EXHIBIT 99.2

COMPLETE APPRAISAL OF
   REAL PROPERTY

Retirement Inn of Burlingame
250 Myrtle Road
Burlingame, San Mateo County, California
94010

IN A SELF-CONTAINED
   APPRAISAL REPORT

As of 10/15/03

Prepared For:
ARV Assisted Living, Inc.
245 Fischer Avenue, D-1
Costa Mesa, CA 92626

Prepared By:
Cushman & Wakefield of Oregon, Inc.
Senior Housing/Healthcare Industry Group
Valuation Services, Advisory Group
200 S.W. Market Street, Suite 200
Portland, OR 97201

C&W File ID: 03-34001-9383

VALUATION SERVICES	ADVISORY GROUP

Cushman & Wakefield of Oregon, Inc.

200 S.W. Market Street, Suite 200

Portland, OR 97201

503-279-1734 Tel

503-279-1791 Fax

WWW.CWVAS.COM

October 23, 2003

Douglas Armstrong
Senior Vice President and General Counsel
ARV Assisted Living, Inc.
245 Fischer Avenue, D-1
Costa Mesa, CA 92626

Re:	Complete Appraisal of Real Property
	In a Self-Contained Report
	Retirement Inn of Burlingame
	250 Myrtle Road
	Burlingame, San Mateo County, California 94010
	C&W File ID: 03-34001-9383

Dear Mr. Armstrong:

In fulfillment of our agreement as outlined in the Letter of Engagement, we are pleased to transmit our complete appraisal report (the “Appraisal”) on the property referenced above.

The value opinion reported below is qualified by certain assumptions, limiting conditions, certifications, and definitions, which are set forth in the Appraisal. We particularly call your attention to the following Extraordinary Assumptions and Hypothetical Conditions:

Extraordinary Assumptions:	This Appraisal assumes that the property continues to meet the licensing requirements of the State of California as a residential care facility for the elderly and continues to remain in compliance with applicable life safety codes.
	This Appraisal employs no other Extraordinary Assumptions.
Hypothetical Conditions:	This Appraisal employs no Hypothetical Conditions.

This Appraisal was prepared for ARV Assisted Living, Inc. and is intended for use in connection with the proxy solicitation/tender offer filed with the SEC and distributed to the holders of limited partnership interests in American Retirement Villas Properties II (a California limited partnership) (the “Partnership”). Unless we otherwise consent in writing, the Appraisal cannot be used other than in the material related to proxy solicitation/tender offer referred to above for any purpose. If the Appraisal is submitted to a lender or investor with the prior approval of C&W, Inc., such party should consider this Appraisal as only one factor, together with its independent investment considerations and underwriting criteria, in its overall investment decision. Such lender or investor is specifically cautioned to understand all Extraordinary Assumptions and Hypothetical Conditions and the Assumptions and Limiting Conditions incorporated in the Appraisal.

Douglas Armstrong
ARV Assisted Living, Inc.
October 23, 2003
Page 2

This Appraisal has been prepared in accordance with our interpretation of FIRREA, the regulations of OCC, and the Uniform Standards of Professional Appraisal Practice (USPAP) including the competency provision, as promulgated by the Appraisal Institute.

The property consists of an existing 67-unit, 67-bed assisted living facility known as Retirement Inn of Burlingame. The facility contains 47,872 ± square feet of gross floor area and is situated on a .52 acre site. The facility occupancy was 88 percent at the time of inspection.

The property has been appraised as a going concern which assumes a fair sale, which includes the transfer of a valid operating license, adequate working capital, an assembled workforce, and the transfer of all business assets necessary for the operation of a licensed assisted living facility.

The property was inspected by and the Appraisal was prepared by Mark E. Bryant under the supervision of John M. Vissotzky, MAI. This Appraisal employs all three typical approaches to determine value: the Cost Approach, the Sales Comparison Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion that all approaches would be considered meaningful and applicable in developing a credible value conclusion.

Based on our Complete Appraisal as defined by the Uniform Standards of Professional Appraisal Practice, we have developed an opinion that the going concern market value of the fee simple estate of the referenced property, subject to the assumptions and limiting conditions, certifications, Extraordinary Assumptions and Hypothetical Conditions, if any, and definitions, “as-is” on October 15, 2003 was:

THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS

$3,250,000

The above value estimate is inclusive of $50,000 in personal property and $0 in business value as an integral part of the going concern.

Based on recent market transactions, as well as discussions with market participants, a sale of the subject property at the above-stated opinion of market value would have required an exposure time of approximately twelve (12) months. Furthermore, a marketing period of approximately twelve (12) months is currently warranted for the subject property.

VALUATION SERVICES	ADVISORY GROUP

Douglas Armstrong
ARV Assisted Living, Inc.
October 23, 2003
Page 3

This letter is invalid as an opinion of value if detached from the Appraisal, which contains the text, exhibits, and Addenda.

Respectfully submitted,

CUSHMAN & WAKEFIELD OF OREGON, INC.

Mark E. Bryant	John M. Vissotzky, MAI
Managing Director	Managing Director
Senior Housing/Healthcare Industry Group
California Certified General Appraiser
License No. AG02572
mark_bryant@cushwake.com
503-279-1734 Office Direct
503-279-1791 Fax

VALUATION SERVICES	ADVISORY GROUP

SUMMARY OF SALIENT FACTS

Common Property Name:	Retirement Inn of Burlingame
Location:	250 Myrtle Road
	Burlingame, San Mateo County, California 94010
	The site is situated at the southeast corner of Myrtle Road and Burlingame Avenue.
Property Description:	The property consists of a one-building, four-story assisted living facility containing 67 units and 67 beds on a .52-acre parcel of land.
Assessor’s Parcel Number:	029-215-240
Interest Appraised:	Fee Simple Estate
Date of Value:	October 15, 2003
Date of Inspection:	October 15, 2003
Ownership:	ARV Burlingame, L.P.
Occupancy:	Current physical occupancy is 88 percent
Current Property Taxes
Total Assessment:	$4,494,215
2002-2003 Property Taxes:	$52,991
Highest and Best Use
If Vacant:	Multi-family residential property developed to the highest density possible
As Improved:	As it is currently utilized as an assisted living facility.
Site & Improvements
Zoning:	R-4
Land Area:	.52 acres or 22,651 ± square feet
Number of Units:	67
Number of Beds:	67
Number of Stories:	Four
Number of Buildings:	One
Year Built:	1977
Type of Construction:	Masonry
Gross Building Area:	47,872 square feet
Parking:	32 spaces (0.47 Unit).

VALUATION SERVICES	ADVISORY GROUP

SUMMARY OF SALIENT FACTS

VALUE INDICATORS
Cost Approach:
Indicated Value:	$3,900,000
Sales Comparison Approach:
Indicated Value:	$3,300,000
Income Capitalization Approach
Direct Capitalization
Net Operating Income:	$366,524
Capitalization Rate:	11.50%
Indicated Value:	$3,200,000
Reconciled Value:	$3,200,000
FINAL VALUE CONCLUSION
Going Concern Market Value As-Is	$3,250,000
Fee Simple:
Exposure Time:	Under 12 months
Marketing Time:	Under 12 months

VALUATION SERVICES	ADVISORY GROUP

SUMMARY OF SALIENT FACTS

Extraordinary Assumptions and Hypothetical Conditions

Extraordinary Assumptions

An extraordinary assumption is defined by the Uniform Standards of Professional Appraisal Practice (2001 Edition, The Appraisal Foundation, page 2) as “an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.”

This appraisal assumes that the property continues to meet the licensing requirements of the State of California as a residential care facility for the elderly and continues to remain in compliance with applicable life safety codes.

This Appraisal employs no other Extraordinary Assumptions.

Hypothetical Conditions

A hypothetical condition is defined by the Uniform Standards of Professional Appraisal Practice (2001 Edition, The Appraisal Foundation, page 3) as “that which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.”

This Appraisal employs no Hypothetical Conditions.

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Front (Myrtle Drive) Elevation of property

Site (Burlingame Avenue) Elevation of property

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Rear (East) Elevation of Building

West Elevation of Building

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Typical Unit

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Typical Bath

Interior Hallway

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Main Activity Room

Private Dining Room

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Dining Room

Kitchen

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Kitchen Serving Area

Beauty Parlor

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Front Patio Area

Under Building Parking

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Southerly View Along Myrtle Road

Easterly View Along Burlingame Avenue

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Westerly View Along Burlingame Avenue

VALUATION SERVICES	ADVISORY GROUP

TABLE OF CONTENTS

INTRODUCTION	1
SILICON VALLEY REGIONAL ANALYSIS	6
LOCAL AREA ANALYSIS	23
SENIOR LIVING INDUSTRY OVERVIEW	25
MANAGEMENT AND OPERATIONS OVERVIEW	34
COMPETITIVE MARKET ANALYSIS	36
SITE DESCRIPTION	55
IMPROVEMENTS DESCRIPTION	57
REAL PROPERTY TAXES AND ASSESSMENTS	62
ZONING	63
HIGHEST AND BEST USE	64
VALUATION PROCESS	66
LAND VALUATION	68
COST APPROACH	74
SALES COMPARISON APPROACH	78
INCOME CAPITALIZATION APPROACH	87
RECONCILIATION AND FINAL VALUE OPINION	108
ASSUMPTIONS AND LIMITING CONDITIONS	110
CERTIFICATION OF APPRAISAL	113
ADDENDA	114

VALUATION SERVICES	ADVISORY GROUP

INTRODUCTION

Identification of Property
Common Property Name:	Retirement Inn of Burlingame
Location:	250 Myrtle Road
	Burlingame, San Mateo County, California 94010
	The site is situated at the southeast corner of Myrtle Road and Burlingame Avenue.
Property Description:	The property consists of a one-building, four-story assisted living facility containing 67 units and 67 beds situated on a .52 acre site.
Assessor’s Parcel Number:	029-215-240

Property Ownership and Recent History

Current Ownership:	ARV Burlingame, L.P., a wholly owned subsidiary of American Retirement Villas Properties II (a California limited partnership).
Sale History:	The property has not transferred within the past three years to the best of our knowledge.
Current Disposition:	American Retirement Villas Properties II (a California limited partnership) is involved in a proxy/solicitation offer filed with the SEC that involves this property.

Intended Use and Users of the Appraisal

This Appraisal is intended to provide an opinion of the going concern market value of the fee simple interest in the property for the use of ARV Assisted Living, Inc. in connection with the proxy solicitation/tender offer filed with the SEC and distributed to the holders of the limited partnership interests in the Partnership. All other uses and users are unintended.

Dates of Inspection and Valuation

The value conclusion reported herein is as of October 15, 2003. The property was inspected on October 15, 2003 by Mark E. Bryant. John M. Vissotzky, MAI has reviewed the report and did not inspect the property.

Property Rights Appraised

Fee simple interest

Scope of the Appraisal

This is a Complete Appraisal presented in a self-contained report, intended to comply with the reporting requirements set forth under the Uniform Standards of Professional Appraisal Practice (USPAP) for a Self-Contained Appraisal Report. In addition, the report was also prepared to conform to the requirements of the Code of Professional Ethics of the Appraisal Institute and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Title XI Regulations.

VALUATION SERVICES	1	ADVISORY GROUP

INTRODUCTION

In preparation of this Appraisal, we investigated a wide array of vacant land sales in the subject’s submarket, improved sales from a local, regional or national basis, analyzed rental data, and considered the input of buyers, sellers, brokers, property developers and public officials. Additionally, we investigated the general regional economy as well as the specifics of the local area of the subject.

The scope of this Appraisal required collecting primary and secondary data relative to the subject property. The depth of the analysis is intended to be appropriate in relation to the significance of the appraisal issues as presented herein. The data has been analyzed and confirmed with sources believed to be reliable, whenever possible, leading to the value conclusions set forth in this report. In the context of completing this report, we have made a physical inspection of the subject property and the comparables. The valuation process involved utilizing market-derived and supported techniques and procedures considered appropriate to the assignment.

The scope of this analysis, and the analysis contained herein, is reflective of “the amount and type of information researched and the analysis applied in an assignment” (2001 USPAP, page 4). This Appraisal employs all three typical approaches to determine value: the Cost Approach, the Sales Comparison Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion that all approaches would be considered meaningful and applicable in developing a credible value conclusion.

Definitions of Value, Interest Appraised and Other Terms

The following definitions of pertinent terms are taken from the Dictionary of Real Estate Appraisal, Third Edition (1993), published by the Appraisal Institute, as well as other sources.

Market Value

Market value is one of the central concepts of the appraisal practice. Market value is differentiated from other types of value in that it is created by the collective patterns of the market. A current economic definition agreed upon by agencies that regulate federal financial institutions in the United States of America follows, taken from the glossary of the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1.	Buyer and seller are typically motivated;
2.	Both parties are well informed or well advised, and acting in what they consider their own best interests;
3.	A reasonable time is allowed for exposure in the open market;
4.	Payment is made in terms of cash in US dollars or in terms of financial arrangements comparable thereto; and
5.	The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

VALUATION SERVICES	2	ADVISORY GROUP

INTRODUCTION

Fee Simple Estate

Absolute ownership unencumbered by any other interest or estate, subject to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

Going Concern Value

The value created by a proven property operation; considered as a separate entity to be valued with a specific business establishment. Common going-concern appraisals are conducted for assisted living facilities, nursing homes, hotels and motels, restaurants, bowling alleys, industrial enterprises, retail stores, and similar property uses. For these property types, the physical real estate assets are integral parts of an ongoing business such that the market values from the land and building are difficult, if not impossible, to segregate from the total value of the ongoing business.

Market Rent

The rental income that a property would most probably command on the open market, indicated by the current rents paid and asked for comparable space as of the date of appraisal.

Cash Equivalent

A price expressed in terms of cash, as distinguished from a price expressed totally or partly in terms of the face amounts of notes or other securities that cannot be sold at their face amounts.

Market Value As Is on Appraisal Date

The value of specific ownership rights to an identified parcel of real estate as of the effective date of the appraisal; related to what physically exists and is legally permissible and excludes all assumptions concerning hypothetical market conditions or possible rezoning.

Prospective Value Upon Reaching Stabilized Occupancy

The value of a property as of a point in time when all improvements have been physically constructed and the property has been leased to its optimum level of long term occupancy. At such point, all capital outlays for tenant improvements, leasing commissions, marketing costs, and other carrying charges are assumed to have been incurred.

Exposure Time and Marketing Time

Exposure Time

Under Paragraph 3 of the Definition of Market Value, the value opinion presumes that “A reasonable time is allowed for exposure in the open market”. Exposure time is defined as the length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at the market value on the effective date of the appraisal. Exposure time is presumed to precede the effective date of the appraisal.

VALUATION SERVICES	3	ADVISORY GROUP

INTRODUCTION

The reasonable exposure period is a function of price, time and use. It is not an isolated opinion of time alone. Exposure time is different for various types of real estate and under various market conditions. As noted above, exposure time is always presumed to precede the effective date of appraisal. It is the length of time the property would have been offered prior to a hypothetical market value sale on the effective date of appraisal. It is a retrospective opinion based on an analysis of recent past events, assuming a competitive and open market. It assumes not only adequate, sufficient and reasonable time but adequate, sufficient and a reasonable marketing effort. Exposure time and conclusion of value are therefore interrelated.

Based on discussions with market participants and information gathered during the sales verification process, a reasonable exposure time for the subject property at the value concluded within this report would have been approximately twelve (12) months. This assumes an active and professional marketing plan would have been employed by the current owner.

Marketing Time

Marketing time is an opinion of the time that might be required to sell a real property interest at the appraised value. Marketing time is presumed to start on the effective date of the appraisal. (Marketing time is subsequent to the effective date of the appraisal and exposure time is presumed to precede the effective date of the appraisal). The opinion of marketing time uses some of the same data analyzed in the process of estimating reasonable exposure time and it is not intended to be a prediction of a date of sale.

We believe, based on the assumptions employed in our analysis, as well as our selection of investment parameters for the subject, that our value conclusion represents a price achievable within twelve (12) months.

Legal Description

The subject site is identified by the San Mateo County assessor as Assessor’s Parcel Number 029-215-240. The legal description for the subject is located in the Addenda.

VALUATION SERVICES	4	ADVISORY GROUP

REGIONAL MAP

VALUATION SERVICES	5	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

Introduction

The short- and long-term value of real estate is influenced by a variety of factors and forces that interact within a given region. Regional analysis serves to identify those forces that affect property value, and the role they play within the region. The four primary forces that influence real property value include environmental characteristics, governmental forces, social factors, and economic trends. These forces determine the supply and demand for real property, which, in turn, affect market value.

The subject property is located in Burlingame, California within San Mateo County, which is part of the greater San Francisco-Oakland-San Jose Consolidated Metropolitan Statistical Area (CMSA).

Regional Economic and Demographic Analysis

Regional Area Overview

Silicon Valley encompasses 1,740 square miles of land and is comprised of San Mateo County and Santa Clara County. San Mateo County is essentially the peninsula formed by San Francisco Bay and the Pacific Ocean (save for the City and County of San Francisco at its northern tip). Santa Clara County lies at the south of San Francisco Bay and is much larger geographically than San Mateo County. Silicon Valley is part of the greater San Francisco-Oakland-San Jose Consolidated Metropolitan Statistical Area (CMSA) which includes the Primary Metropolitan Statistical Areas (PMSAs) of San Francisco (Marin, San Francisco and San Mateo Counties), San Jose (Santa Clara County), Santa Cruz (Santa Cruz County), Oakland (Alameda and Contra Costa Counties), Vallejo-Fairfield-Napa (Napa and Solano Counties) and Santa Rosa (Sonoma County).

Silicon Valley’s Northern California location on the San Francisco Bay provides for a fairly mild climate year round. The topography of the area varies from beaches to mountains, providing for myriad microclimates and recreational venues.

VALUATION SERVICES	6	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

SAN FRANCISCO CMSA COMPONENT COUNTIES

Source: Cushman & Wakefield Analytics

Silicon Valley has long been the high-tech center of the nation and despite the technology fallout that has beset the region, remains so. Increased business investment in computers and related equipment was the driving force of the Silicon Valley economy throughout the late 1990s into the 2000s. Rising stock valuations, an influx of venture capital, investment in hardware and software in anticipation of Y2K, and the continuous need by businesses to enhance productivity, fueled the growth of Silicon Valley’s industries. As business investment has waned, however, so has the Silicon Valley’s prosperity.

The Silicon Valley’s technology sector accounts for nearly a quarter of its employment base. As a growing economy that lacks significant diversity across industrial sectors, Silicon Valley tends to exhibit more volatile growth than do more economically diversified markets.

Demographic Profile

Both Santa Clara and San Mateo counties are considered highly desirable but expensive places to live. The median age of Silicon Valley’s population is 35.1 years, the same as the median age of the nation’s top 100 largest metropolitan areas (Top 100) and just slightly below the U.S. median age of 35.6 years. Its population’s share of the age cohort under 24 years is also slightly below that of the Top 100 at 33 percent versus 35 percent, but its prime wage-earning age cohort of 35-59 years is somewhat greater at 36 versus 35 percent.

Silicon Valley’s labor pool is highly skilled and highly compensated, resulting in a very high per capita income. Its average household income is 62 percent above the Top 100 average, and its median household income is an even more impressive 68 percent above the Top 100 median.

Silicon Valley has a vastly higher percentage of households in the $100,000 plus annual income cohort – 45 percent versus 20 percent across the Top 100. At the lower end of the income

VALUATION SERVICES	7	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

strata with annual incomes under $50,000, Silicon Valley’s share of households is half that of the Top 100 – 23 percent versus 46 percent.

DEMOGRAPHIC CHARACTERISTICS
Silicon Valley vs. Top 100 MSAs and U.S.
2002 Estimates

		Silicon			Top 100
Characteristic		Valley			Metro Areas*			U.S.
Median Age (years)			35.1			35.1			35.6
Average Annual Household Income		$	117,800		$	72,700		$	64,300
Median Annual Household Income		$	92,100		$	54,700		$	47,500
Households by Annual Income Level:
	<$25,000		9.1	%		21.0	%		25.3	%
	$25,000 to $49,999		13.5	%		25.1	%		27.3	%
	$50,000 to $74,999		16.7	%		20.8	%		20.2	%
	$75,000 to $99,999		15.6	%		13.4	%		11.8	%
	$100,000 plus		45.1	%		19.7	%		15.5	%
Education Breakdown:
	< High School		18.0	%		21.8	%		24.1	%
	High School Graduate		19.6	%		27.8	%		29.8	%
	College < Bachelor Degree		30.9	%		26.5	%		25.4	%
	Bachelor Degree		20.1	%		15.5	%		13.5	%
	Advanced Degree		11.3	%		8.4	%		7.3	%

Source: Claritas, Inc., Cushman & Wakefield Analytics

* The Top 100 Metro Areas are comprised of the 100 largest metropolitan statistical areas within the U.S. in terms of total employment as of 2002.

