000
Extinguishment of Debt, Amount		5,000,000																						274,900,000						62,800,000								15,000,000		37,400,000		28,000,000		445,200,000
Interest rate terms																																		75% of it bears interest at a fixed rate of 4.2% and the remaining 25% bears interest at a variable rate of 30-day LIBOR plus a margin of 276 basis points		bore interest at a fixed rate of 7.0%						bears interest at a rate that has been effectively fixed at 5.49% by means of a swap instrument issued by the lender		75% of the loans bear interest at a fixed rate of 4.25% while the remaining 25% of the loans bear interest at a variable rate equal to the 30-day LIBOR plus a margin of 182 basis points
Term of loan (in years)																																			10		2				10
Number of recently acquired communities securing mortgage notes																																								8
Extinguishment of debt with release of entrance fee escrows		37,900,000
Extinguishment of debt and moved into borrowing base of credit facility		48,700,000
Loss on extinguishment of debt	(221,000)	(18,863,000)	(1,557,000)
Amortization period (in years)																																													30
Long-term debt maturity [Abstract]
2013	546,494,000																			55,828,000									490,666,000
2014	225,770,000																			55,065,000									170,705,000
2015	107,843,000																			53,401,000									54,442,000
2016	97,600,000																			46,957,000									50,643,000
2017	402,477,000																			60,494,000									341,983,000
Thereafter	1,448,857,000																			211,405,000									1,237,452,000
Total obligations	2,829,041,000																			483,150,000									2,345,891,000
Unamortized debt discount	66,267,000											300,000				1,000,000	3,000,000			0			65,000,000	74,400,000					66,267,000
Less amount representing interest	(163,405,000)																			(163,405,000)									0
Total	2,599,369,000	2,398,625,000										1,701,515,000	1,470,462,000	144,384,000	148,601,000	80,533,000	79,911,000	99,847,000	100,423,000	319,745,000	348,195,000		251,312,000	241,897,000	1,280,000	6,591,000	753,000	2,545,000	2,279,624,000
Derivative [Line Items]
Current notional balance								27,373,000		589,568,000
Highest possible notional								27,373,000		589,568,000
Lowest interest rate								5.49%		5.00%
Highest interest rate								5.49%		6.06%
Average fixed rate								5.49%		5.43%
Earliest maturity date								4 years		1 year
Latest maturity date								4 years		6 years
Weighted average original maturity								5 years		3 years 6 months
Estimated liability fair value (included in other liabilities)								(1,833,000)	(2,809,000)
Estimated asset fair value (included in other assets)										495,000	0
Number of swaps agreements terminated								1
Notional amount of swap agreement terminated								150,000,000
Cash collateral paid to counterparties pursuant to swap termination								1,200,000
Number of new agreements										3
Notional amount of new agreements										340,800,000
Number of cap agreements, extended maturity										5
Aggregate notional amount, extended maturities cap agreements										100,800,000
Line of Credit Facility [Line Items]
Credit Facility, maximum borrowing capacity				230,000,000	200,000,000	120,000,000	92,500,000
Maturity date				Jan. 31, 2016										Aug. 31, 2013		Jun. 30, 2013		Dec. 31, 2032		Dec. 31, 2026			Jun. 30, 2018				Dec. 31, 2013			Jan. 31, 2017		Feb. 28, 2017						Jun. 30, 2017				Mar. 31, 2016		Aug. 31, 2018
Description of applicable margin calculation based on utilization percentage				Amounts drawn under the facility bear interest at 90-day LIBOR plus an applicable margin, as described below. For purposes of determining the interest rate, in no event will LIBOR be less than 2%. The applicable margin varies with the percentage of total commitment drawn, with a 4.5% margin at 35% or lower utilization, a 5.0% margin at utilization greater than 35% but less than or equal to 50% and a 5.5% margin at greater than 50% utilization. The Company is also required to pay a quarterly commitment fee of 1.0% per annum on the unused portion of the facility.
Quarterly commitment fee				1.00%
Availability under the secured line of credit				191,400,000
Credit facilities borrowings outstanding				$ 80,000,000			$ 78,100,000