Silicon Valley’s population breakdown by educational achievement follows a similar pattern to incomes, reflective of the strong correlation between the two demographic factors. The San Francisco Bay Area is home to some of the nation’s most prestigious universities, including Stanford University, University of California (UC) Berkeley and UC San Francisco. Over 31 percent of Silicon Valley’s population has a bachelor or graduate degree, compared to just 24 percent for the Top 100. And, while 50 percent of the Top 100 population has just a high school diploma or less, that figure is a substantially lower 38 percent in Silicon Valley.

Population

Silicon Valley, with a current population of 2.4 million, has significantly lagged the Top 100 in terms of its population growth between 1992 and 2002. Silicon Valley, with an average annual growth rate of 0.8 percent, also grew more slowly than the San Francisco CMSA as a whole. While Silicon Valley briefly exceeded the Top 100’s population growth rate during 1996 and 1997, it has since significantly lagged the Top 100 and indeed saw a decline in population in 2002.

VALUATION SERVICES	8	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

POPULATION GROWTH BY YEAR
Silicon Valley vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

NOTE: In this Exhibit and all subsequent time-series graphs, the shaded bars indicate the periods of a U.S. economic recession

Population growth is forecast to be negative once again in 2003, and thereafter to under-perform substantially the Top 100 over the forecast period. Between 2002 to 2007, Silicon Valley’s average population growth rate, at 0.2 percent annually, is expected to be dwarfed by that of both the Top 100 and the CMSA (both 1.1 percent).

ANNUALIZED POPULATION GROWTH BY COUNTY
Silicon Valley vs. San Francisco CMSA Counties
1990 – 2007

							Forecast		Annual Growth
Population (000s)			1992		2002		2007		92-02			02-07
Top 100 Metro Areas				160,017.2		181,966.9		191,733.8		1.3	%		1.1	%
San Francisco CMSA				6,449.8		7,126.5		7,398.0		1.0	%		0.8	%
		Marin County		235.8		247.6		263.1		0.5	%		1.2	%
		San Francisco County		734.9		764.0		789.2		0.4	%		0.6	%
	Silicon Valley Region			2,194.8		2,386.7		2,414.5		0.8	%		0.2	%
		San Mateo County		662.9		703.2		691.7		0.6	%		-0.3	%
		Santa Clara County		1,531.9		1,683.5		1,722.8		0.9	%		0.5	%
		Alameda County		1,332.2		1,472.3		1,490.2		1.0	%		0.2	%
		Contra Costa County		839.8		992.4		1,070.3		1.7	%		1.5	%
		Santa Cruz County		232.9		253.8		266.1		0.9	%		0.9	%
		Napa County		114.3		130.3		143.1		1.3	%		1.9	%
		Solano County		359.9		411.1		452.1		1.3	%		1.9	%
		Sonoma County		405.2		468.4		509.4		1.5	%		1.7	%

Source: Economy.com, Cushman & Wakefield Analytics

VALUATION SERVICES	9	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

Silicon Valley’s largest population clusters are along the west shore of San Francisco Bay and east of Interstate 280 within San Mateo County, in the communities of Daly City, Foster City and San Mateo. Within Santa Clara County, Mountain, Sunnyvale, Cupertino, San Jose and Milpitas have the greatest population density. The lowest population concentrations are along the coastal ranges of San Mateo County and the hills to the east of Santa Clara County.

POPULATION PER SQUARE MILE BY ZIP CODE
Silicon Valley
2002

Source: Claritas, Inc., Cushman & Wakefield Analytics

Households

As Silicon Valley’s population growth has trailed the Top 100, likewise its household formation rate has significantly lagged the Top 100 over the past 10 years. Between 1992 and 2002, growth in Silicon Valley’s number of households averaged 0.6 percent annually, somewhat below the CMSA’s 0.9 percent annual growth rate and well below the Top 100 growth rate of 1.3 percent annually. Household growth was negative in 2002 as out-migration from Silicon Valley increased.

Worsening net out-migration is an indicator of an economy not yet in recovery. Migration originally turned negative in 1999 when the economy was still strong, but a lack of housing

VALUATION SERVICES	10	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

affordability drove many out of Silicon Valley. Then, as job losses mounted, out-migration accelerated. The magnitude of net out-migration is indicative of the depth of Silicon Valley’s recession. Until the jobless rate begins to subside and narrow the gap with other western metro areas, out-migration will continue at a rapid clip.

Growth in household formations for Silicon Valley between 2002 and 2007 is forecast at a meager 0.5 percent – above its population growth rate, but significantly less than the projected rate of 1.1 percent for the CMSA and 1.3 percent for the Top 100.

HOUSEHOLD GROWTH BY YEAR
Silicon Valley vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

Income

In 2002, the median household income in Silicon Valley was $92,100. This figure is a staggering 68 and 94 percent higher than the respective median incomes for the Top 100 and the U.S., respectively. Between 1992 and 2002, Silicon Valley’s 4.5 percent average annual growth in median household income far exceeded the Top 100 average annual growth of 3.7 percent. Broken down by county, Santa Clara County’s average annual growth rate was 4.2 percent, and the average annual growth in median household income for San Mateo County was an even stronger strong 5.3 percent.

Through 2007, median household income growth in Silicon Valley is expected to slow considerably to 2.7 percent, with San Mateo County forecast for 3.4 percent and Santa Clara County expected to average annual increases of just 2.3 percent. By comparison, the median household income for the Top 100 is forecast to average roughly 2.7 percent annual growth.

Silicon Valley remains the most affluent region in the Bay Area. The highest income households are generally located to the south and west of Interstate 280 and south and east of Interstate 680. No ZIP code areas in Silicon Valley have a median household income of less than $50,000, and there are but a few in the $50,000 to $75,000 income cohort, with those predominantly located in north, central and east San Jose.

VALUATION SERVICES	11	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

MEDIAN HOUSEHOLD INCOME DISTRIBUTION BY ZIP CODE
Silicon Valley
2002

Source: Claritas, Inc., Cushman & Wakefield Analytics

Regional Economic Overview

Silicon Valley remains in recession. Employment continues to fall and the jobless rate hit a record high in January 2003. Employment in the critical electronics manufacturing and information services industries continues to fall, with continued negative spillover effects on professional and business services. Construction activity is also beginning to falter. Average real wages among Silicon Valley’s manufacturers have fallen for over one year, as has the average workweek. House prices are falling once again and housing inventories on the market are rising.

Silicon Valley’s workforce continues to shrink. It has fallen by over 11 percent from its peak in late 2000, an extraordinary loss of 152,000 jobs. The downturn has been so severe that it generated the first annual decline in population since World War II. The economy’s rise was so fast and the downturn so sharp that given a projected steady growth rate beginning in 2004, it will be more than a decade before the previous peak is reached again.

VALUATION SERVICES	12	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

Improving indicators remain elusive, but retailers are no longer paring staff, indicating some stability in personal income and consumer spending. Similarly, employment in financial services is no longer declining. Also, leisure and hospitality industry payrolls have remained level for the past year, a good indicator of stable business travel to the area. Indeed, the local hotel industry is considering ways to help fund an expansion of San Jose’s downtown convention center. Thus, the worst of the multiplier effects of the tech downturn may be diminishing. Yet hiring in healthcare has gone flat, which was one of the few industries that had expanded over the past two years.

While Silicon Valley’s economic turnaround is clearly not evident yet, some sources of growth are emerging. Biotechnology, for example, has one of the more positive outlooks for the San Mateo County economy. Indicative of the outlook is a doubling of Genentech’s stock price, with most of the gain following FDA approvals of several of their experimental drugs. More importantly, however, are a number of IPOs announced or venture capital placements made with several Bay Area biotech firms. They include a stock offering by Exelixis in South San Francisco worth an estimated $95 million, and a $100 million private placement with CV Therapeutics in the San Jose metro area. The industry is historically volatile, going through periods of funding drought and excess, and through periods of successful drug approvals. Indicative of this volatility is the closing of Millennium Pharmaceuticals’s South San Francisco operation, where 210 were employed, to concentrate its operations in Massachusetts.

Venture funding is not limited solely to biotech, however, as Visto Corporation, a maker of mobile email software located in Redwood City, garnered over $50 million in venture funding in first quarter 2003. But this has not stanched the employment cutbacks in computer and electronic manufacturing in the valley. Information services employment, however, has nearly leveled off.

The need to replace an aging stock of computers and electronic equipment generates some optimism that Silicon Valley’s tech industries will see moderate growth next year. Already, consumer spending on electronic equipment fueled a rise in new orders for semiconductors late last year. The trend is far from solid, however, as global chip sales fell in three of the four months ending in March 2003, resulting in lackluster orders for the fabrication equipment made or designed in Silicon Valley. Furthermore, private research and development spending among local tech firms has been cut this year, as cost savings become critical to the bottom line.

Software and tech services will likely lead Silicon Valley’s rebound. Current examples include the remake of Hewlett-Packard into a service-based firm, the non-stop expansion of Internet-retailer eBay, and the potential move into online entertainment by Apple Computer. But Silicon Valley’s true growth driver, technology innovation, will be slow to turn around until venture capital placement halts the slide that continued through first quarter 2003. One possible new generator of local innovation, however, may be research dollars from the defense and homeland security departments.

Silicon Valley’s near-term outlook remains weak with no substantial turnaround in employment until well into 2004. Office and industrial property markets, thus, will also remain weak for another year at least. Further risk to residential property markets is also possible as sales prices are faltering again, and supply currently exceeds demand. Rising interest rates can be expected to add further downside pressure.

Longer term, the economy is not expected to expand at a rate above the Top 100 average until 2005. This makes Silicon Valley an underperforming region until it is able to pull out of its current slump towards the latter part of the decade.

VALUATION SERVICES	13	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

Silicon Valley will continue to be a volatile economy, driven by cycles of innovation and investment. Longer-term, Silicon Valley will benefit from its extremely well educated workforce, the basic research undertaken at its universities and corporate labs, and its still deep sources of investment capital.

Gross Product

Silicon Valley enjoyed a 10-year period of astounding 8.7 percent average annual growth in its gross product, compared to 3.8 percent for the Top 100, with phenomenal peaks in 1999 and 2000 of 18.6 and 25.9 percent, respectively. During 2002, Silicon Valley’s real gross product experienced negative 2.3 percent growth, and the region’s growth in gross product is anticipated to be zero during 2003. Over the five-year forecast period of 2002 to 2007, gross product is expected to grow at a 3.4 percent annual rate, exceeding somewhat the forecasted Top 100 rate of 3.0 percent.

REAL GROSS PRODUCT GROWTH BY YEAR
Silicon Valley vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

Employment Trends

Silicon Valley’s employment base is far less diversified than the U.S. overall. High-tech employment accounts for nearly one-fourth of all employment within Silicon Valley, compared to about four percent across the Top 100. The Valley is significantly more concentrated in Manufacturing (18 versus 10 percent) and Professional and Business Services (19 versus 14 percent) than the Top 100. Both of those sectors locally have substantial high-tech components.

VALUATION SERVICES	14	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

EMPLOYMENT BY SECTOR
Silicon Valley vs. Top 100
2002

Source: Economy.com, Cushman & Wakefield Analytics

Compared to the Top 100, Silicon Valley is relatively less weighted in the sectors of Government (10 versus 15 percent), Finance, Insurance and Real Estate (five versus seven percent) and Trade, Transportation and Utilities (17 versus 20 percent). Over the past year, the only sectors to see employment growth has been Education and Health Services, and Government, which increased by 3.8 percent and 3.0 percent, respectively. Information, Professional and Business Services, and Manufacturing all saw double-digit declines in employment over the course of 2002.

Among the San Francisco CMSA’s counties, Silicon Valley has by far the largest share of total employment (37 percent) and realized the greatest increase in total employment between 1992 and 2002 of over 173,000 jobs (edging out the Oakland PMSA’s 172,000 jobs). Silicon Valley is also expected to capture the largest share of new job creations between 2002 and 2007 of 54,000 jobs, followed the Oakland PMSA with 53,000 jobs.

TOTAL EMPLOYMENT BY COUNTY
San Francisco CMSA
2002

Source: Economy.com, Cushman & Wakefield Analytics

VALUATION SERVICES	15	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

Between 1992 and 2002, Silicon Valley’s total employment increased at a 1.5 percent average annual rate, significantly below the Top 100 rate of 1.9 percent. More recently, total employment has turned negative. Total employment is not forecast to recover to its pre-recession level until the next decade. Beginning in 2005, Silicon Valley employment growth is forecast to grow at 2.0 percent annually through 2007, on par with the Top 100.

TOTAL EMPLOYMENT GROWTH AND UNEMPLOYMENT RATE BY YEAR
Silicon Valley vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

Over most of the past decade, Silicon Valley’s unemployment rate had been substantially lower than that across the Top 100. However, with the 2001 economic recession and the corresponding loss of many of the region’s jobs, Silicon Valley’s unemployment rate has lost its advantage over the Top 100. The jobless rate jumped from its low point of 1.9 percent in 2000 to 7.5 percent in 2002. The unemployment rate is projected to peak at 7.8 percent during 2003 and then recede to 5.7 percent by 2007 – by which time the Top 100 unemployment rate is expected to decline to 5.0 percent.

Silicon Valley is home to 12 of the 2002 Fortune 500 corporations: Hewlett-Packard Company (ranked 14), Intel (58), Cisco Systems (95), Solectron Corporation (158), Sun Microsystems Inc. (155), Oracle Corporation (190), Agilent Technologies Inc. (292), Calpine Corporation (246), Applied Materials Inc. (327), Apple Computer Inc. (300), CNF Inc. (347), and Maxtor Corporation (421). Following is a table of Silicon Valley’s largest non-government employers.

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SILICON VALLEY REGIONAL ANALYSIS

TOP NON-GOVERNMENT EMPLOYERS
Silicon Valley
2002

	Number of MSA
Employer	Employees
United Airlines		17,700
Cisco Systems		13,000
Hewlett-Packard Company/Agilent		10,000
Stanford University		10,000
Kaiser Permanente		9,100
Oracle Corporation		7,400
Intel Corporation		7,000
Lockheed Martin Missiles & Space		6,700
Applied Materials, Inc.		6,200
Solectron Corporation		6,000
Sanmina		6,000
A T & T		5,200
UCSF Stanford Health Care		4,200
Genentech		3,700
Apple Computer, Inc.		3,000
3Com Corporation		3,000
Advanced Micro Devices		2,900
Raychem Corporation		2,900
Visa USA/International		2,700
Mills Peninsula Health Services		2,500

Source: Economy.com, Cushman & Wakefield Analytics

In the early 1990s, Silicon Valley and San Francisco had roughly the same number of office workers – roughly 200,000 each. As of year-end 2002, while San Francisco still had 195,000, Silicon Valley had nearly 330,000. Between 1992 and 2002, Silicon Valley’s office-using employment grew at an average annual rate of 4.0 percent, while San Francisco averaged only 0.2 percent. By comparison, office-using employment for the Top 100 grew at a 2.7 percent rate. Silicon Valley’s surge in office-using employment that took place during the 1990s has ended, however, Recently, Silicon Valley has seen two consecutive years of declining office-using employment, including a staggering 11.6 percent decrease during 2002.

Office-using employment is expected to drop another 2.7 percent during 2003, before reversing the negative trend between 2004 and 2007. Over the forecast period, office-using employment is forecast to rise at an annual 2.3 percent rate through 2007 – outperforming the CMSA’s 1.9 percent growth rate and slightly outpacing the 2.1 percent rate of the Top 100.

VALUATION SERVICES	17	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

TOTAL OFFICE-USING EMPLOYMENT GROWTH BY YEAR
Silicon Valley vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

The South Bay’s largest concentrations of office-using employment are located in the cities of San Jose, Milpitas, Santa Clara, Sunnyvale, Cupertino, Mountain View and Palo Alto. Moving up the Peninsula, the largest concentrations office-using employees in San Mateo County are found in Redwood Shores, Menlo Park, Redwood City, Foster City and San Mateo.

VALUATION SERVICES	18	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

OFFICE-USING EMPLOYMENT PER SQUARE MILE BY ZIP CODE
Silicon Valley
2002

Source: Claritas, Inc., Cushman & Wakefield Analytics

Transportation Network

As in much of the rest of the Bay Area, Silicon Valley freeways are a challenge during commute hours. Interstates 280, 680, 880, U.S. 101, Highways 85, 87 and 92 are the primary freeways serving Silicon Valley. Also, a number of expressways criss-cross Santa Clara County. From the East Bay, the San Mateo Bridge (Highway 92) feeds commuters into San Mateo County and the Dumbarton Bridge feeds commuters into northern Santa Clara County.

Silicon Valley’s public transportation system consists of commuter trains, buses and light rail. The rails for the CalTrain commuter train extend 77 miles from Gilroy in southern Santa Clara County to the South of Market district in San Francisco. CalTrain has an average daily ridership of over 31,000.

The Santa Clara Valley Transportation Authority’s (VTA) light rail system has two lines – an east-west line extending from Downtown Mountain View to Milpitas at Interstate 880, and a north-south line from Baypoint near Highway 237 to south San Jose’s Santa Teresa District. Weekday ridership averages 30,000. San Mateo County has no light rail system.

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SILICON VALLEY REGIONAL ANALYSIS

Separate bus systems run in each county – Santa Clara County’s run by VTA and San Mateo County’s run by SamTrans. VTA average weekday bus boardings are approximately 145,000. SamTrans, serving a significantly smaller population, averages 58,000 weekday boardings.

The Bay Area Rapid Transit System (BART), a high-speed rail system serving predominantly Alameda and Contra Costa County commuters heading into San Francisco, has recently extended into northern San Mateo County and to San Francisco International Airport. BART is also planning expansion into Santa Clara County from Fremont in Alameda County.

Located within the geography of San Mateo County, San Francisco International Airport (SFO), which opened its new International Terminal in 2000, was the 19^th busiest airport in the world for the year 2002 with 31.4 million arrivals and departures. SFO is negotiating to add runways to fuel future growth, but the plan is stalled due to environmental concerns of adding more landfill to San Francisco Bay.

San Jose International Airport (SJC) handled 11.7 million passengers during fiscal 2002 through its existing 31 gates. SJC has won approval for a 40-gate expansion that is expected to greatly improve air transport in and out of Silicon Valley.

Quality of Life/Amenities

Major Attractions and Amenities

Silicon Valley is an area with many unique characteristics. Its topographic features include valleys, mountains, ocean, bay, and lakes. It also has a wide variety of development ranging from urban high-rise, suburban mid-rise, industrial, residential, and agricultural land to natural and undeveloped open space.

A variety of venues include San Jose’s Tech Museum, the Winchester Mystery House, and the Rosicrucian Egyptian Museum. Paramount’s Great America is a prominent theme park in Santa Clara. Santa Cruz Beach & Boardwalk is about an hour away. The valley’s warm summers make San Jose’s Raging Waters, the Bay Area’s largest water theme park, a very popular destination.

Perhaps one of the valley’s best amenities is its proximity to San Francisco. The Wine Country in Napa and Sonoma Counties are also only about a two-hour drive from the south bay. Monterey, Carmel and Big Sur are about an hour drive, and Lake Tahoe and Yosemite National Park are roughly four hours from Silicon Valley.

Silicon Valley is home to the San Jose Sharks professional hockey team. In addition, Santa Clara County is often mentioned when the Oakland A’s start talking about moving the baseball team. The headquarters and practice facilities for the San Francisco 49ers are located in the city of Santa Clara.

Education

The San Francisco Bay Area is home to numerous institutions of higher learning. The large number of world-class educational and research facilities – more than 35 colleges and universities – positively impacts the entire Bay Area economy. Silicon Valley’s most prestigious university is Stanford University in Palo Alto, but the region is also well served by San Jose State, College of San Mateo, Santa Clara University, University of California Santa Cruz and University of California Berkeley.

VALUATION SERVICES	20	ADVISORY GROUP

SILICON VALLEY REGIONAL ANALYSIS

MAJOR COLLEGES/UNIVERSITIES
Silicon Valley
2001

	Full/Part Time
College/University	Enrollment
San Jose State University		50,400
Mission College		17,300
DeAnza College		15,100
Stanford University		14,200
Evergreen Valley College		12,200
College of San Mateo		11,900

Source: San Francisco Business Times Book of Lists, Cushman & Wakefield Analytics

Medical Facilities

Silicon Valley has a comprehensive healthcare network. The area’s major healthcare facilities include the Stanford Medical Center, Santa Clara Valley Medical Center, Kaiser Permanente (3 hospitals), Regional Medical Center of San Jose, El Camino Hospital, Sequoia Hospital and VA Palo Alto.

Regional Summary

Silicon Valley’s near-term economic outlook remains dim. It is expected to limp along for another year before measurable improvement is seen. The local economy’s lack of diversity maintains its volatility and dependence upon capital investment. As long as corporate profits remain weak, business investment is expected to remain lackluster. Furthermore, technology exports, which are crucial to the region’s economic health, will be sluggish until the global economies show marked improvement.

Silicon Valley’s moderate climate and attractive quality-of-life factors, however, are expected to continue attracting top talent to the region – at least those who can afford its high cost of living and housing costs. Its first-class educational institutions will continue to seed the region with tech-savvy graduates. Silicon Valley still maintains the highest share of nationwide venture capital investments. Silicon Valley’s substantial biotechnology industry remains strong and has attracted venture capital in the wake of the dotcom bust. Research related to anti-bioterrorism may provide an additional boost to these firms.

Longer term, innovation and R&D are expected to revive the local economy and to bring its performance on par with that of the nation’s top 100 metropolitan areas. When the national and global economies eventually rebound, capital investment would likely surge, stimulating Silicon Valley’s tech manufacturing base. As computer software becomes more sophisticated, more powerful computers will be required to run the software, boosting investment in computers. Finally, defense and homeland security spending are expected to bolster R&D in the valley.

Silicon Valley is expected to underperform the Top 100. Given the region’s high cost of living and housing costs, its population growth and household formation rates are both expected to lag the Top 100. Furthermore, with the overall weakness in the local, national and global economies, employment growth is also expected to trail the Top 100. Indicative of Silicon Valley’s high productivity, however, the region’s growth in gross product is forecast to slightly exceed that of the Top 100 through 2007.

VALUATION SERVICES	21	ADVISORY GROUP

LOCAL AREA MAP

VALUATION SERVICES	22	ADVISORY GROUP

LOCAL AREA ANALYSIS

Location

The subject is located in the southeastern area of Burlingame, approximately one-half mile south of the downtown core. The boundaries of the local area are considered to be Peninsula Avenue to the south, El Camino Real to the west, Broadway to the north, and U.S. Highway 101 to the east.

Access

The primary access routes serving the local area include California Drive and El Camino Real which both course north and south through the district, and Peninsula Avenue and Broadway which course east and west. El Camino Real is primary north/south route serving the district and also serves as Highway 82. Broadway provides primary access to U.S. Highway 101. Overall, access to the local area is considered very good, including that to medical facilities for the elderly residents in the local area.

Character

The local area is characterized by a mixture of retail commercial, professional office, public and single- and multi-family uses. Development patterns in the district were influenced by the area’s proximity to the major transportation route (Highway 101), and the CalTrain commuter stations located in Burlingame. The majority of existing development located in the area is residential in nature with higher density residential uses found abutting the major streets in the area.

The local area is considered to be in a mature stage of its life with the availability of a few remaining vacant sites providing for limited new development opportunities. The local area is considered to be approximately 98 percent developed at this time. The only remaining vacant parcels are small in-fill sites. Any future development will take the form of redevelopment of existing sites to higher uses.

Nearby and Adjacent Land Uses

West:	Single-family residence and Azure Street
North:	Single Family Residences
East:	Apartments
South:	Apartments

Proximity to Health Care

The primary medical facility serving Burlingame is Mills Peninsula Hospital located in at the north end of Burlingame, approximately one and one-half miles north of the subject property. The travel time to this facility is approximately 10 minutes from the subject.

Special Hazards or Adverse Influences

There are no hazards or adverse influences present in the local area which have a detrimental influence on properties.

Land Use Changes

We are not aware of, at this time, of any planned improvements or demolitions in the local area that would impact the subject.

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LOCAL AREA ANALYSIS

Conclusion

The subject is located in an established area of Burlingame. The primary influence of the local area is residential oriented. The local area is in a mature stage of its life and there is limited land available for future development. Future development will likely consist of redevelopment of existing sites with commercial uses located along El Camino Real or California Street, and residential on others. Services requisite to support a senior living complex such as the subject are within close proximity. After reviewing the local area data, a positive effect on real estate values in the local area is anticipated for the foreseeable future. This positive effect also extends to the subject property.

VALUATION SERVICES	24	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

Independent Living

Congregate care or independent living units are designed for seniors who pay for some congregate services (i.e. housekeeping, transportation, meals, etc.) as part of the monthly fee or rental rate, and who require little, if any, assistance with activities of daily living. Residents of congregate/independent living units may have some health care-type services provided to them by in-house staff or an outside agency. Congregate units may be part of a congregate residence, a property that provides congregate and assisted living services, or a continuing care retirement community.

The retirement housing industry overall has matured considerably over the past two decades as the elderly population has increased and seniors have come to accept and seek alternatives to remaining in their homes. Retirement housing has expanded beyond the early dominance of life care and continuing care retirement communities (CCRCs). These communities, which typically included independent living and nursing care on a single campus, typically charged residents an entrance fee and a monthly fee. Rental retirement communities represented a major area of growth in the 1980s, fueled in part by the Department of Housing and Urban Development’s 221(d)(4) Retirement Service Center mortgage insurance program. Although the program no longer exists, the rental model is still a popular option for newly developed retirement communities. In addition, a small but definite increase in the number of cooperatives and condominiums has taken place, particularly among communities targeting a more affluent segment of the elderly population.

The retirement community of today is a smaller complex consisting of 100 to 200 independent living units versus the 200 to 300 independent living units that characterized the early CCRCs. In some cases, the communities are being developed in stages to avoid some of the up front risk associated with initial lease-up and to allow the facility to be more responsive to the market needs and preferences.

The rental retirement communities of the early 1980s typically offered no nursing care or assistance with daily living. These facilities were designed to provide hospitality services such as meals, housekeeping, transportation, and activities. These facilities met with slow lease-up rates and exceedingly high turnover due to their inability to meet changing resident needs.

Independent living communities, particularly rental communities, are least heavily monitored and governed by state regulations. In some states, this has resulted in a fair degree of flexibility in providing additional services.

It has become quite clear over the past ten years that the retirement communities are attracting an older and somewhat frailer population than originally anticipated. The average age of entrance into independent living units is between the late 70’s and early 80’s, rather than the late 60’s and early 70’s originally anticipated. As a result of the change in resident profile as well as the experience gained in the 1980s, it is clear that some form of health care or supportive services for the frail elderly is a necessary component of a retirement community.

Assisted Living

The emergence of assisted living as an option in the long-term care continuum for elders in the 1990’s represented the convergence of social, political, economic and treatment trends. Prior to this, most dependent seniors had only two long-term care options: be cared for by a family member or enter a nursing home. Today, as the number of elders and their frailty increases, these options have proven inadequate for seniors, their families and society. For many elderly, nursing homes are overly intensive and expensive. Therefore, for the segment of seniors with moderate to intermediate care needs, assisted living has become a favored form of long-term care.

VALUATION SERVICES	25	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

The Assisted Living Facilities Association of America (ALFAA) defines assisted living as a special combination of housing, personalized supportive services and health care designed to respond to the individual needs of those who require help in activities of daily living, but do not need the skilled medical care provided in a nursing home. Assisted living care promotes the maximum independence of dignity for each resident and encourages the involvement of a resident’s family, neighbors and friends.

Although industry proponents are clear as to the general characteristics and philosophy of an assisted living community, there is no national agreement on the details and legal definition of assisted living. As the assisted living industry becomes increasingly standardized, and as the industry expands, it can expect to acquire a defined legal status with respect to licensure, reimbursement and financing.

Some states have enacted laws using the term assisted living, however, in most jurisdictions licensure statutes combine a variety of terms and programs. In referring to residential housing and services, most state licensing laws use terms such as: rest homes, homes for the aged, supportive living facilities, residential care facilities, board and care homes, elderly group homes, congregate care housing and senior housing.

Assisted living programs are located in a variety of environments. They may be housed in newly constructed freestanding facilities, retrofitted buildings such as former hotels, units attached to nursing homes, senior apartments with services, units within CCRC developments and congregate care units. Whatever the environment, there must be private, or at a minimum companion suite residential living space.

Typically, a resident will have a compact studio or efficiency apartment. Living space will almost always include a private bathroom. The living space may or may not include a kitchen or kitchenette, washer and dryer, a living room or storage space. Economics generally dictate the size of the private living space, which can range from a small one-room efficiency of less than 300 square feet to a large one-bedroom apartment of 750 square feet.

Assisted living residences also provide for a considerable amount of common space for the residents to share. Newer assisted living facilities generally allocate from 30 percent to 40 percent of all gross square footage of the building to common area. Such space includes dining rooms, libraries, lounges, activity centers, kitchens and laundry rooms. The size of an assisted living facility depends on many variables including market forces and site constraints. Most newer freestanding facilities typically fall into the range of 40 to 80 units.

The level of service in assisted living facilities varies. However, within a broad range, there are certain basic services offered:

• 24-hour a day on-site supervision or access to an emergency call system;

• Two or three meals and regular snacks are available;

• Light housekeeping and laundry services are available;

• Residents are entitled to some level of personal care each day from the facility staff;

• A personalized health care plan delineates how health care needs may be addressed; and;

• Activity, social service and transportation resources are made available.

Because it is a goal of assisted living to enable residents to age- in- place, the level of personal care, food services or health care may be adjusted upwards as needed. However, arranging services to allow aging- in- place can be difficult if residents need increasing amounts of nursing care and the states limit or prohibit skilled nursing care in assisted living facilities. With this in

VALUATION SERVICES	26	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

mind, it should be noted that there is a growing trend by states to extend the scope of assisted living services far into the long-term care continuum.

The typical resident of assisted living is 83 years old, is a woman and is single or widowed. Today’s assisted living residents have care needs and characteristics that were associated with patients in intermediate care facility nursing homes in the 1970’s and 1980’s. Senior care needs are gauged by the extent to which an individual requires regular assistance with ongoing activities of daily living (ADLs) such as bathing, eating, walking, toileting and dressing. In order to determine that there is an ADL dependency, a clinician must determine that an individual cannot safely or routinely perform a specific activity unless he or she has help. Unless such help is provided, the individual is at risk of not meeting an essential daily need.

While the number of ADLs with which a person needs help is used clinically as a measure of dependency, having such dependency does not mean that medical care is required. In assisted living facilities, residents generally have at least one ADL dependency, and it is not uncommon that they have as many as three or four.

Assisted living fees are typically structured around a fixed monthly amount that covers both housing and services. The monthly amount generally includes a base level of personal care with additional personal care charged separately. There also may be entrance fees, typically equivalent to the first and last month’s rent. Assisted living facilities do not require the large endowment type entrance fees required in some CCRCs.

Occupancy Patterns

Occupancy data compiled by the American Seniors Housing Association for the various senior housing community types (congregate, assisted and CCRCs) has been summarized in the following table.

Median Occupancy Rates
For Profit Senior Housing Facilities

Property Type	1995			1996			1997			1998			1999			2000			2001			2002
Independent		95.0	%		98.0	%		96.0	%		98.0	%		95.0	%		95.0	%		94.5	%		93.1	%
Assisted Living		97.0	%		95.0	%		95.0	%		92.0	%		94.0	%		90.0	%		93.8	%		94.2	%
CCRCs		95.0	%		95.0	%		94.0	%		95.0	%		93.2	%		93.2	%		93.1	%		92.4	%
All Communities		95.0	%		96.0	%		95.0	%		95.0	%		93.7	%		93.7	%		94.0	%		93.5	%

Source: American Seniors Housing Association

As seen, assisted living facilities in 2002 exhibited the highest occupancy rate of any of the property types. This was in contrast to the other property types that saw median occupancy rates decline slightly over 2001.

The average length of stay in a senior facility also varies as to the property type. In the following table is average length of stay data compiled by the American Seniors Housing Association.

VALUATION SERVICES	27	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

Average Resident Length of Stay
(Stated In Months)

Property Type		1998		1999		2000		2001		2002
Independent			45.5		43.4		38.1		43.1		33.4
Assisted Living			24.8		18.5		20.5		28.0		17.7
All CCRCs
	Independent		61.0		45.4		59.8		37.3		37.0
	Assisted Living		16.0		18.2		16.8		12.8		12.0
	Nursing		20.0		23.2		18.6		9.0		9.0

Source: American Seniors Housing Association

As shown, the average length of stay in an assisted living facility in 2002 was 17.7 months and which reflected a notable decline over the length of stay average for 2001. Both assisted and independent living facilities showed declines, while CCRCs maintained generally similar occupancies over 2001. Much of the reasoning for the decline is from increased lateral movement of residents between existing facilities caused by such factors as facility operations (management, staffing, etc.), as well as foreclosures and closings of poorly operated facilities.

VALUATION SERVICES	28	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

Absorption Trends

Net absorption data compiled by the American Seniors Housing Association (ASHA) for senior housing facilities is summarized in the following table.

2001 National Average Net Absorption Rates
Senior Housing Facilities

	1st		Months		Months		2nd		3rd
Property Type	Month		2 - 6		7 - 12		Year		Year
Independent		25.5		6.7		3.7		2.8		2.9
Assisted Living		11.7		5.2		2.9		2.2		5.3
CCRCs		37.4		18.9		9.0		5.5		4.1
All Communities		28.4		10.3		5.2		3.5		4.1

Figures based on number of residents

Source: American Seniors Housing Association

As seen, initial absorption of new residents for all facility types is strong in the first month, then it tapers off during the following months.

California Assisted Living Environment

The California Department of Social Services, Community Care Licensing Division, is the State Agency responsible for approving, monitoring and regulating residential care facilities for the elderly, which provide temporary or long-term, 24-hour non-medical residential care services to the elderly, who are substantially unable to live independently. Resident dependence may be the result of physical or other limitations associated with age, physical or mental disabilities or other factors.

Residential facilities are group living facilities with shared bedrooms for the residents. Services provided typically include three meals daily, recreation, housekeeping, security and personal services. Personal services in general include assistance with bathing and dressing and dispensing of medications.

Regulation of residential care facilities in California is documented by the State Department of Social Services (“Department”), contained in Residential Care Facilities for the Elderly, Title 22, Division 6, Chapter 8. Included in these regulations are application procedures, license requirements, enforcement provisions, continuing requirements, physical environment and health related services. Unless a facility is exempt from licensure as specified in regulatory Section 80007, no adult, firm, partnership, association, corporation, county, city, public agency or other government entity shall operate, establish, manage, conduct or maintain a community care facility without first obtaining a valid license.

General Requirements

The following is an outline of the basic requirements for residential care facilities in the State of California:

VALUATION SERVICES	29	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

Admission

Prior to accepting a resident for care, the facility shall conduct an interview with the applicant and responsible person, perform a pre-admission appraisal, and evaluate a recent medical assessment. The licensee is to complete and maintain individual written admission agreements with all persons admitted to the facility or their designated representatives. The agreement shall specify basic services to be made available, payment provisions, modification conditions, refund conditions, general facility policies, and that the Department or licensing agency has the authority to examine residents’ records. The agreement must also specify conditions under which the agreement may be terminated.

Medical Assessment

Prior to a person’s acceptance as a resident, the licensee shall obtain and keep on file, documentation of a medical assessment, signed by a physician, made within the last year. The medical assessment shall include a physical examination of the resident, documentation of prior medical services and history, and a current medical status. There should be a record of current prescribed medications, identification of physical limitations of the person, and a determination of the person’s ambulatory status. The licensee shall obtain an updated medical assessment when required by the Department.

Resident Records

A separate record shall be maintained for each resident. The record shall be current and complete and be generally accessible. A current register of all residents in the facility shall be maintained and also kept in a central location.

Personal Rights

Each person shall have personal rights, which include but are not limited to:

• To be accorded dignity in his/her personal relationships with staff, residents, and other persons.

• To be accorded safe, healthful and comfortable accommodations, furnishings and equipment.

• To be free from corporal or unusual punishment, humiliation, intimidation, mental abuse or other actions of a punitive nature which interfere with daily living functions.

• To leave or depart the facility at any time and to not be locked in any room, building, or on the premises by day or night.

• All persons accepted to facilities or their responsible persons, shall be personally advised and given a copy of these rights at admissions.

Incidental Medical and Dental Care

Each facility shall have a plan for incidental medical and dental care. The plan shall encourage routine medical and dental care and provide for assistance in obtaining such care by compliance with the following:

• The licensee shall arrange, or assist in arranging, for medical and dental care appropriate to the condition and needs of the residents.

• The licensee shall provide assistance in meeting necessary medical and dental needs. This includes transportation to the nearest available medical or dental facility.

VALUATION SERVICES	30	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

• There shall be arrangements for separation and care of residents whose illness requires separation from others.

• When residents require prosthetic devices, vision and hearing aids, the staff shall be familiar with the use of these devices, and shall assist the resident with the utilization of them.

• The licensee shall provide for assisting residents with self-administered medications as needed.

• There shall be adequate privacy for first aid treatment of minor injuries and for examination by a physician if necessary.

• If the facility has no medical unit, a complete first aid kit shall be maintained and readily available.

Food Service

Meals on the premises shall be served in one or more dining rooms or similar areas in which the furniture, fixtures and equipment necessary for meal service are provided. Such dining areas shall be located near the kitchen so that food may be served quickly and easily. The dining rooms are to be attractive to promote socialization among the diners. Tray service shall be provided in case of temporary need.

In facilities with 50 or more residents, providing three meals a day, a full-time employee qualified by formal training or experience shall be responsible for the operation of the food service. If this person is not a dietician, then a provision should be made for regular consultation. The food should be of a good quality.

Personal Accommodations and Services

The facility shall be safe, clean, sanitary and in good repair at all times for the safety and well being of clients, employees and visitors. The facility should be large enough to provide comfortable living accommodations and privacy for the residents, staff and others. There should be common rooms such as living rooms, dining rooms, dens or other activity rooms. Bedrooms shall sleep no more than two clients and be large enough to allow for easy passage and comfortable use of any required client assistance devices. Bedrooms are not to be used as passageways and no room for any other use can double as a bedroom.

Equipment and supplies necessary for personal care and maintenance of adequate hygiene practice shall be readily available to each resident.

Each client is to be provided with a bed in good repair, a chair, a nightstand, a lamp for reading, and adequate closets and drawer space. Clean linen and towels in good repair are to be provided weekly at a minimum, and more often if necessary. Toilets and bathrooms are to be located near the client’s bedrooms. There is to be at least one toilet and sink for each six persons, and at least one tub or shower for each ten persons, with adequate privacy.

A comfortable temperature must be maintained at all times. All windows are to be in good repair and free of insects, dirt and other debris. There should be adequate lighting throughout the facility for the safety and comfort of all persons in the facility.

Personal Services

Licensees shall provide necessary personal assistance and care with activities of daily living including, but not limited to dressing, eating, and bathing.

VALUATION SERVICES	31	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

Activities

The licensee shall ensure that planned recreational activities are provided for the client. These activities include physical activities such as games, sports and exercise, as well as group interaction.

Evaluation Visits

Every licensed community care facility is periodically inspected and evaluated for quality of care. Evaluations are to be conducted at least once a year to ensure the quality of care. The Department shall notify the facility in writing of all deficiencies and shall set a reasonable timeframe for compliance by the facility. Upon a finding of noncompliance, the Department may levy a civil penalty not to exceed $50 per day for each day until the Department finds the facility in compliance. If the facility fails to comply in the allotted time, then the amount collected shall be forfeited to the Department. Reports shall be kept on file in the Department and open to public inspection. A follow up visit is required to determine if the deficiency has been corrected.

Corrective action is taken by the Department when a licensee fails to protect the health, safety and personal rights of individuals in its care, or is unwilling or unable to maintain substantial compliance with licensing regulations.

Enforcement is maintained through:

1.	Fines and civil penalties (vary according to the violation)
2.	Non-compliance office conferences
3.	Administrative legal actions as follows:

• Denial of applications

• Compliance plans

• Probationary license

• Temporary suspension of license

• Revocation of license

• License and employee exclusions

The Department may suspend or revoke any license on any of the following grounds stipulated in Health and Safety Code Sections 1569.1515(c) and 1569.50:

• The Department may revoke the license of any corporate licensee that has a member of the board of directors, the executive director or an officer who is not eligible for licensure pursuant to regulations.

• Violations of the specifics rules and regulations.

• Aiding, abetting or permitting the violation of the rules and regulations.

• Conduct which is inimical to the health, morals or safety of either an individual in or receiving services from the facility or the people of the State of California.

• The conviction of a licensee, or individuals in contact with residents at any time before or during licensure, of a crime as defined in the regulations.

VALUATION SERVICES	32	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

• Engaging in acts of financial malfeasance concerning the operation of a facility, including, but not limited to, improper use or embezzlement of resident monies and property or fraudulent appropriation for personal gain of facility moneys and property, or willful or negligent failure to provide services for the care of the residents.

When the Department intends to seek revocation of a license, the Department shall notify the licensee of the proposed action and at the same time shall serve such licensee with an accusation. The licensee has a right to a hearing prior to the revocation or suspension of a license, except when an “Immediate Temporary Suspension Order” is written.

The Immediate Temporary Suspension Order temporarily suspends any license prior to any hearing when in the Department’s opinion such action is necessary to protect the residents in the facility from any physical or mental abuse or any other substantial threat to health and safety. When the Department intends to temporarily suspend a license prior to a hearing, the Department shall notify the licensee of the temporary suspension and the effective date thereof and at the same time serve the licensee with an accusation.

For either a revocation or a revocation and temporary suspension action, the Department shall within 15 days of receipt of notice of defense ask the Office of Administrative Hearings to set the matter for hearing.

For a revocation and temporary suspension action, the Department shall ask the Office of Administrative Hearings to hold the hearings as soon as possible but not later than 30 days after receipt of the Notice of Defense.

VALUATION SERVICES	33	ADVISORY GROUP

MANAGEMENT AND OPERATIONS OVERVIEW

Management Overview

The subject is managed by ARV Assisted Living, Inc. (ARV). Retirement Inn of Burlingame was constructed in 1977. The facility underwent a major renovation in 2002 that primarily involved upgraded interior components, including paint, carpeting, wall coverings, etc. The property was updated over the last 12 months. Revenues have been sporadic over the last three years, while expenses have been increasing. The facility’s occupancy averaged around 80 percent between 2000 and early 2003, while recent occupancy has increased to the upper 80 percentile. The reasoning for the lower annual occupancy has been reportedly due to the older age of the property and market positioning. The recent increase in occupancy, however, is believed to be the result of strengthened market conditions, as well as more aggressive marketing. Overall, we believe that ARV is competent to manage the subject property.

Operations Overview

Services

Retirement Inn of Burlingame is designed for assisted living and offers all the services typical of these types of facilities. This facility has been designed as a rental community and provides most services under a fixed monthly rate. All resident contracts are for the term of stay. According to the terms of the agreement, a thirty (30) day written notice is required prior to any increase in fees for additional charges or for increases due to increased cost of operations. Included in the monthly rates are:

• Three meals daily and snacks;

• All utilities except for personal telephone

• Scheduled Transportation;

• Twenty-four (24) hour security and numerous safety features throughout the apartments;

• Weekly housekeeping services;

• Linen services;

• Organized individual and group activities

In addition to the monthly fee there are optional services available at an additional charge. These services include additional personal care, respite care, guest meals, beauty shop fees and additional transportation fees. There are regularly scheduled health assessments that help determine which level of services each individual resident receives.

Regulations and Health Matters

The facility has a license for a capacity of 90 residential care/assisted living beds and is regulated by the State of California’s Department of Social Services. A copy of the Regulations is posted in a conspicuous place in the facility and the residents acknowledge at the time of entry that the operation of this facility is governed by these regulations. Furthermore, if the licensing entity amends these regulations, the resident and the provider must obey by the amended regulations.

State Monitoring

The State of California conducts annual surveys of licensed residential care/assisted living facilities. The most recent survey for the subject was conducted in July 2002. The survey reported that the facility met all requirements with no serious deficiencies. A new license for the following 12 months was issued for the facility.

VALUATION SERVICES	34	ADVISORY GROUP

MANAGEMENT AND OPERATIONS OVERVIEW

Admission Policies

Retirement Inn of Burlingame requires all potential assisted living residents to undergo a health evaluation by a physician before entrance into the facility. The operator has the right to terminate the agreement at any time when they feel that the resident’s personal care needs cannot be adequately served by the facility.

There is to be a chart for each resident in assisted living. At the time of admission, a dated and signed medical evaluation, which conforms to the licensing regulations, must be on file. Thereafter, a medical evaluation, which also conforms to licensing regulations, must be made at least every twelve (12) months.

The operator may seek appropriate evaluation and assistance and may arrange for the transfer of a resident to an appropriate and safe location, prior to termination of an admission agreement and without ninety (90) days notice or court review for the following reasons:

• When a resident fails to pay the monthly rent prior to written notice of such absence;

• When the operator feels that the residents mental or physical needs cannot be adequately met by the facility;

• In the event a resident’s behavior poses an imminent risk of death or serious physical injury to himself/herself or to others;

• Breach of contract for any reason by the resident or operator;

• Any prolonged health-related or other absence.

Retirement Inn of Burlingame caters to the full range of needs of seniors requiring assisted living services. The administrator develops and maintains a personalized service plan, which is amended if necessary. Furthermore, the aging-in-place and out-placement policies appear to be reasonable and well implemented. Services at the facility are standard for this type of complex and are in keeping with the residential make-up at the subject.

Marketing

Retirement Inn of Burlingame has a full time marketing director. Marketing personnel are actively involved in the community, as well as with discharge planners for area hospitals. They do not do any telemarketing. Direct mailings, scheduled community events, and networking, on the other hand are a routine part of marketing efforts.

Overall, given the history of the subject, it appears that the recent marketing efforts are adequate. Occupancy of the facility had been averaging around 80 percent for much of the period between 2000 and early 2003, with recent occupancy showing an increase to nearly 90 percent. Continued aggressive marketing will be required to maintain and possibly improve the current occupancy.

Conclusion

Overall, based on our inspection of the facility, discussions with some of the personnel and our review of the Policies and Procedures, it is our opinion that the facility is presently being operated in a competent manner. The facility has been adequately maintained and the residents appear to be content.

VALUATION SERVICES	35	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Primary Market Area

The first step in analyzing the competitive market for the subject is delineating its primary market area (PMA). The primary market area is typically described as either a defined radius around the subject, zip codes, or the subject’s county. In order to delineate the subject’s primary market area, we have interviewed the subject’s Executive Director as well as the competitive properties we have used in our analysis.

Our discussions indicated that approximately 75 percent of the subject’s residents come from the Sunnyvale area. This encompasses an area of approximately three miles. The remaining 25 percent emanate from the greater eastside area. The following chart details the competitors primary market areas (PMA), as well as the estimated percentage that comes from their PMA.

		% of Residents
Name	PMA	from PMA
San Carlos Elms	3.0-5.0 Miles		75	%
Mills Estate Villas	3.0-5.0 Miles		75	%
Westborough Royale	3.0-5.0 Miles		75	%
Glenwood Inn	3.0-5.0 Miles		75	%
Woodside Terrace	3.0-5.0 Miles		75	%
SUBJECT	3.0-5.0 Miles		75	%

In the case of the subject, we have determined the primary market area to encompass an area of approximately three miles with 75 percent of the residents emanating from this PMA. Although a project like the subject may also attract residents from outside of the area, the geographic market area within a radius of three miles of the subject is considered to represent the primary draw for the subject. As indicated on the chart, the subject’s primary market area of three miles is similar to the comparables.

Most of the marketing directors we interviewed also indicated that adult children in this market are the driving forces in the decision making process for their parents.

Supply/New Construction

Existing Facilities

Because of the subject’s levels of personal care services, and type of amenities, the personal care homes in the market with less than 25 beds do not generally compete directly with the subject. However, the following charts detail the number of assisted living units in the subject’s market area that pose direct and indirect competition to the subject. We note that the table includes facilities located in both the subject’s primary and secondary market area in the Burlingame area.

VALUATION SERVICES	36	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

MARKET AREA SUPPLY

	Total AL
Name	Units		PMA/SMA*
San Carlos Elms		85	PMA
Mills Estate Villas		47	PMA
Westborough Royale		88	PMA
Glenwood Inn		131	PMA
Woodside Terrace		65	SMA
SUBJECT		68
Totals		484

* PMA - Primary Market Area; SMA - Secondary Market Area

Proposed Units

Discussions with local providers and planning departments indicated that there are no other facilities planned at this time. We note that San Carlos Elms is currently nearing completion of a dementia wing at their facility in San Carlos.

Occupancy Patterns

Industry Statistics

Assisted living facilities generally exhibit the lowest overall occupancy patterns of any of the senior housing community types (congregate, assisted and CCRCs). As was noted in the Senior Housing Industry Overview presented earlier, assisted living facilities indicated an average occupancy rate of 94.2 percent in 2002, which represented an increase from 93.8 percent in 2001. Assisted living facilities in 2002, according to the survey, indicated the highest occupancies of the senior housing property types (independent, assisted and CCRCs).

Competitive Market Area

The senior living facilities we surveyed for our analysis totaled approximately 416 units and/or beds (excluding the subject) and the current available occupancy of those properties was from 93 to 100 percent. We note that due to the limited amount of similar facilities in the immediate area, several of the facilities we investigated are located outside of the defined primary market area of the subject.

Retirement Inn of Burlingame is noted as having been at 88 percent occupancy at the time of inspection. The subject appears to have a relatively good reputation in the market and although occupancy has been below stabilized levels over the last three years, current increased occupancies and more aggressive marketing should help to continue recent trends.

A summary showing the competitive properties and their overall average occupancy levels is shown below. Please note that not all of these properties may fall within the defined market area of the subject, however, in the Elderly Demographics section we have defined the total supply in the competitive market area.

VALUATION SERVICES	37	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

	Total AL
Name	Units		Occupancy Level
San Carlos Elms	*	85		100	%
Mills Estate Villas	*	47		93	%
Westborough Royale	*	88		96	%
Glenwood Inn		131		93	%
Woodside Terrace		65		96	%
SUBJECT		68		88	%

*     Denotes facilities located in subject’s primary market area.

Again, we note that due to the limited amount of similar facilities in the immediate area, several of the facilities we investigated are located outside of the defined primary market area of the subject. The properties located in the PMA are identified in the above chart.

Rental Rates

Current rental rates for assisted living units in the Burlingame area begin at around $1,650 per month for shared accommodations and go up to around $4,100 for a two-bedroom unit. For the most part, assisted living facilities provide three meals per day, weekly to bi-weekly housekeeping, weekly laundry, all utilities except telephone and cable TV, activities and transportation. Most assisted living facilities generally include a minimal or base level of personal care services in the base monthly rents. In the subject’s market, charges for additional personal care services vary from a property like the subject that includes no personal care in the base rental rate up to facilities such as San Carlos Elms that includes a moderate level of personal care services in the monthly rent.

Rent Increases

Most assisted living facilities in the Burlingame market area have been instigating annual rent increases over the last several years. Although no specific data was available, discussions with several providers indicated that they have been routinely increasing rents between three and five percent per year. Discussions with the subject’s Executive Director indicated that the facility has also been increasing rents annually over the last several years. The most recent rent increase at the subject was October 1, 2003 and was for a 5.0 percent across the board increase.

Concessions

Rent concessions, or incentives, provide a good indication of the condition, or strength of current market conditions. Rent concessions are generally found in markets exhibiting high vacancy and diminished absorption levels, as well as being used by new projects as a part of their overall marketing programs. At the time of our investigation of the Burlingame market area, no significant degree of concessions being offered were noted. Retirement Inn of Burlingame reported that they are currently not offering concessions for leasing vacant units. The property, however, had been offering concessions in 2002 and in the first part of 2003 in attempt to stimulate the below stabilized occupancy problems. This, along with aggressive marketing has helped to strengthen occupancy to its current level near 90 percent. Although concessions will not likely be seen consistently in the market going forward, newer product will

VALUATION SERVICES	38	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

likely use them to stimulate any unforeseen vacancies, while older properties like the subject may have to use concessions more frequently.

Absorption Trends

An assisted living facility generally exhibits lower initial absorption patterns during the first year of any of the senior housing community types (independent, assisted and CCRCs). Occupancy data compiled by the American Seniors Housing Association (ASHA) was previously summarized in the Assisted Living Industry Overview. The industry data indicated that initial absorption of new residents for all facility types is strong in the first month, then it tapers off dramatically during the following months. Specifically, net absorption averaged 11.7 residents for the Month 1, 5.2 residents for Months 2 – 6, 2.9 residents for Months 7 – 12, and 2.2 residents during Year 2.

Retirement Inn of Burlingame opened in 1977 and has been moderately successful from an occupancy basis. Occupancy at the facility was 78 percent in 2000, 82 percent in 2001, 78 percent in 2002 and year-to-date 2003 annualizes out to 90 percent. We note that the facility was at an occupancy of 88 percent at the time of our inspection.

Senior Demographics

We have evaluated the current and future market potential by analyzing demographic trends and the supply of elderly housing in the facility’s market area. Most market areas for assisted living are considered to comprise up to five miles for the primary area and up to 10 to 20 miles for the secondary area. As was discussed earlier, the primary market area for the subject is considered to effectively encompass an area of approximately three miles and a secondary area of approximately five miles. This assumption was based on our review of the demographics of the area, trends on where most of the competition is being constructed, as well as from discussions with the facility’s Executive Director regarding its primary market area.

The demographic data used in our analysis was compiled by Claritas, Inc. The data includes figures for the most recent census year in 2000, 2002 estimates and projections for the year 2007. For purposes of this analysis, we have relied upon the 2002 estimates for current demographic information. Additional state and national information has also been obtained from A Profile of Older Americans: 2001, prepared by the American Association of Retired Persons and the Administration on Aging and based on data from the U.S. Bureau of the Census.

Senior Population/Growth Rates

Population and growth statistics for the subject’s primary and secondary market area is shown in the following chart.

VALUATION SERVICES	39	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Population Statistics

	PMA					SMA
	3 miles					5 miles
	Population		%			Population		%
2000
Total *		96,566					199,044
65+		15,097		15.6	%		30,105		15.1	%
75+		8,489		8.8	%		15,979		8.0	%
85+		2,593		2.7	%		4,562		2.3	%
2002	Estimate
Total *		98,708					202,988
65+		15,354		15.6	%		30,452		15.0	%
75+		8,796		8.9	%		16,471		8.1	%
85+		2,775		2.8	%		4,874		2.4	%
2007	Projection
Total *		103,760					212,215
65+		16,283		15.7	%		32,075		15.1	%
75+		9,356		9.0	%		17,360		8.2	%
85+		3,213		3.1	%		5,596		2.6	%

* Total population unadjusted for age

Source: Claritas, Inc.

Growth Rates

	PMA						SMA
	3 miles						5 miles
	Total			Annual			Total			Annual
2000-2007
Total *		7.4	%		1.0	%		6.6	%		0.9	%
65+		7.9	%		1.1	%		6.5	%		0.9	%
75+		10.2	%		1.4	%		8.6	%		1.2	%
85+		23.9	%		3.1	%		22.7	%		3.0	%
2000-2002
Total *		2.2	%		1.1	%		2.0	%		1.0	%
65+		1.7	%		0.8	%		1.2	%		0.6	%
75+		3.6	%		1.8	%		3.1	%		1.5	%
85+		7.0	%		3.4	%		6.8	%		3.4	%
2002-2007
Total *		5.1	%		1.0	%		4.5	%		0.9	%
65+		6.1	%		1.2	%		5.3	%		1.0	%
75+		6.4	%		1.2	%		5.4	%		1.1	%
85+		15.8	%		3.0	%		14.8	%		2.8	%

* Total population unadjusted for age

Source: Claritas, Inc.

The population in the subject’s market area indicates a moderate level of demand for senior housing. As seen from the data, the elderly population is growing slowly in terms of absolute numbers and as a percentage of total population. Comparatively, the national average of residents age 65+ constituted 13.0 percent of the total population in 2000 according to Claritas, Inc. The subject’s primary market area indicates a similar aged older population to the national average. Furthermore, the average number of older Americans increased 12.6 percent from 1990 to 2000. These rates are similar than the senior growth seen in the subject’s primary and secondary market areas.

Adult Children Population/Growth Rates

     We have also analyzed population trends for what the industry refers to as “adult children”. This segment of the population generally plays a significant role in the placement of a senior in a senior housing facility. This is especially true as many seniors or elderly will relocate to be near their adult children or relatives. This fact is widely recognized by senior housing operators who indicate that market areas exhibiting a higher concentration of adults between the age of 45 and 65 can generally support a much larger supply of senior housing than would be shown through analyzing only the percentage of seniors currently residing in the market area. This situation is more prevalent with regard to higher levels of care such as assisted living and nursing. Population and growth statistics for the subject’s primary market (PMA), as well as the secondary market (SMA) areas for these age groups are shown below

VALUATION SERVICES	40	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Population Statistics - Adult Children

	PMA					SMA
	Population		%			Population		%
2000
Total *		96,566					199,044
45 - 54		13,769		14.3	%		28,967		14.6	%
55 - 59		4,840		5.0	%		10,586		5.3	%
60 - 64		3,775		3.9	%		8,351		4.2	%
2002		2002
Total *		98,708					202,988
45 - 54		14,603		14.8	%		30,653		15.1	%
55 - 59		5,436		5.5	%		11,802		5.8	%
60 - 64		4,038		4.1	%		8,906		4.4	%
2007		2007
Total *		103,760					212,215
45 - 54		16,159		15.6	%		33,741		15.9	%
55 - 59		6,527		6.3	%		14,125		6.7	%
60 - 64		5,066		4.9	%		11,138		5.2	%

* Total population unadjusted for age

Source: Claritas, Inc.

Growth Rates - Adult Children

	PMA						SMA
	Total			Annual			Total			Annual
2000-2007
Total *		7.4	%		1.0	%		6.6	%		0.9	%
45 - 54		17.4	%		2.3	%		16.5	%		2.2	%
55 - 59		34.9	%		4.4	%		33.4	%		4.2	%
60 - 64		34.2	%		4.3	%		33.4	%		4.2	%
2000-2002
Total *		2.2	%		1.1	%		2.0	%		1.0	%
45 - 54		6.1	%		3.0	%		5.8	%		2.9	%
55 - 59		12.3	%		6.0	%		11.5	%		5.6	%
60 - 64		7.0	%		3.4	%		6.6	%		3.3	%
2002-2007
Total *		5.1	%		1.0	%		4.5	%		0.9	%
45 - 54		10.7	%		2.0	%		10.1	%		1.9	%
55 - 59		20.1	%		3.7	%		19.7	%		3.7	%
60 - 64		25.5	%		4.6	%		25.1	%		4.6	%

* Total population unadjusted for age

Source: Claritas, Inc.

As shown, the 45 to 64 age group showed strong growth between 2000 and 2002 in both the primary and secondary market area. Going forward, this age group is forecast to grow at slightly higher rates. Overall, adult children are expected to contribute positively towards living options for the subject and its market area.

Income and Households

In addition to the absolute number and growth of the elderly population, the number of households with appropriate income levels will dictate the actual population available to support the subject. Statistics on income levels are typically presented by the household. We note that in the case of the elderly, most households include at least a single adult. For comparison purposes it is therefore reasonable to utilize the household statistics. Furthermore, the housing cost and income requirements for a second person are significantly less than the primary occupant.

Compared with the local competition, the subject has monthly rates in the middle portion of the range. To afford the various accommodations at the subject, it is estimated that an average annual income of $32,000 would be necessary. We have utilized the average projected revenue per resident of approximately $27,170 as calculated in the Income Capitalization Approach to value. We have assumed that a resident would spend approximately 85 percent of their income on housing, meals and utilities. The balance of the income is required for taxes, insurance, and personal needs. By dividing the $27,170 by 85 percent we arrive at an average income of $32,000, rounded.

Assuming no child subsidy, it is estimated that most residents would require an annual income of $32,000 or more to afford the majority of the accommodations at the subject. We note that this is a conservative assumption given that there are a significant number of elderly who are receiving some form of child subsidy. Furthermore, these indicators are somewhat skewed given that there are recent findings suggesting that the elderly are indeed spending down their assets other than income from their house while residing in senior living facilities. Given the relatively short term of stay anticipated in these facilities, it is reasonable to assume that there would be a greater spend-down of assets. Reference is made to the findings in the State of

VALUATION SERVICES	41	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Seniors Housing Report, 2002 published by the Americans Senior Housing Association, which cites the average length of stay in an assisted living facility to be 18 months.

We also note that the indicated income level does not account for child subsidies or a sale of a home. According to the Claritas report, 75.5 percent of the 65+-householder population owns their own residences in the primary market area and the median housing value was reported to be $630,488 in 2002 . Given that the elderly population typically own their residence free and clear, it is reasonable to assume that there would be additional income available from the sale of a residence which could be amortized over the length of stay. Given the average price of a house and that the majority of the elderly own their houses free and clear, we have assumed that this cash would provide for additional income of say $37,829 annually or a safe rate of return of 6.0 percent of the investment (6.0 percent x $630,488).

After accounting for this ($32,000 - $37,829 = $-5,800), we have considered a higher income qualifier of $25,000 to be a reasonable threshold for entrance to the subject facility due to the rent structure at the property. Reference is made to the table below for a summary of household income for the income qualifiers in the $25,000+ range.

Income Statistics

Households With Incomes Greater Than $15,000

	PMA					SMA
	3 miles					5 miles
	Total		%			Total		%
2002
* Total 65+		9,507		—			18,482	—
65+		8,520		89.6	%		16,686	90.3	%
75+		4,938		51.9	%		9,041	48.9	%
85+		1,505		15.8	%		2,471	13.4	%
2007
* Total 65+		9,852		—			19,055	—
65+		9,220		93.6	%		17,922	94.1	%
75+		5,452		55.3	%		9,852	51.7	%
85+		1,831		18.6	%		2,973	15.6	%

* Unadjusted for Income

Source: Claritas, Inc.

Income Statistics - Growth Rates

Households With Incomes Greater Than $15,000

	PMA						SMA
	3 miles						5 miles
2002-2007	Total			Annual			Total			Annual
* Total 65+		3.6	%		0.7	%		3.1	%		0.6	%
65+		8.2	%		1.6	%		7.4	%		1.4	%
75+		10.4	%		2.0	%		9.0	%		1.7	%
85+		21.7	%		4.0	%		20.3	%		3.8	%

* Unadjusted for Income

Source: Claritas, Inc.

We have found that for households over $25,000 within our primary market area in 2002 (5-mile radius), there were 8,520 for the 65+ age group, 4,938 for the 75+ age group and 1,505 for the 85+ age group. The number of households earning $25,000 or more in the primary market area is anticipated to increase over the next five years at an annual average rate of 1.59 percent for age 65+ households, 2.00 percent per year for age 75+ and 4.00 percent for the age 85+ households. Overall, these figures appear to be consistent with the population trends.

Penetration Rates

A market penetration analysis provides insight into project feasibility. It indicates the ability of a project to lease-up or maintain stabilized operation based on a ratio analysis of other geographic areas (units to population) applied to the subject’s market area. The applicability of the penetration analysis is dependent on the similarities of the area analysis to the subject area. Other factors may cause variations in the penetration rates in an individual market such as competition from similar property types (assisted versus independent living) and unique market demand characteristics (urban versus rural). Given the relatively small number of units and population in an individual area, some divergence from the macro ratio is not unlikely.

VALUATION SERVICES	42	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

In this analysis we have defined the penetration rate to be the percentage of primary market assisted living units to age and income-qualified residents. The 2002 penetration rate is compared to that projected for 2007 based on a supply increase of 25 percent. While there are no firm industry standards for penetration rates, studies across the country suggest that assisted living penetration rates up to 7.0 percent reflect good markets or markets in equilibrium. These percentages have been provided by the MDS Research Company, Inc., who specializes in the market and feasibility analysis of senior housing facilities. Furthermore, a Cushman & Wakefield survey of over 120 senior housing markets across the nation supports acceptable penetration rates of 7.0 percent or below.

Through a review of senior demographics, industry surveys noted above and local market characteristics; we have utilized the following criteria to determine the subject’s market area characteristics.

MARKET CLASSIFICATIONS

	Market Wide	Market Penetration	Rent
Type of Market	Occupancy	Rate	Concessions
Good	90%+	Up to 3.9%	None
Equilibrium	80 – 89%	4.0% - 6.9%	Nominal
Saturation	70 – 79%	7.0% - 9.9%	Moderate
Saturated (Over Built)	69% and Below	10% and Above	Substantial

Nationally, it is generally anticipated that 60 to 70 percent of residents will come from the primary market area and an additional 15 to 20 percent will be from the secondary market area. The remainder of the residents will generally be from other areas and have relocated to be closer to family members. Primary market residents lost to other market areas generally offset residents coming from the secondary market.

The demand for elderly housing is determined by analyzing the relationship between the supply of senior housing units and the number of qualified residents with adequate income to afford the units. In general, a higher ratio of qualified residents, coupled with a high overall occupancy in the area indicates a strong demand for senior housing. At the same time, a low ratio of units to available households coupled with a high occupancy also indicates a high demand. A low occupancy for the area always indicates a low demand. In other words, the ratio of qualified residents is only one component.

We have calculated the market wide occupancy as of the date of inspection for the subject’s primary market area. The primary competing facilities in the PMA, including the subject, are shown in the following table. We acknowledge that the following summary of properties may not represent all of the facilities in the market area, but are what we believe to be the most competitive to the subject.

VALUATION SERVICES	43	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

MARKET OCCUPANCY CHARACTERISTICS

Primary Market Area

Name	No. Units		Occupancy		Occupied Units
San Carlos Elms		85	100	%		85
Mills Estate Villas		47	93	%		44
Westborough Royale		88	96	%		84
Glenwood Inn		131	93	%		122
Woodside Terrace		65	96	%		62
SUBJECT		67	88	%		60
Totals		483	95	%		457

These, along with the previous factors shown will be used in our age and income qualified penetration analysis that follows.

Age and Income Qualified Penetration Analysis

In our analysis we have assumed that 75 percent of the residents will come from the primary market area. We note that the population in the area is moderate and that the general population is increasing and the elderly population is on the rise. This suggests that the subject facility will have to place greater weight on attracting residents to move to be close to family members. We note that areas where the younger population is expanding would be more apt to attract residents from outside the community to move to be closer to their children.

Based on the population and income data presented earlier, the following chart shows our market penetration analysis for the subject.

Market Penetration Analysis

Primary Market Area
3 miles

	2002			2007
65+ Income Qualified Households		8,520			9,220
Average Household Size*		1.62			1.65
Available Persons		13,760			15,238
Total Supply**		483			604
Required Resident % From PMA		75	%		75	%
Required Residents		362			453
Available Persons		13,760			15,238
Indicated Penetration Rate***		2.63	%		2.97	%

* Total 65+ Population Divided by Total 65+ Households

** No. of assisted living units (includes dementia) in primary market area.
    2007 figure accounts for 25 percent new or forecast competition

*** Required Residents divided by Available Persons

Source: Claritas, Inc.

VALUATION SERVICES	44	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Based on the data, the indicated penetration rate for the subject in 2002 is 2.63 percent. The projected growth of 25 percent in the unit supply in the next five years indicates a penetration rate of 2.97 percent in 2007.

Based on the market classification chart presented earlier, penetration rates of up to 3.9 percent were classified for good markets, 4.0 to 6.9 percent signifies the market is at equilibrium, 7.0 to 9.9 percent indicates a market is nearing saturation and rates above 10 percent signify the market is saturated.

The subject’s indicated penetration rate for 2002 signifies that there is good demand in the primary market area. Even assuming a 25 percent increase in supply over the next five years indicates good demand in the primary market area.

Conclusion

Overall, these findings suggest that there appears to be good demand for the assisted living units in the primary market area from both the general population base and the project specific targeting. Based on the current inventory, the subject’s primary market area is not close to reaching a saturation point. Also, the lack of significant rent concessions is positive. Further, current statistics appear to be leaning towards a greater spend down of assets by the elderly and that traditional income levels may be conservative. With this in mind, and based on the indicated penetration rate of 2.63 percent for the general population, there appears to be an adequate marketplace for assisted living units in the marketplace. Older properties like the subject, however, may be required to utilize concessions in order to maintain stabilized occupancy levels.

Market Rate Comparisons

On the following pages are data sheets of the facilities we have compared with the subject. A map showing their location follows these pages. All of the facilities are noted as being located in the subject’s primary market area (PMA).

VALUATION SERVICES	45	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 1

San Carlos Elms
707 Elm Street
San Carlos, CA

Property Type:	ALF/ALZ
Verification:	Marketing Director
	652-595-1500
	22-Oct-03

No. Units		Unit Types	Occupancy
	85	Assisted Living Units		100	%
	0	Alzheimer Units/Beds		0	%
	85	Total Units/Beds		100	%

Rent Schedule

	Assisted Living					Unit Size				Dementia				Unit Size
Unit Description	Monthly Rent Range					Range				Monthly Rent Range				Range
Semi-Private		—	to		—		—	to	—		—	to	—		—	to	—
Studio	$	3,200	to	$	3,200		380	to	380		—	to	—		—	to	—
Studio Alcove		—	to		—		—	to	—		—	to	—		—	to	—
One-Bedroom	$	3,650	to	$	3,650		450	to	450		—	to	—		—	to	—
Two-Bedroom	$	3,975	to	$	3,975		745	to	745		—	to	—		—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to	—		—	to	—
2nd Occupant Rent	$	850	to	$	850						—	to	—
Additional Personal Care	$	350	to	$	1,550						—	to	—
Community Fee	$	1,000	to	$	1,000

Basic Service Care Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:	0.5
Utilities:	Water/Sewer	X	Additional Personal Care Charges	Levels
	Electricity	X
	Cable TV	X
	Telephone	X	Incontinence Care:	Yes
Housekeeping:	Weekly		Dressing Assistance:	Yes
Activities:	Daily		Bathing Assistance:	Yes
Transportation:	Bus		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	N/A
Nursing Staff:	RN

Improvement Description

Year Opened	1996	Common Area	Lobby	X	Dining Room	X
Construction Type	Wood Frame		Activity	X	Salon	X
Floors	2		Library	X	Laundry	X
Site Suitability	Good
Construction Quality	Good	Unit Amenities	Call System	X	Fire Detectors	X
Exterior Siding	Wood		Pvt Bath	X	Shared Bath
Roofing	Shingles		Kitchenettes	Yes
Building Area (Sq.Ft.)	N/A
Condition	Good	HVAC System	Central/Wall Units
Effective Age (Yrs):	N/A	Covered Parki	Yes

Remarks: For profit facility located in San Carlos. Offers assisted living. A new dementia wing is nearing completion. Assisted living rate includes a base level of personal care. Additional personal care based on a five level system. Facility has good reputation and generally has a waiting list.

VALUATION SERVICES	46	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 2

Mills Estate Villas
1733 California Drive
Burlingame, CA

Property Type:	AL
Verification:	Marketing Director
	650-692-0600
	22-Oct-03

No. Units		Unit Types	Occupancy
	47	Assisted Living Units		93	%
	0	Alzheimer Units/Beds		0	%
	47	Total Units/Beds		93	%

Rent Schedule

	Assisted Living					Unit Size				Dementia				Unit Size
Unit Description	Monthly Rent Range					Range				Monthly Rent Range				Range
Semi-Private	$	2,800	to	$	3,300		400	to	400		—	to	—		—	to	—
Studio	$	3,800	to	$	4,400		300	to	300		—	to	—		—	to	—
Studio Alcove		—	to		—		—	to	—		—	to	—		—	to	—
One-Bedroom		—	to		—		—	to	—		—	to	—		—	to	—
Two-Bedroom		—	to		—		—	to	—		—	to	—		—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to	—		—	to	—
2nd Occupant Rent		—	to		—						—	to	—
Additional Personal Care	$	350	to	$	650						—	to	—
Community Fee	$	1,000	to	$	1,000

Basic Service Care Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:	0.5
Utilities:	Water/Sewer	X	Additional Personal Care Charges	Levels
	Electricity	X
	Cable TV	X
	Telephone	X	Incontinence Care:	Yes
Housekeeping:	Weekly		Dressing Assistance:	Yes
Activities:	Daily		Bathing Assistance:	Yes
Transportation:	Bus		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	N/A
Nursing Staff:	RN

Improvement Description

Year Opened	1999	Common Area	Lobby	X		Dining Room	X
Construction Type	Wood Frame		Activity	X		Salon	X
Floors	2		Library	X		Laundry	X
Site Suitability	Good
Construction Quality	Good	Unit Amenities	Call System	X		Fire Detectors	X
Exterior Siding	Wood		Pvt Bath	X		Shared Bath	X
Roofing	Shingles		Kitchenettes	Yes	No
Building Area (Sq.Ft.)	N/A
Condition	Good	HVAC System	Central/Wall Units
Effective Age (Yrs):	N/A	Covered Parki	No

Remarks: For profit facility located in Burlingame. Assisted living rates include a base level of personal care with two additional levels available.

VALUATION SERVICES	47	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 3

Westborough Royale
89 Westborough
South San Francisco, CA

Property Type:	IL/AL
Verification:	Marketing Director
	650-872-0400
	22-Oct-03

No. Units		Unit Types	Occupancy
	88	Assisted Living Units		96	%
	0	Alzheimer Units/Beds		0	%
	88	Total Units/Beds		96	%

Rent Schedule

	Assisted Living					Unit Size				Dementia				Unit Size
Unit Description	Monthly Rent Range					Range				Monthly Rent Range				Range
Semi-Private	$	1,650	to	$	1,650		430	to	430		—	to	—		—	to	—
Studio	$	2,350	to	$	2,350		280	to	280		—	to	—		—	to	—
Studio Alcove	$	2,450	to	$	2,450		340	to	340		—	to	—		—	to	—
One-Bedroom		—	to		—		—	to	—		—	to	—		—	to	—
Two-Bedroom		—	to		—		—	to	—		—	to	—		—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to	—		—	to	—
2nd Occupant Rent	$	750	to	$	750						—	to	—
Additional Personal Care	$	300	to	$	900						—	to	—
Community Fee	$	750	to	$	750

Basic Service Care Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:	0.5
Utilities:	Water/Sewer	X	Additional Personal Care Charges	Levels
	Electricity	X
	Cable TV	X
	Telephone	X	Incontinence Care:	Yes
Housekeeping:	Weekly		Dressing Assistance:	Yes
Activities:	Daily		Bathing Assistance:	Yes
Transportation:	Bus		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	N/A
Nursing Staff:	RN

Improvement Description

Year Opened	1979	Common Area	Lobby	X	Dining Room	X
Construction Type	Wood Frame		Activity	X	Salon	X
Floors	2		Library	X	Laundry	X
Site Suitability	Good
Construction Quality	Good	Unit Amenities	Call System	X	Fire Detectors	X
Exterior Siding	Wood		Pvt Bath	X	Shared Bath	X
Roofing	Shingles		Kitchenettes	Yes
Building Area (Sq.Ft.)	N/A
Condition	Average	HVAC System	Central/Wall Units
Effective Age (Yrs):	N/A	Covered Parki	No

Remarks: For profit facility located in South San Francisco. Offers independent and assisted living. Assisted living rates include a base level of personal care with additional levels priced on a level or tier basis.

VALUATION SERVICES	48	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 4

Glenwood Inn
555 Glenwood Avenue
Menlo Park, CA

Property Type:	AL
Verification:	Marketing Director
	650-322-5550
	23-Oct-03

No. Units		Unit Types	Occupancy
	131	Assisted Living Units		93	%
	0	Alzheimer Units/Beds		0	%
	131	Total Units/Beds		93	%

Rent Schedule

	Assisted Living					Unit Size				Dementia				Unit Size
Unit Description	Monthly Rent Range					Range				Monthly Rent Range				Range
Semi-Private		—	to		—		—	to	—		—	to	—		—	to	—
Studio	$	2,550	to	$	2,850		350	to	350		—	to	—		—	to	—
Studio Alcove		—	to		—		—	to	—		—	to	—		—	to	—
One-Bedroom	$	2,950	to	$	3,250		500	to	500		—	to	—		—	to	—
Two-Bedroom	$	3,550	to	$	4,100		700	to	700		—	to	—		—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to	—		—	to	—
2nd Occupant Rent	$	750	to	$	750						—	to	—
Additional Personal Care	$	225	to	$	1,200						—	to	—
Community Fee	$	1,000	to	$	1,000

Basic Service Care Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:	0.5
Utilities:	Water/Sewer	X	Additional Personal Care Charges	Levels
	Electricity	X
	Cable TV	X
	Telephone	X	Incontinence Care:	Yes
Housekeeping:	Weekly		Dressing Assistance:	Yes
Activities:	Daily		Bathing Assistance:	Yes
Transportation:	Bus		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	N/A
Nursing Staff:	RN

Improvement Description

Year Opened	1991	Common Area	Lobby	X	Dining Room	X
Construction Type	Wood Frame		Activity	X	Salon	X
Floors	2		Library	X	Laundry	X
Site Suitability	Good
Construction Quality	Good	Unit Amenities	Call System	X	Fire Detectors	X
Exterior Siding	Wood		Pvt Bath	X	Shared Bath
Roofing	Shingles		Kitchenettes	Yes
Building Area (Sq.Ft.)	N/A
Condition	Good	HVAC System	Central/Wall Units
Effective Age (Yrs):	N/A	Covered Parki	No

Remarks: For profit congregate living facility located in Menlo Park. Additional personal care based on level basis.

VALUATION SERVICES	49	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 5

Woodside Terrace
485 Woodside Road
Redwood City, CA

Property Type:	AL
Verification:	Marketing Director
	650-366-3900
	22-Oct-03

No. Units		Unit Types	Occupancy
	65	Assisted Living Units		96	%
	0	Alzheimer Units/Beds		0	%
	65	Total Units/Beds		96	%

Rent Schedule

	Assisted Living					Unit Size				Dementia				Unit Size
Unit Description	Monthly Rent Range					Range				Monthly Rent Range				Range
Semi-Private		—	to		—		—	to	—		—	to	—		—	to	—
Studio	$	3,100	to	$	3,100		300	to	300		—	to	—		—	to	—
Studio Alcove		—	to		—		—	to	—		—	to	—		—	to	—
One-Bedroom	$	3,200	to	$	3,200		450	to	450		—	to	—		—	to	—
Two-Bedroom	$	3,400	to	$	3,400		600	to	600		—	to	—		—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to	—		—	to	—
2nd Occupant Rent	$	750	to	$	750						—	to	—
Additional Personal Care	$	300	to	$	1,200						—	to	—
Community Fee	$	1,000	to	$	1,000

Basic Service Care Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:	0.5
Utilities:	Water/Sewer	X	Additional Personal Care Charges	Levels
	Electricity	X
	Cable TV	X
	Telephone	X	Incontinence Care:	Yes
Housekeeping:	Weekly		Dressing Assistance:	Yes
Activities:	Daily		Bathing Assistance:	Yes
Transportation:	Bus		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	N/A
Nursing Staff:	RN

Improvement Description

Year Opened	1988	Common Area	Lobby	X	Dining Room	X
Construction Type	Wood Frame		Activity	X	Salon	X
Floors	2		Library	X	Laundry	X
Site Suitability	Good
Construction Quality	Good	Unit Amenities	Call System	X	Fire Detectors	X
Exterior Siding	Wood		Pvt Bath	X	Shared Bath
Roofing	Shingles		Kitchenettes	Yes
Building Area (Sq.Ft.)	N/A
Condition Effective Age (Yrs):	Good N/A	HVAC System Covered Parki	Central/Wall Units No

Remarks: For-profit congregate facility located in Redwood City. Has a total of 270 units. Most of the units are independent. The assisted living rates include a base level of personal care with additional care available on a five level tier system.

VALUATION SERVICES	50	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

RENT COMPARABLE MAP

VALUATION SERVICES	51	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Direct Comparisons

As a basis for comparing the subject’s asking rental rates to the comparables shown in the previous summary, we have classified each comparable in relation to the subject as either similar, inferior, or superior. The overall classification was based on the five primary factors (aside from pricing) used by potential residents in choosing an assisted living facility. These factors are based on our discussions with hundreds of marketing directors and administrators across the nation. The five main factors in order of importance are as follows: reputation for quality care or social status of the facility; age and condition of the building; unit sizes; amenities and planned activities; and location.

Based on our physical inspection of the comparables and the subject and discussions with local market participants, we have classified the comparables as follows:

Rental No.	Comparison To Subject
1	Superior
2	Superior
3	Similar
4	Similar
5	Superior

Rental Rate Analysis

The assisted living rates at Retirement Inn of Burlingame include three meals per day, weekly housekeeping/laundry, utilities (except for telephone and cable TV), activities and scheduled transportation. All personal care at the subject is charged in addition to the base monthly rental rate. Specifically, there are eight base levels or tiers of care services available (based on a point system) that are determined from a monthly need assessment basis. The levels of personal care range from $225 per month (Level A) up to an additional $1,425 per month for Level 7 services. If a resident requires services above Level 7, there is an additional charge of $5.00 per point.

A summary of the asking or street rents for the subject, as well as the rates for the competitive properties are shown below.

Studio Units – Assisted Living

The following chart indicates the asking rates for assisted living studio units at the subject, as well as the comparables:

Studio Units - AL

Facility Name	Unit Size (SF)				Rental Range
San Carlos Elms		380	-	380	$	3,200	-	$	3,200
Mills Estate Villas		300	-	300	$	3,800	-	$	4,400
Westborough Royale		280	-	280	$	2,350	-	$	2,350
Glenwood Inn		350	-	350	$	2,550	-	$	2,850
Woodside Terrace		300	-	300	$	3,100	-	$	3,100
SUBJECT		190	-	190	$	2,150	-	$	2,500
Range (Excluding Subject)		280	-	380	$	2,350	-	$	4,400

VALUATION SERVICES	52	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

The comparables indicate a range of asking rates from $2,350 to $4,400 per month based on unit sizes from 280 to 380 square feet. The subject’ asking rates of $2,150 per month is seen as falling slightly below the range from an absolute rent basis, as well as from unit size basis. San Carlos, Mills Estate Villas, and Woodside Terrace have asking rates above $3,000 per month and these are reflective of a higher level of personal care in the base monthly rental rates. Westborough Royale and Glenwood Inn have a similar rent structure to the subject, which includes no personal care. We note that the average in-place rent for the subject is $2,019 per month. Based on the data, we believe that a rent of $2,100 per month is warranted for the subject’s studio units.

Studio Alcove Units - Assisted Living

The following chart indicates the asking rates for assisted living studio alcove units at the subject, as well as the comparables:

Alcove Units - AL

Facility Name	Unit Size (SF)				Rental Range
San Carlos Elms		380	-	380	$	3,200	-	$	3,200
Mills Estate Villas		300	-	300	$	3,800	-	$	4,400
Westborough Royale		340	-	340	$	2,450	-	$	2,450
Glenwood Inn		350	-	350	$	2,550	-	$	2,850
Woodside Terrace		300	-	300	$	3,100	-	$	3,100
SUBJECT		220	-	220	$	2,350	-	$	2,500
Range (Excluding Subject)		300	-	380	$	2,450	-	$	4,400

The comparables indicate a range of asking rates from $2,450 to $4,400 per month based on unit sizes from 300 to 380 square feet. The subject’ asking rates of $2,350 per month is seen as falling slightly below the range from an absolute rent basis, as well as from unit size basis. San Carlos, Mills Estate Villas, and Woodside Terrace have asking rates above $3,000 per month and these are reflective of a higher level of personal care in the base monthly rental rates. Westborough Royale and Glenwood Inn have a similar rent structure to the subject, which includes no personal care. We note that the average in-place rent for the subject is $2,143 per month. Based on the data, we believe that a rent of $2,200 per month is warranted for the subject’s larger studio units.

One-Bedroom Units – Assisted Living

The following chart indicates the asking rates for assisted living one-bedroom units at the subject, as well as the comparables:

VALUATION SERVICES	53	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

One-Bedroom Units - AL

Facility Name	Unit Size (SF)				Rental Range
San Carlos Elms		450	-	450	$	3,650	-	$	3,650
Mills Estate Villas		—	-	—		—	-		—
Westborough Royale		—	-	—		—	-		—
Glenwood Inn		500	-	500	$	2,950	-	$	3,250
Woodside Terrace		450	-	450	$	3,200	-	$	3,200
SUBJECT		390	-	390	$	3,250	-	$	3,250
Range (Excluding Subject)		450	-	500	$	2,950	-	$	3,650

The comparables indicate a range of asking rates from $2,950 to $3,650 per month based on unit sizes from 450 to 600 square feet. The subject’ asking rates of $3,250 per month is seen as falling towards the lower to middle of the range from an absolute rent basis, while offering smaller unit sizes. Again, San Carlos has an asking rate of $3,650 per month and this is reflective of a higher level of personal care in the base monthly rental rates. The remaining comparables have similar rent structures to the subject, which includes no personal care. We note that the average in-place rent for the subject is $3,063 per month. Based on the data, we believe that a rent of $3,100 per month is warranted for the subject’s one-bedroom units.

Summary/Conclusion

The subject is one of several competing facilities in the marketplace and offers assisted living units. The facility’s occupancy averaged around 80 percent between 2000 and early 2003, while recent occupancy, however, has increased to the upper 80 percentile. The reasoning for the lower annual occupancy has been reportedly due to the older age of the property and competition. It would also appear that marketing might not have been as aggressive as needed to maintain higher occupancy levels. The recent increase in occupancy at the subject is believed to be the result of strengthened market conditions, as well as more aggressive marketing. The subject has had to utilize some degree of concessions, however, as part of its marketing strategy. This, along with continued aggressive marketing should help to maintain positive occupancy levels. The subject rates are generally at the lower end of the competition and based on the older age of the facility, they appear to be reflective of market rates. Concessions are not prevalent in the marketplace in the newer, more modern product. Overall, it appears that there is a adequate marketplace for the subject, although its older age and small unit sizes does limit its ability to market to a wider qualifying senior target base.

VALUATION SERVICES	54	ADVISORY GROUP

SITE DESCRIPTION

Location:	250 Myrtle Road
	Burlingame, San Mateo County, California 94010
	The site is situated at the southeast corner of Myrtle Road and Burlingame Avenue.
Shape:	Square
Topography:	Level at street grade
Land Area:	0.5167 gross acres (0.5167 net acres)
	22,651 gross square feet (22,651 net square feet)
Frontage, Access, Visibility:	The site has 150 feet of frontage along Myrtle Road and 150 feet along Burlingame Avenue.
Soil Conditions:	We did not receive nor review a soil report. However, we assume that the soil’s load-bearing capacity is sufficient to support the existing structures. We did not observe any evidence to the contrary during our physical inspection of the property. Drainage appears to be adequate.
Utilities
Water:	City of Burlingame
Sewer:	City of Burlingame
Electricity:	Pacific Gas & Electric
Gas:	Pacific Gas & Electric
Telephone:	Pacific Bell
Site Improvements:	The site improvements include asphalt paved parking areas, curbing, signage, landscaping, yard lighting and drainage.
Land Use Restrictions:	We were not given a title report to review. Review of the ALTA survey indicated that there appears to several typical utility easements across the property. We are not aware of any other easements that would adversely affect the property; however, the determination of adverse easements or encroachments is a legal matter, which is beyond the scope of this appraisal. We recommend that the appropriate experts be consulted, as part of a business decision regarding the subject.
Flood Map:	National Flood Insurance Rate Map Community Panel Number 065019 0004C (09/16/81).

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SITE DESCRIPTION

Flood Zone:	FEMA Zone B: This area has been identified in the community flood insurance study as an area of moderate or minimal hazard from the principal source of flood in the area. However, buildings in this zone could be flooded by severe, concentrated rainfall coupled with inadequate local drainage systems. Local storm water drainage systems are not normally considered in the community’s Flood Insurance Study. The failure of a local drainage system creates areas of high flood risk within this rate zone. Flood insurance is available in participating communities but is not required by regulation in this zone.
Wetlands:	We were not given a Wetlands survey. If subsequent engineering data reveal the presence of regulated wetlands, it could materially affect property value. We did not note any presence of wetlands during our inspection We recommend a wetlands survey by a competent engineering firm.
Seismic Hazard:	The site is not located in a Special Study Zone as established by California’s Alquist-Priolo Geological Hazards Act. The entire Central California region, however, is prone to earthquakes.
Hazardous Substances:	We observed no evidence of toxic or hazardous substances during our inspection of the site. However, we are not trained to perform technical environmental inspections and recommend the services of a professional engineer for this purpose.
Overall Functionality:	The subject site is functional for the current intended use.

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IMPROVEMENTS DESCRIPTION

The following description of improvements is based upon our physical inspection of the improvements along with our discussions with the Executive Director. Please refer to the development plan and floor plans in the Addenda.

The facility was constructed in 1977 and contains 47,872 square feet of gross building area within one, four-story building. There is also below grade parking garage. The facility has 67 units and a capacity of 67 beds. The unit mix for the development is as follows.

Retirement Inn of Burlingame

	No.		No.		Unit		Total
Description	Units		Beds		Sq.Ft.		Sq.Ft.
Assisted Living
Small Studio		36		36		190		6,840
Medium Studio		25		25		220		5,500
One-Bedroom		6		6		390		2,340
Totals		67		67				14,680

General Description
Year Built:	1977
Number of Buildings:	One
Number of Stories:	Four
Gross Building Area:	47,872 ± square feet
Number of Units:	67
Number of Beds:	67
Design and Functionality:	The building is an assisted living property of masonry construction. The improvements have above average appeal to prospective assisted living residents.
Amenities:	Indoor and outdoor common areas
Construction Detail
Basic Construction:	Masonry
Foundation:	Poured reinforced concrete
Framing:	Wood frame (Class C) construction. Interior partitions are wood studs.
Floors:	Concrete slab on main floor, wood truss joists on the upper floors.
Exterior Walls:	The exterior facade of the building consists of stucco with wood trim.

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IMPROVEMENTS DESCRIPTION

Roof Cover:	Wood truss roofing system covered with a clay tile cover.
Windows:	All windows are single-glazed sliders situated in aluminum frames.
Mechanical Detail
Heating:	Heating and cooling to the building is supplied by roof mounted gas HVAC systems. In addition, each living unit has a wall mounted electric heating unit.
Plumbing:	The plumbing system is assumed to be adequate for existing use and in compliance with local law and building codes. The plumbing system is typical of other assisted living properties in the area with a combination of copper supply lines and plastic or cast iron waste and vent lines throughout the improvements. There is one set of common restrooms on each floor. All of the living units have private bathrooms with sink, toilet and step-in (handicap) showers. The remaining plumbing items consist of water service to the kitchen, facility laundry, resident laundry rooms and mechanical rooms. Hot water is provided by natural gas water heaters.
Electrical Service:	Electricity for the building is obtained through low voltage underground power lines. Electrical service appears adequate and is assumed to be in conformance with city codes
Emergency Power:	The building’s electrical system is backed by an emergency generator serving all building safety and support systems.
Elevator Service:	The building contains two, 2,500 pound capacity hydraulic elevators.
Fire Protection:	The building is fully protected by an overhead fire sprinklered system. Each unit and the common areas have electric smoke and heat detectors in compliance with local code. The building also has interior stairwells built to fire code. There are an adequate number of fire hydrants in the vicinity of the improvements.
Security:	Resident call systems in all of the resident living areas and bathrooms, as well as emergency battery back-up lighting system and corridor handrails on both sides.

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IMPROVEMENTS DESCRIPTION

Interior Detail
Layout:	The facility is designed in an “L” shape. The main floor common areas include the lobby, living room, administrative offices, employee lounge, beauty shop, kitchen, dining room, guest dining room and storage and mechanical rooms. Common areas on the other floors include central lounge areas at the ends of each floor. The living units are located along the perimeter elevations of all floors facing exterior elevations of the building.
	There are two different sizes for the studio units (standard and alcove). The standard units contain 190 square feet, the alcove units 220 square feet and the one-bedroom units 390 square feet. All of the resident living units are rectangular in shape and have bathrooms with a toilet, sink and roll-in shower stalls, as well as limited storage/closet areas. The one-bedroom units have small kitchenettes (refrigerator, sink and stove/oven), while the studio units have no kitchenettes. Most of the units have an open balcony accessible from the unit. All the units have emergency call systems in the bedroom and bathrooms.
	Overall, the unit sizes and layouts are small for assisted living. Reference is made to the unit and floor plans in the Addenda.
Floor Covering:	The common areas have carpet and vinyl floor coverings. The living units have carpeting and vinyl (bathrooms). All high activity areas have vinyl and/or tile floors (kitchen, shower rooms, etc.).
Walls:	Painted and textured or wallpapered gypsum board. There are various accents through the buildings, including wainscoting, handrails and vinyl accent coverings.
Ceilings:	Painted and textured gypsum board.
Bathrooms:	Each resident unit is equipped with a private bathroom. All bathrooms consist of a walk-in shower with wall-mounted showerhead, toilet and sink and sheet vinyl floor covering, and a combination wall papered gypsum board walls.
Kitchen Facilities:	All meals for the residents are prepared in a central kitchen. Equipment includes a gas range, steel hood with fire suppression system, dishwashers, stainless steel preparation tables, walk-in coolers and walk-in freezers.
Site Improvements
Parking:	There are 32 parking stalls in a below grade parking garage. There is a separate bus parking stall at the east elevation of the building. The parking provisions equate to a ratio of 0.47 per unit. Overall, the parking appears to be adequate for the facility given that most residents do not have a vehicle.

VALUATION SERVICES	59	ADVISORY GROUP

IMPROVEMENTS DESCRIPTION

Onsite Landscaping:	Landscaping consists of grass areas and planted areas with a variety of deciduous trees, flowering plants and shrubbery. There are two common courtyard areas with sitting areas. All landscaped areas are fully irrigated with an automatic irrigation system.
Other:	Other site improvements include signage, trash enclosures, paved asphalt drives, concrete sidewalks and walking paths, as well as fencing.
Summary
Condition:	The subject improvements are considered to be in average condition. The improvements received a major renovation in 2000 which primarily involved upgraded interior components, including paint, carpeting, wall coverings, etc. Nonetheless, the improvements, because of their age, however, are considered to be somewhat dated (smaller rooms, layout, etc.) with regard relative to much of the competing properties and newer assisted living product in the marketplace.
	We did not inspect the roof of the building or make a detailed inspection of the mechanical systems. The appraisers, however, are not qualified to render an opinion as to the adequacy or condition of these components. The client is urged to retain an expert in this field if detailed information is needed about the adequacy and condition of mechanical systems.
Quality:	The overall quality of the improvements is rated as average and is similar to inferior to the competition in the market area.
Layout & Functional Plan:	Average. The facility is considered to be functional for its intended use. There are adequate common areas, although the units are small and corridors are narrower than newer competing facilities. The furnishings and fixtures appear to be of average quality. The living area of the facility equates to around 31 percent of the total area. This equates to around 69 percent of the facility being designated common area, slightly above today’s design of around 40 percent to 60 percent common area.
Year Built:	1977
Effective Age:	25 years
Expected Economic Life:	50 years
Remaining Economic Life:	25 years

Americans With Disabilities Act

The Americans With Disabilities Act (ADA) became effective January 26, 1992. We have not made, nor are we qualified by training to make, a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey and a detailed analysis of the

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IMPROVEMENTS DESCRIPTION

requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have not been provided with the results of a survey, we did not analyze the results of possible non-compliance.

Hazardous Substances

We are not aware of any potentially hazardous materials (such as formaldehyde foam insulation, asbestos insulation, radon gas emitting materials, or other potentially hazardous materials), which may have been used in the construction of the improvements. However, we are not qualified to detect such materials and urge the client to employ an expert in the field to determine if such hazardous materials are thought to exist.

VALUATION SERVICES	61	ADVISORY GROUP

REAL PROPERTY TAXES AND ASSESSMENTS

Taxes are levied against all real property in this locale for the purpose of providing funding for the various municipalities. The amount of ad valorem taxes is determined by the current assessed value for the property in conjunction with the total combined tax rate for the municipalities. The property is subject to the taxing jurisdiction of San Mateo County. The assessors’ parcel identification number is 029-215-240.

Under the provisions of Article XIIIA of the California Tax and Revenue Code, properties are assessed their market value as of March 1, 1975, the base year lien date. This value may be increased only 2.0 percent per year, with few exceptions. Events such as a transfer of ownership, or significant new construction will trigger a reassessment of the property. The county assessor usually accepts the sale price, or the cost of improvements, in calculating assessed value. Assessed values are usually poor indicators of actual market value and are useful only to estimate effective tax rates.

The 2002-2003 fiscal tax year is the most recent year for both assessed value and tax information for the subject. This data is shown below.

PROPERTY ASSESSMENT/TAX DATA

		2002-2003
Assessor’s Market Value:
	Land	$	1,538,751
	Improvements		2,955,464
	Personal Property		552,296
	Assessor’s Market Value:	$	4,494,215
Equalization/Assessment Ratio			100.00	%
Assessed Value		$	4,494,215
Tax Rate ($/$1,000 AV)			11.7910
Total Property Taxes		$	52,991.16
Building Area			47,872
Property Taxes per Square Foot		$	1.11
No. of Units			67
Property Taxes per Unit		$	790.91

We did not do any direct comparison with other senior housing facilities in the market area. As noted previously, assessed values are usually poor indicators of market value and in the case of the subject and its higher level of quality, any direct comparison to the existing product in the Burlingame market area would not provide any substantial of support towards an assessment estimate.

The definition of market value used in this report assumes a sale of the property. If the property were sold, it would be reassessed according to the county assessor’s opinion of its market value, which is typically the sale price. The current assessment of the property of $4,494,215 is considered reasonable based on our market value estimates determined herein.

For the purposes of our Year 1 proforma, we have increased the current taxes for the property by 3.0 percent . Based on the current tax liability of $52,991.16, this equates to a forecast tax liability of $54,581 or $54,600. The increased taxes will be reflected in our proforma model in the Income Capitalization Approach.

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ZONING

The property is zoned R-4, Multiple Family Residential. According to the City of Burlingame zoning regulations, the residential zoning allows for single- and multi-family accessory uses. Senior housing, such as the subject use, requires a Conditional Use permit. A Conditional Use permit was reportedly granted to the property for its initial construction.

We are not experts in the interpretation of complex zoning ordinances but the property appears to be a conforming use based on our review of public information. The determination of compliance is beyond the scope of a real estate appraisal.

We know of no other deed restrictions, private or public, that further limit the subject property’s use. The research required to determine whether or not such restrictions exist, however, is beyond the scope of this appraisal assignment. Deed restrictions are a legal matter and only a title examination by an attorney or title company can usually uncover such restrictive covenants. Thus, we recommend a title search to determine if any such restrictions

VALUATION SERVICES	63	ADVISORY GROUP

HIGHEST AND BEST USE

Definition Of Highest And Best Use

According to The Dictionary of Real Estate Appraisal, Third Edition (1993), a publication of the Appraisal Institute, the highest and best use is defined as:

The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability.

Highest And Best Use Criteria

We evaluated the site’s highest and best use both as currently improved and as if vacant. In both cases, the property’s highest and best use must meet four criteria described above.

Legally Permissible

The first test concerns permitted uses. According to our understanding of the zoning ordinance, noted earlier in this report, the site may legally be improved with structures that accommodate moderate density residential uses. Aside from the site’s zoning and regulations, we are not aware of any legal restrictions that limit the potential uses of the subject.

Physically Possible

The second test is what is physically possible. As discussed in the “Property Description,” the site’s size, soil, topography, etc. do not physically limit its use. The subject site is of adequate shape and size to accommodate almost all suburban land uses.

Financial Feasibility and Maximal Productivity

The third and fourth tests are, respectively, what is feasible and what will produce the highest net return. After analyzing the physically possible and legally permissible uses of the property, the highest and best use must be considered in light of financial feasibility and maximum productivity. For a potential use to be seriously considered, it must have the potential to provide a sufficient return to attract investment capital over alternative forms of investment. A positive net income or acceptable rate of return would indicate that a use is financially feasible.

As stated in the Competitive Market Analysis section, population, income and age statistics would indicate that demand for senior living options in the subject area is considered good. This relates to the economic feasibility of developing a property similar to the subject. The stabilized facilities in the subject’s market area are exhibiting occupancies at or above 90 percent. As such, market conditions for senior living in the subject’s primary market area is considered good .

Highest and Best Use of Site As Though Vacant

Considering the subject site’s size, configuration and topography, location among other assisted living properties and state of the local assisted living market, it is our opinion that the Highest and Best Use of the subject site as though vacant is multi-family residential property developed to the highest density possible.

VALUATION SERVICES	64	ADVISORY GROUP

HIGHEST AND BEST USE

Highest and Best Use of Property As Improved

According to the Dictionary of Real Estate Appraisal, highest and best use of the property as improved is defined as:

The use that should be made of a property as it exists. An existing property should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one.

As discussed, an assisted living facility exists on the site. The design, layout, as well as average unit size of the facility is considered average. The improvements are older and the unit sizes are smaller than the newer competitive properties in the marketplace. As will be demonstrated in the Sales Comparison Approach and the Income Capitalization Approach, the operating characteristics of an assisted living facility represent a viable facility from a revenue-producing standpoint. As will be demonstrated in the Sales Comparison Approach and the Income Capitalization Approach, the operating characteristics of an assisted living facility represent a viable facility from a revenue-producing standpoint.

Alternative uses for the existing improvements, however, would be limited due to the overall design (smaller rooms and limited individual cooking facilities). As a result, any conversion to an alternative use would be costly.

It is our opinion that the existing complex adds value to the site as if vacant, and rent levels of existing leases encumbering the subject property would dictate a continuation of the current use. Therefore, it is our opinion that the Highest and Best Use of the subject property as improved is as it is currently utilized as an assisted living facility.

VALUATION SERVICES	65	ADVISORY GROUP

VALUATION PROCESS

Methodology

There are three generally accepted approaches available in developing an opinion of value: the Cost, Sales Comparison and Income Capitalization approaches. We have considered and analyzed each in this appraisal to develop an opinion of the market value of the subject property, because this is a complete appraisal. In appraisal practice, an approach to value is included or eliminated based on its applicability to the property type being valued and the quality of information available. Each approach is discussed below, and applicability to the subject property is briefly addressed in the following summary.

Land Value

Developing an opinion of land value is typically accomplished via the Sales Comparison Approach by analyzing sites of comparable utility adjusted for differences, to indicate a value for the subject parcel. Valuation is typically accomplished using a unit of comparison such as price per square foot or acre. Adjustments are applied to the units of comparison from an analysis of comparable sales, and the adjusted unit of comparison is then used to derive a total value.

The reliability of this approach is dependent upon (a) the availability of comparable sales data; (b) the verification of the sales data; (c) the degree of comparability; (d) the absence of nontypical conditions affecting the sales price.

Cost Approach

The Cost Approach is based upon the proposition that an informed purchaser would pay no more for the subject than the cost to produce a substitute property with equivalent utility. This approach is particularly applicable when the property being appraised involves relatively new improvements, which represent the highest and best use of the land; or when relatively unique or specialized improvements are located on the site, for which there exist few sales or leases of comparable properties.

In the Cost Approach, the appraiser forms an opinion of the cost of all improvements, depreciating them to reflect value loss from physical, functional and external causes. Land value, entrepreneurial profit and depreciated improvement costs are then added for a total value.

Sales Comparison Approach

The Sales Comparison Approach utilizes sales of comparable properties, adjusted for differences, to indicate a value for the subject property. Valuation is typically accomplished using a unit of comparison such as price per square foot, effective gross income multiplier or net income multiplier. Adjustments are applied to the units of comparison from an analysis of comparable sales, and the adjusted unit of comparison is then used to derive a total value.

The reliability of this approach is dependent upon (a) the availability of comparable sales data; (b) the verification of the sales data; (c) the degree of comparability; (d) the absence of nontypical conditions affecting the sales price.

Income Capitalization Approach

This approach first determines the income-producing capacity of a property by utilizing contract rents on leases in place and by estimating market rent from rental activity at competing properties. Deductions then are made for vacancy and collection loss and operating expenses. The resulting net operating income is capitalized at an overall capitalization rate to derive an

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VALUATION PROCESS

opinion of value. The capitalization rate represents the relationship between net operating income and value.

Related to the Direct Capitalization Method is the Discounted Cash Flow Method. In this method, periodic cash flows (which consist of net operating income less capital costs) and a reversionary value are developed and discounted to a present value using an internal rate of return that is determined by analyzing current investor yield requirements for similar investments.

The reliability of the Income Capitalization Approach depends upon whether investors actively purchase the subject property type for income potential, as well as the quality and quantity of available income and expense data from comparable investments.

Summary

This Appraisal employs all three typical approaches to determine value: the Cost Approach, the Sales Comparison Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion that all approaches would be considered meaningful and applicable in developing a credible value conclusion.

The valuation process is concluded by analyzing each approach to value used in the appraisal. When more than one approach is used, each approach is judged based on its applicability, reliability, and the quantity and quality of its data. A final value opinion is chosen that either corresponds to one of the approaches to value, or is a correlation of all the approaches used in the appraisal.

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LAND VALUATION

We used the Sales Comparison Approach to develop an opinion of land value. In this method, we analyzed prices buyers have recently paid for similar sites in this area, as well as examined current offerings. In making comparisons, we adjusted the sale prices for differences between this site and the comparable sites. We present on the following pages a summary of pertinent details of sites recently sold that we compared to the site appraised.

In the valuation of the subject’s fee simple interest, the Sales Comparison Approach has been used to establish prices being paid for comparably zoned land. The most widely used and market oriented unit of comparison for properties with characteristics similar to those of the subject is the sale price per square foot of land area. All transactions utilized in this analysis are computed on this basis.

Real estate developers make qualitative and quantitative judgments in the acquisition of a site with development potential such as the subject property. Subjectively, a developer considers the nature of surrounding land uses and proximity to complimentary services to a potential project. Objectively, the physical and functional attributes of the site, and the cost of preparing it for construction must be calculated. Lying between these two considerations are the many aesthetic and economic factors, which come to influence the final product.

The major elements of comparison for analysis of this type include the property rights conveyed, the financial terms incorporated into a particular transaction, the conditions or motivations surrounding the sale, changes in market conditions since the sale, the location of the real estate, its utility and the physical characteristics of the property.

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LAND VALUATION

LAND SALES MAP

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LAND VALUATION

SUMMARY OF LAND SALES

Price

Site SqFt

Zoning

Public Utilities

$/SqFt

No.

Location

Date

Site Acres

Utility*

Units

$/Unit

COMMENTS

1

NWC El Camino & Chadbourne

$

4,000,000

74,052 SF

HDR

Yes

$

54.02

To hold for future multi-

Millbrae, CA

4/01

1.7000 Ac

Good

100

$

40,000

family development

2

800 E. 3rd Avenue

$

4,625,000

38,768 SF

CL-C2

Yes

$

119.30

To develop a market rate

San Mateo, CA

1/02

0.8900 Ac

Good

45

$

102,778

property.

3

783 E. 3rd Avenue

$

5,000,000

69,417 SF

C10-C21

Yes

$

72.03

To develop a market rate

San Mateo, CA

12/00

1.5936 Ac

Good

80

$

62,500

property.

4

3446 Rolison Road

$

2,284,500

70,001 SF

R-3

Yes

$

32.64

To develop a market rate

Redwood City, CA

5/00

1.6070 Ac

Good

36

$

63,458

property.

	Price		Site SqFt		Zoning				$/SqFt
							Utilities
	Date		Site Acres		Utility*		Units		$/Unit
Survey Low	$	2,284,500	38,768 SF			N/A		N/A	$	32.64
Survey High	$	5,000,000	74,052 SF			N/A		N/A	$	119.30
Average	$	3,977,375	63,060 SF			N/A		N/A	$	69.49
Survey Low		5/00	0.8900 Ac			N/A		36	$	40,000
Survey High		1/02	1.7000 Ac			N/A		100	$	102,778
Average		2/01	1.4476 Ac			N/A		65	$	67,184
Subject Property				22,508		R-4	Yes			N/A
				0.5167	Good			67		N/A

* Utility includes shape, access, frontage and visibility.

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LAND VALUATION

Adjustment Process

Property Rights Conveyed

All of the sales utilized in this analysis involved the transfer of the fee simple interest. No adjustments were required.

Financial Terms

To the best of our knowledge, all of the sales utilized in this analysis were accomplished with cash and/or cash and market-oriented financing. Therefore, no adjustment for financial terms is required for the comparables.

Conditions of Sale

Adjustments for conditions of sale usually reflect the motivations of the buyer and the seller. In many situations the conditions of sale may significantly affect transaction prices. However, all sales used in this analysis are considered to be “arms-length” market transactions between both knowledgeable buyers and sellers on the open market. Therefore, no adjustments for conditions of sale are required for the comparables.

Market Conditions

The sales included in this analysis date between May 3, 2000 and January 3, 2002. The market has changed over this time period. The appropriate adjustment was made to each comparable.

Location

An adjustment for location is required when the locational characteristics of a comparable property are different from those of the subject property. A senior housing location is dependent on its visibility and access, as well as proximity to transportation and support services. The subject property is considered to exhibit a good location, but it has average access and visibility. We have made a negative adjustment to those comparables considered superior in location versus the subject. Conversely, a positive adjustment was made to those comparables considered inferior. Each comparable was adjusted accordingly.

Size

The size adjustment generally reflects the inverse relationship expressed between unit price and lot size. Smaller lots tend to sell for higher unit prices than larger lots, and vice versa. Hence, positive adjustments were made to larger land parcels, and negative adjustments were made to smaller land parcels. Each comparable was adjusted accordingly.

Public Utilities

All of the sales, like the subject, had full access to public utilities at the time of sale; therefore, no adjustments for this characteristic were required.

Utility

The subject property has good utility. The parcel is adequately shaped to accommodate a typical building, and it has average access, frontage and visibility. When a comparable is considered to have superior or inferior utility, an adjustment was made.

VALUATION SERVICES	71	ADVISORY GROUP

LAND VALUATION

Other

In some cases, other variables will impact the price of a transaction. Some examples would include soil or slope conditions, restrictive zoning, easements, wetlands or external influences. In our analysis of the comparables we found that no unusual conditions existed at the time of sale. As a result, no adjustments were required.

Discussion of Comparable Sales

Comparable Sale No. 1

This is the April 2001 sale of a multi-family site located in Millbrae, California. The parcel contains 1.70 acres. At the time of sale, this comparable was considered similar to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable is of a larger size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments were warranted for size. Positive adjustments were not warranted.

Comparable Sale No. 2

This is the January 2002 sale of a multi-family site located in San Mateo, California. The parcel contains 0.89 acres. At the time of sale, this comparable was considered superior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable exhibits a superior location to the subject. The comparable is of an inferior size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments for location and size were warranted. Positive adjustments were not warranted.

Comparable Sale No. 3

This is the December 2000 sale of a multi-family site located in San Mateo, California. The parcel contains 1.59 acres. At the time of sale, this comparable was considered superior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable exhibits a superior location to the subject. The comparable is of an inferior size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments for location and size were warranted. Positive adjustments were not warranted.

Comparable Sale No. 4

This is the May 2000 sale of a multi-family site located in Redwood City, California. The parcel contains 1.61 acres. At the time of sale, this comparable was considered inferior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable exhibits a inferior location to the subject. The comparable is of an inferior size to the subject. The comparable has similar utility in relation to the subject. A positive adjustment for location was warranted, while a negative adjustment was warranted for size.

A summary of our land sale adjustments is presented below.

VALUATION SERVICES	72	ADVISORY GROUP

LAND VALUATION

LAND SALE ADJUSTMENT GRID

			Economic Adjustments (Cumulative)
			Property			Financing &
	$/SqFt		Rights			Conditions			Exp. After			Market*
No.	Date		Conveyed			of Sale			Purchase			Conditions			Subtotal
1	$	54.02	Fee Simple/Mkt.			Arms-Length			None			Similar			$	54.02
		4/01		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
2	$	119.30	Fee Simple/Mkt.			Arms-Length			None			Similar			$	119.30
		1/02		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
3	$	72.03	Fee Simple/Mkt.			Arms-Length			None			Similar			$	72.03
		12/00		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
4	$	32.64	Fee Simple/Mkt.			Arms-Length			None			Similar			$	32.64
		5/00		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

			Property Characteristic Adjustments (Additive)
	$/SqFt								Public									Adj.
No.	Date		Location			Size			Utilities			Utility**			Other			$/SqFt			Overall
1	$	54.02	Similar			Smaller			Similar			Similar			Similar			$	51.32		Superior
		4/01		0.0	%		-5.0	%		0.0	%		0.0	%		0.0	%		-5.0	%
2	$	119.30	Superior			Smaller			Similar			Similar			Similar			$	65.61		Superior
		1/02		-40.0	%		-5.0	%		0.0	%		0.0	%		0.0	%		-45.0	%
3	$	72.03	Superior			Smaller			Similar			Similar			Similar			$	54.02		Superior
		12/00		-20.0	%		-5.0	%		0.0	%		0.0	%		0.0	%		-25.0	%
4	$	32.64	Inferior			Smaller			Similar			Similar			Similar			$	44.06		Inferior
		5/00		40.0	%		-5.0	%		0.0	%		0.0	%		0.0	%		35.0	%

SUMMARY	Unadjusted				Adjusted
Price Range	$/SF Land		$/AC Land		$/SF Land			$/AC Land
Low	$	32.64	$	1,421,591		$	44.06	$	1,919,145
High	$	119.30	$	5,196,683		$	65.61	$	2,858,176
Average	$	69.49	$	3,027,194		$	53.75	$	2,341,447

Net Adjustment Range (Additive Property Characteristics)

Low	-45.0	%
High	35.0	%
Average	-10.0	%

*	Market Conditions Adjustment
	Compound annual change in market conditions:  San Mateo
	Date of Value (for adjustment calculations):  Mar-03
**	Utility includes shape, access, frontage and visibility.

Summary of Sales and Opinion of Site Value

After considering the differences between each comparable and the subject, the adjusted sales price range is $48.66 to $64.74 per square foot of site area. We have elected to conclude within this range and our opinion of land value indicated by the Sales Comparison Approach is:

	$/Sq.Ft.
Sq.Ft.:		22,651
Opinion of Value:	X $	50.00
Indicated Land Value:	$	1,125,400
Rounded Land Value:	$	1,125,000

VALUATION SERVICES	73	ADVISORY GROUP

COST APPROACH

Methodology

The Cost Approach is based on the principle of substitution, which states that no prudent person will pay more for a property than the cost of acquiring a site and constructing, without undue delay, an equally desirable and useful property. The steps have been outlined under the Valuation Process section of this report. We have previously developed an opinion of land value at $1,125,000.

Replacement Cost New (RCN)

In this section, we will estimate the replacement cost of the existing improvements. Generally, there are three methods of estimating replacement cost; 1) review of the actual/proposed costs of the subject, 2) review of construction costs of other similar type properties, and 3) estimating costs from published cost data sources. In the case of the subject, we were not not provided with actual construction costs for the improvements.

Marshall Valuation Service

As a check towards the above comparisons, we have estimated the replacement cost for the improvements from the Calculator Section in the Marshall Valuation Service, a nationally recognized publication containing construction costs for all types of improvements. Base costs in the Marshall Valuation Service are revised monthly and adjustment factors are provided to reflect regional and local cost variations.

Base Building Costs

The published costs include all direct costs for the base structure and tenant improvements, and the following indirect costs:

1.	Plans, specifications, and building permits, including engineer’s and architect’s fees;
2.	Interest on construction funds during the construction period;
3.	Sales taxes on materials; and
4.	Contractor’s overhead and profit, including worker’s compensation, fire and liability insurance, unemployment insurance, etc.

These base building costs, adjusted for any unique building characteristics and cost multipliers, are presented in the cost summary chart following this section.

Base Construction Costs

In referencing the Marshall Valuation Service cost manual, we have used base costs for an average quality Class D Multiple Residence – Elderly Assisted Living in Section 12/Page 16. The indicated base cost for the improvements is $56.84 per square foot. Adjustments include $2.00 per square foot for sprinklers. Multiplier adjustments include 1.04 for current conditions, 1.28 for location, 1.00 for story height and .93 for perimeter.

Personal Property (Furniture, Fixtures and Equipment)

Based on the Marshall Valuation Service cost manual, the cost of furnishings, fixtures and equipment is estimated to be $3,500 per unit/bed or $234,500 for the 67 units.

VALUATION SERVICES	74	ADVISORY GROUP

COST APPROACH

Site Improvement Costs

Site improvement costs are not included in our Base Building Cost opinion. These include landscaping, asphalt paving, walkways, etc. Site improvement costs are estimated to be $45,016.

Other Indirect Costs

Other indirect costs not included in the RCN of building and site improvements are developer overhead, property taxes, permanent loan fees, legal costs, developer fees, contingencies, and lease-up and marketing costs.

Research into these costs leads to the conclusion that an average property requires an allowance for other indirect costs of between 8.00 percent and 12.00 percent of RCN of building improvements plus site improvements. We have chosen to use 10 percent in our analysis.

Pre-Marketing/Stabilization Costs

Total costs to bring the property into production to a stabilized occupancy level include marketing and pre-marketing expenses, operating losses incurred during fill-up, promotional and public relations expenses, marketing consultants, and professional advertising through the various media. Based upon our knowledge of these expenses for similar facilities, and discussions with marketing specialists and consultants, we estimated the total costs to bring the property into production at stabilized occupancy to be approximately $368,500 or $5,500 per unit. We note that this estimate presumes a healthy market and a competent marketing/management team.

Entrepreneurial Profit

Entrepreneurial profit represents the return to the developer for taking the construction and lease-up risk. Market conditions can influence entrepreneurial profit. Based upon our discussions with developers in the local market, this figure tends to range between 10.00 percent to 20.00 percent of total direct and indirect costs. We chose to use 15.00 percent.

VALUATION SERVICES	75	ADVISORY GROUP

COST APPROACH

Accrued Depreciation

There are three sources of accrued depreciation:

Physical Deterioration:	The subject improvements were built in 1977, yet have seen some upgrading over the last 12 to 24 months. We have used the economic age-life method to develop an opinion of physical deterioration. In the Improvements Description section of this report, we developed an opinion that the effective age of the subject to be 25 years and the economic life to be 50 years. This results in a physical deterioration of 50.00 percent (effective age divided by economic life). The furniture, fixtures and equipment (FF&E). We have concluded that the effective age of the FF&E to be 25 years and the economic life to be 10 years. This results in a physical deterioration of 80.00 percent (effective age divided by economic life).
Functional Obsolescence:	Due to the fact that our RCN opinion considers the construction of the subject improvements utilizing modern materials and current standards, design and layout, functional obsolescence is not applicable. Therefore, functional obsolescence is zero percent. We do acknowledge that in comparison to newer competitive properties in the marketplace, the improvements are older and the unit sizes are smaller.
External Obsolescence:	Based upon a review of the specific location of the subject as well as the local assisted living market, external obsolescence is zero percent.
Total Depreciation:	The sum of these elements of accrued depreciation is 50.00 percent for the improvements and 80.00 percent for the FF&E.

Conclusion

Please refer to the following page for our Cost Approach summary that concludes to a market value opinion as follows:

		Value
Cost Approach Conclusion		$	3,892,891
Rounded		$	3,900,000
	Per Unit	$	58,209

VALUATION SERVICES	76	ADVISORY GROUP

COST APPROACH

COST APPROACH SUMMARY

													Total
REPLACEMENT COST NEW (RCN)			SqFt					$/SqFt			Total		Cost
	Building Base Cost			47,872				$	56.84		$	2,721,044
		Sprinklers		47,872				$	2.00			95,744
		Parking Garage		47,872				$	7.00			335,104
		Subtotal (GBA)		47,872				$	65.84		$	3,151,892
	Subtotal of Building Costs										$	3,151,892
	Multipliers
		Current Cost							1.040
		Local Area							1.280
		Perimeter (approximate; blended)							0.927
		Building Height							1.000
		Product of Multipliers										x 1.234
	Adjusted Base Cost										$	3,889,506
	Furnishings, Fixtures & Equipment
		FF&E	$	3,500				$/Unit			$	234,500
	Total Furnishings, Fixtures & Equipment										$	234,500
	Site Improvements		$	2.00				$/SqFt			$	45,016
	Total Direct Costs										$	4,169,022
		Plus: Indirect Costs (% of Direct Costs)		10.0	%						$	416,902
	Subtotal Replacement Cost New ( RCN )												$	4,585,924
	Pre-Marketing/Stabilization Costs		$	5,500				$/Unit			$	368,500
	Subtotal												$	4,954,424
		Plus: Entrepreneurial Profit (% of RCN)		15.0	%									743,164
	Total Replacement Cost New ( RCN )												$	5,697,588
		Per Square Foot											$	47,872.00
		Per Unit											$	85,039
ACCRUED DEPRECIATION
	Physical Deterioration		Improvements					FF&E
		Effective Age (Years):		25 Years					8 Years
		Total Expected Economic Life		50 Years					10 Years
		Total Physical Depreciation:		50.0	%	$	2,713,956		80.0	%	$	215,740
	Functional Obsolescence			0.0	%		0
	External Obsolescence			0.0	%		0
Total				50.0	%	$	2,713,956		80.0	%	$	215,740	$	2,929,696
Depreciated Value of the Improvements													$	2,767,891
	Per Square Foot GBA												$	91.16
	Per Unit												$	108,746
Plus Land Value													$	1,125,000
Indicated Value													$	3,892,891
	Rounded to nearest $50,000												$	3,900,000
	Per Unit												$	58,209
	Per Square Foot												$	81.47

Source: Marshall Valuation Service	Section: 12	Quality: Average
	Section: 16	Class: C
	Date: 8/02	Type: Multiple Residences - Elderly Assisted Living

VALUATION SERVICES	77	ADVISORY GROUP

SALES COMPARISON APPROACH

Methodology

In the Sales Comparison Approach, we developed an opinion of value by comparing this property with similar, recently sold properties in the surrounding or competing area. Inherent in this approach is the principle of substitution, which states that when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming that no costly delay is encountered in making the substitution.

By analyzing sales that qualify as arm’s-length transactions between willing and knowledgeable buyers and sellers, we can identify value and price trends. The basic steps of this approach are:

1.	Research recent, relevant property sales and current offerings throughout the competitive area;
2.	Select and analyze properties that are similar to the property appraised, analyzing changes in economic conditions that may have occurred between the sale date and the date of value, and other physical, functional, or locational factors;
3.	Identify sales that include favorable financing and calculate the cash equivalent price;
4.	Reduce the sale prices to a common unit of comparison such as price per square foot, price per unit or effective gross income multiplier;
5.	Make appropriate comparative adjustments to the prices of the comparable properties to relate them to the property being appraised; and
6.	Interpret the adjusted sales data and draw a logical value conclusion.

The most widely used and market-oriented unit of comparison for properties such as the subject is the sales price per unit basis. All comparable sales were analyzed on this basis.

On the following pages we present a summary of the improved properties that we compared to the subject property, a map showing their locations, and an adjustment grid. Detail sheets describing these sales can be found in the Addenda.

Due to the nature of the subject property and the level of detail available for the comparable data, we have elected to analyze the comparables through application of:

• A cash flow multiplier (CFM) analysis

• An effective gross income multiplier (EGIM) analysis

• A traditional adjustment grid utilizing percentage adjustments

VALUATION SERVICES	78	ADVISORY GROUP

SALES COMPARISON APPROACH

SENIOR HOUSING SALES

							Average					Condition						Revenues		Expense
					Sale Price		Unit SF		% Occ.			& Quality		$/SqFt		Revenues		Per Unit		Ratio			CFM
		Name	Property	Grantee
No.		Property	Type	Grantor	Date		Bldg SqFt		# Units			Year Built		$/Unit		NOI		NOI/Unit		EGIM			OAR
				625 Management Company
	1	Carmel Village	IL/AL	LLC	$	23,125,000		623		97.0	%	Good		$	196.53	$	5,450,000	$	28,836		52.8	%		8.98
		17077 San Mateo Street		Carmel Village Retirement
		Fountain Valley, CA		Residence LLC		1/03		117,666	189 units				1986	$	122,354	$	2,575,000	$	13,624		4.24			11.14	%
				Healthcare Property
				Investors LLC	$	8,800,000		693		95.0	%	Good		$	142.68	$	2,475,000	$	27,809		60.2	%		8.93
	2	Emerald Hills	AL
		11550 Education Street		ALCO IV LLC
		Auburn, CA				9/02		61,677	89 units				1999	$	98,876	$	985,000	$	11,067		3.56			11.19	%
				CNL Retirement Properties
	3	Mapleride of Laguna Creek	AL		$	8,055,600		601		95.0	%	Good		$	159.59	$	2,550,000	$	30,357		66.7	%		9.48
		6727 Laguna Park Drive		Marriott Senior Living
		Elk Grove, CA		Services		1/02		50,476	84 units				1999	$	95,900	$	850,000	$	10,119		3.16			10.55	%
				Emeritus Senior Living
	4	Woodmark at Summit Ridge	AL/ALZ		$	8,500,000		842		95.0	%	Average		$	109.76	$	3,300,000	$	35,870		66.7	%		7.73
		5165 Summit Ridge Court Reno, NV		Woodmart at Summit Ridge
				LLC		2/02		77,445	92 units				1998	$	92,391	$	1,100,000	$	11,957		2.58			12.94	%
				Quilted Care Reno LLC
	5	Manor at Lakeside	IL/AL		$	3,200,000		620		95.0	%	Average		$	56.73	$	1,200,000	$	13,187		69.2	%		8.65
		855 Brinkby Avenue		WMFMT Real Estate LP
		Reno, NV				8/01		56,411	91 units				1981	$	35,165	$	370,000	$	4,066		2.67			11.56	%
				AMI Senior Living
	6	Atria Redding	AL		$	5,000,000		739		95.0	%	Average		$	112.80	$	1,950,000	$	32,500		67.9	%		8.00
		101 Quartz Hill Road		Atria Communities
		Redding, CA				7/01		44,328	60 units				2000	$	83,333	$	625,000	$	10,417		2.56			12.50	%

			Average					Condition						Revenues		Expense
	Sale Price		Unit SF		% Occ.			& Quality		$/SqFt		Revenues		Per Unit		Ratio			CFM
	Date		Bldg SqFt		# Units			Year Built		$/Unit		NOI		NOI/Unit		EGIM			OAR
Survey Minimum	$	3,200,000		601		95.0	%		N/A	$	56.73	$	1,200,000	$	13,187		53	%		7.73
Survey Maximum	$	23,125,000		842		97.0	%		N/A	$	196.53	$	5,450,000	$	35,870		69	%		9.48
Survey Average	$	9,446,767		686		95.3	%		N/A	$	129.68	$	2,820,833	$	28,093		64	%		8.63
Survey Minimum		7/01		44,328	60 units				1981	$	35,165	$	370,000	$	4,066		2.56			10.55	%
Survey Maximum		1/03		117,666	189 units				2000	$	122,354	$	2,575,000	$	13,624		4.24			12.94	%
Survey Average		2/02		68,001	101 units				1994	$	88,003	$	1,084,167	$	10,208		3.13			11.65	%
Subject Property		N/A		715		88	%	Average			N/A	$	1,856,026	$	27,702		80	%		N/A
		N/A		47,872		67			1977		N/A	$	366,524	$	5,471		N/A			N/A

VALUATION SERVICES	79	ADVISORY GROUP

SALES COMPARISON APPROACH

IMPROVED SALES COMPARABLE MAP

VALUATION SERVICES	80	ADVISORY GROUP

SALES COMPARISON APPROACH

Cash Flow Multiplier

The cash flow multiple (CFM) is considered a reliable indicator of value. This is because the CFM considers both the income and the expenses of a facility, whereas the EGIM and the price per unit do not. The CFMs of the comparables range from 7.73x to 9.48x cash flow, with an average of 8.63x. The properties are newer facilities in average to good condition. The financial indicators are all based on stabilized operating levels.

The subject is an assisted living facility of average quality that is located in a good senior demographic market area in California. We note that the forecast subject expense ratio, inclusive of management fees and replacement reserves, is 80.25 percent, which falls within the lower portion of the range of the comparables. In addition, the subject’s cash flow is moderate relative to the comparables. We have utilized a cash flow multiplier in the middle to upper portion of the range of 9.00x, which when applied to the subject’s projected stabilized cash flow (net operating income) arrives at a market value for the subject as follows:

			Subject		Indicated
Range	CFM		NOI		Value		$/Unit
Low		7.73	$	366,524	$	2,832,233	$	42,272
High		9.48	$	366,524	$	3,473,616	$	51,845
Median		8.79	$	366,524	$	3,222,236	$	48,093
Average		8.63	$	366,524	$	3,162,353	$	47,199
Sample Si		6

CONCLUSIONS

Indicated CFM			9.00
Net Operating Income		x   $	366,524
Indicated Stabilized Value		$	3,298,719
Rounded to nearest $100,000		$	3,300,000
	Per Unit	$	49,254
	Per Square Foot	$	68.93

Therefore, the indicated value for the subject the CFM analysis is $3,300,000.

Effective Gross Income Multiplier

The effective gross income multiplier serves as an indicator of market value as expressed by the relationship between the sales price of a property and its effective gross income. This unit of comparison is commonly utilized by participants active in the real estate market. A significant strength of this analytical technique is that it represents a direct factor of income as reflected by the market and, therefore, requires no adjustment. Furthermore, the effective gross income is more easily verified and more reliable than net operating income since the figure is not distorted by management fees, capital costs or accounting conventions.

The effective gross income multipliers for the comparable sales indicate a range of 2.56x to 4.24x effective gross income with an average of 3.13x. In The Senior Care Acquisition Report, 2003, published by Irving Levin Associates, EGIMs for 2002 were analyzed. In general, the average EGIM for assisted living facilities in 2002 was 2.4x. This represented a strong decline over the EGIM of 3.2x reported in 2001. The decline was reported as being reflective of the excessive development in the 1990s, as well as several corporate bankruptcies during 2001.

VALUATION SERVICES	81	ADVISORY GROUP

SALES COMPARISON APPROACH

Furthermore, our findings are that multipliers decline as the age of the facility increases. We have utilized an EGIM of 2.00x for the subject, which falls below the range for the comparables. This rate is considered reasonable for the subject given the subject’s projected expense ratio, age, and location. This is applied to the subject’s projected effective gross income as follows:

			Subject		Indicated
Range	EGIM		EGI		Value		$/Unit
Low		2.56	$	1,856,026	$	4,759,040	$	71,030
High		4.24	$	1,856,026	$	7,875,338	$	117,542
Median		2.91	$	1,856,026	$	5,406,348	$	80,692
Average		3.13	$	1,856,026	$	5,804,491	$	86,634
Sample Size		6

CONCLUSIONS

Indicated EGIM			2.00
Effective Gross Income		x   $	1,856,026
Indicated Stabilized Value		$	3,712,051
Rounded to nearest $100,000		$	3,700,000
	Per Unit	$	55,224
	Per Square Foot	$	77.29

Therefore, the indicated value for the subject by the EGIM analysis is $3,700,000.

Price Per Unit

The price per unit is the most frequently quoted unit of comparison. This is despite the fact he fact that the calculation ignores variations in rates or operating margins and, therefore, is indifferent to the income generating potential of an investment property. Nonetheless, the price per unit provides some indication of prices. Although our income estimates maybe based on a per resident basis due to the possible inclusion of shared units, the basis of the comparables has been analyzed on a per unit situation. We believe that comparing the subject on a per unit basis is the most reasonable method and would not provide a misleading value estimate for the property.

The following is a discussion of the sales that have been compared with the subject. Again, the sales have been analyzed on a price per unit basis with all necessary adjustments. Reference is made to sales summary shown previously.

Percentage Adjustment Method

Adjustment Process

The sales that we have utilized represent the best available information that could be compared to the subject property. The major elements of comparison for an analysis of this type include the property rights conveyed, the financial terms incorporated into a particular transaction, the conditions or motivations surrounding the sale, changes in market conditions since the sale, the location of the real estate, its physical traits and the economic characteristics of the property.

The first adjustment made to the market data takes into account differences between the subject property and the comparable property sales with regard to the legal interest transferred.

VALUATION SERVICES	82	ADVISORY GROUP

SALES COMPARISON APPROACH

Advantageous financing terms or peculiar conditions of sale are then adjusted to reflect a normal market transaction. Next, changes in market condition must be accounted for, thereby creating a time adjusted normal unit of comparison. Lastly, adjustments for location, the physical traits and the economic characteristics of the market data are made in order to generate the final adjusted unit rate, which is appropriate for the subject property.

Property Rights Conveyed

All of the sales utilized in this analysis involved the transfer of the fee simple interest. Since we are appraising the fee simple interest of the subject property, no adjustments were required.

Financial Terms

To the best of our knowledge, all of the sales utilized in this analysis were accomplished with cash and/or cash and market-oriented financing. Therefore, no adjustment for financial terms is required for the comparables.

Conditions of Sale

Adjustments for conditions of sale usually reflect the motivations of the buyer and the seller. In many situations the conditions of sale may significantly affect transaction prices. However, all sales used in this analysis are considered to be “arms-length” market transactions between both knowledgeable buyers and sellers on the open market. Therefore, no adjustments for conditions of sale are required for the comparables.

Market Conditions

The sales included in this analysis date between July 1, 2001 and January 1, 2003. The market has not changed over this time period. The appropriate adjustment was made to each comparable.

Location

An adjustment for location is required when the locational characteristics of a comparable property are different from those of the subject property. The subject property is considered to exhibit a good location and has average access and visibility. We have made a negative adjustment to those comparables considered superior in location versus the subject. Conversely, a positive adjustment was made to those comparables considered inferior. Each comparable was adjusted accordingly.

Physical Traits

Various physical factors were analyzed including size, age, condition, quality, amenities, unit mix, utility, etc. When an item was determined to be inferior to the subject, a positive adjustment was applied. When an item was determined to be superior to the subject, a negative adjustment was applied.

Economic Characteristics

This adjustment is used to reflect differences in rent levels, operating expense ratios, occupancy levels, and other items that would have an economic impact on the transaction. Each comparable was adjusted accordingly.

VALUATION SERVICES	83	ADVISORY GROUP

SALES COMPARISON APPROACH

Discussion of Comparable Sales

In our analysis of the market for comparable assisted living properties, we have compared the subject to assisted living properties from throughout the regional area. These are discussed below.

Comparable Sale No. 1

At the time of sale, this comparable was considered superior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were superior. Negative adjustments were warranted for age and revenue characteristics. Positive adjustments were not warranted.

Comparable Sale No. 2

At the time of sale, this comparable was considered superior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable exhibits an inferior location. The comparable is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were superior. Negative adjustments were warranted for age and revenue characteristics. Positive adjustments were warranted for location.

Comparable Sale No. 3

At the time of sale, this comparable was considered superior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were superior. Negative adjustments were warranted for age and revenue characteristics. Positive adjustments were not warranted.

Comparable Sale No. 4

At the time of sale, this comparable was considered superior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. The comparable exhibits an inferior location. Revenue characteristics were superior. Negative adjustments were warranted for age and revenue characteristics. Positive adjustments were warranted for location.

Comparable Sale No. 5

At the time of sale, this comparable was considered inferior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable exhibits an inferior location. The comparable is of a similar age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were inferior. Negative adjustments were not warranted. Positive adjustments were warranted for location and revenue characteristics.

VALUATION SERVICES	84	ADVISORY GROUP

SALES COMPARISON APPROACH

Comparable Sale No. 6

At the time of sale, this comparable was considered superior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have not changed in the period since the sale. The comparable exhibits an inferior location. The comparable is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were superior. Negative adjustments were warranted for age and revenue characteristics. Positive adjustments were warranted for location.

A summary of our adjustments is shown in the following table.

IMPROVED COMPARABLE SALE ADJUSTMENT GRID

ECONOMIC ADJUSTMENTS (CUMULATIVE)

	$/Unit		Property			Financing &
			Rights			Conditions			Exp. After			Market*
No.	Date		Conveyed			of Sale			Purchase			Conditions			Subtotal
1	$	122,354	Fee Simple/mkt.			Arms-Length			None			Similar			$	122,354
		1/03		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
2	$	98,876	Fee Simple/mkt.			Arms-Length			None			Similar			$	98,876
		9/02		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
3	$	95,900	Fee Simple/mkt.			Arms-Length			None			Similar			$	95,900
		1/02		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
4	$	92,391	Fee Simple/mkt.			Arms-Length			None			Similar			$	92,391
		2/02		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
5	$	35,165	Fee Simple/mkt.			Arms-Length			None			Similar			$	35,165
		8/01		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
6	$	83,333	Fee Simple/mkt.			Arms-Length			None			Similar			$	83,333
		7/01		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%

PROPERTY CHARACTERISTIC ADJUSTMENTS (ADDITIVE)

						Age,
	$/Unit					Quality						Revenue			Payor						Adj.
No.	Date		Location			Condition			Unit Mix			Characteristics			Mix			Other			$/Unit			Overall
1	$	122,354	Similar			Superior			Similar			Superior			Similar			Similar			$	55,060		Superior
		1/03		0.0	%		-5.0	%		0.0	%		-50.0	%		0.0	%		0.0	%		-55.0	%
2	$	98,876	Similar			Superior			Similar			Superior			Similar			Similar			$	49,438		Superior
		9/02		0.0	%		-20.0	%		0.0	%		-30.0	%		0.0	%		0.0	%		-50.0	%
3	$	95,900	Similar			Superior			Similar			Superior			Similar			Similar			$	47,950		Superior
		1/02		0.0	%		-20.0	%		0.0	%		-30.0	%		0.0	%		0.0	%		-50.0	%
4	$	92,391	Inferior			Superior			Similar			Superior			Similar			Similar			$	50,815		Superior
		2/02		5.0	%		-20.0	%		0.0	%		-30.0	%		0.0	%		0.0	%		-45.0	%
5	$	35,165	Inferior			Superior			Similar			Inferior			Similar			Similar			$	36,923		Inferior
		8/01		5.0	%		-5.0	%		0.0	%		5.0	%		0.0	%		0.0	%		5.0	%
6	$	83,333	Inferior			Superior			Similar			Superior			Similar			Similar			$	45,833		Superior
		7/01		5.0	%		-20.0	%		0.0	%		-30.0	%		0.0	%		0.0	%		-45.0	%

SUMMARY

Price Range		Unadj. $/Unit			Adj. $/Unit
	Low	$	35,165		$	36,923
	High	$	122,354		$	55,060
	Average	$	88,003		$	47,670
Net Adjustment
	Low		-55.0	%
	High		-45.0	%
	Average		-50.0	%

CONCLUSION

Indicated Value per Unit		$	47,000
Number of Units			x 67
Indicated Value		$	3,149,000
	Rounded to nearest $100,000	$	3,100,000
	Per Unit	$	46,269

*Market Conditions Adjustment

Compound annual change in market conditions:	3.00	%
Date of Value (for adjustment calculations):	03/31/2003

Summary of Price Per Unit Analysis

After adjusting each comparable sale for differences with the subject property, the adjusted sale price range is $36,923 to $55,060 per unit. Based on the data, we believe that due to the subject’s level of construction quality, resident targeting and location, a price per unit towards the middle portion of the adjusted range is warranted. From this, we have correlated to a price of $47,000 per unit.

Price Per Unit Conclusion

Number of Units		Price Per Unit			Indicated Value
67	X	$	47,000	=	$	3,149,000
			Rounded To:		$	3,150,000

VALUATION SERVICES	85	ADVISORY GROUP

SALES COMPARISON APPROACH

The Sales Comparison Approach results in a range of values for the subject property of $3,150,000 to $3,700,000. This value range equates to a price per square foot of building area of $65.80 to $77.29, which at the lower portion of the range of the unadjusted comparables and is considered reasonable based on the economic and physical characteristics of the subject.

Based on our analysis of competitive transactions, we conclude that the indicated value by the Sales Comparison Approach on October 15, 2003 was:

Units	Indicated Value
67	$	3,300,000

VALUATION SERVICES	86	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Methodology

The Income Capitalization Approach is a method of converting the anticipated economic benefits of owning property into a value through the capitalization process. The principle of “anticipation” underlies this approach in that investors recognize the relationship between an asset’s income and its value. In order to value the anticipated economic benefits of a particular property, potential income and expenses must be projected, and the most appropriate capitalization method must be selected.

The two most common methods of converting net income into value are Direct Capitalization and Discounted Cash Flow. In direct capitalization, net operating income is divided by an overall capitalization rate to indicate an opinion of market value. In the discounted cash flow method, anticipated future cash flows and a reversionary value are discounted to an opinion of net present value at a chosen yield rate (internal rate of return).

In our opinion, the direct capitalization analysis method is most appropriate to value the subject property.

Historical Financial Performance of the Subject Property

The subject is an existing assisted living facility. We were provided with financial statements for 2000, 2001, 2002, and year-to-date 2003. The financial statements have been summarized on a following chart.

Potential Gross Income

There is only one type of payment source at the subject for assisted living services; private pay residents. This type of payor is generally considered the most desirable since private pay rates allow for greater profitability than any fixed government rate plans. Therefore, revenue for the subject is received from the monthly rentals of the living units, as well as from other sources such as second person (double occupancy) fees, move-in or processing fees, as well as other miscellaneous revenue.

VALUATION SERVICES	87	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Retirement Inn of Burlingame
INCOME AND OPERATING EXPENSE SUMMARY

		2000												2001
		(January - December)												(January - December)
		Amount			$/Resident			PRD			% of EGI			Amount			$/Resident		PRD		% of EGI
REVENUES
Rental Income		$	1,211,089		$	23,201		$	63.56			86.26	%	$	1,313,378		$	24,055	$	65.90		88.19	%
Rent Concessions		$	(5,614	)	$	(108	)	$	(0.29	)		-0.40	%	$	—		$	—	$	—		0.00	%
Additional Personal Care		$	191,927		$	3,677		$	10.07			13.67	%	$	157,252		$	2,880	$	7.89		10.56	%
Second Occupant		$	—		$	—		$	—			0.00	%	$	—		$	—	$	—		0.00	%
New Resident Fees		$	—		$	—		$	—			0.00	%	$	12,200		$	223	$	0.61		0.82	%
Other Income		$	6,647		$	127		$	0.35			0.47	%	$	6,416		$	118	$	0.32		0.43	%
GROSS POTENTIAL REV.		$	1,404,049		$	26,897		$	73.69			100.00	%	$	1,489,246		$	27,276	$	74.73		100.00	%
Vacancy/Collection Loss		Inc. Above												Inc. Above
TOTAL NET REVENUE		$	1,404,049		$	26,897		$	73.69			100.00	%	$	1,489,246		$	27,276	$	74.73		100.00	%
OPERATING EXPENSES
Departmental
	General/Administrative	$	60,410		$	1,157		$	3.17			4.30	%	$	48,570		$	890	$	2.44		3.26	%
	Payroll (Wages)	$	485,209		$	9,295		$	25.47			34.56	%	$	507,752		$	9,299	$	25.48		34.09	%
	Payroll Taxes & Benefits	$	162,645		$	3,116		$	8.54			11.58	%	$	159,797		$	2,927	$	8.02		10.73	%
	Resident Care	$	2,763		$	53		$	0.15			0.20	%	$	3,146		$	58	$	0.16		0.21	%
	Food Services	$	119,856		$	2,296		$	6.29			8.54	%	$	100,225		$	1,836	$	5.03		6.73	%
	Activities	$	12,980		$	249		$	0.68			0.92	%	$	10,088		$	185	$	0.51		0.68	%
	Housekeeping/Laundry	$	22,405		$	429		$	1.18			1.60	%	$	20,832		$	382	$	1.05		1.40	%
	Plant Operations	$	61,075		$	1,170		$	3.21			4.35	%	$	41,548		$	761	$	2.08		2.79	%
	Utilities	$	88,939		$	1,704		$	4.67			6.33	%	$	114,812		$	2,103	$	5.76		7.71	%
	Marketing/Promotions	$	46,365		$	888		$	2.43			3.30	%	$	29,118		$	533	$	1.46		1.96	%
Non-Departmental
	Real Estate Taxes	$	54,221		$	1,039		$	2.85			3.86	%	$	51,546		$	944	$	2.59		3.46	%
	Insurance	$	12,507		$	240		$	0.66			0.89	%	$	20,187		$	370	$	1.01		1.36	%
	Management Fees (5% of EGI)	$	70,202		$	1,345		$	3.68			5.00	%	$	74,462		$	1,364	$	3.74		5.00	%
	Replacement Reserves ($/Unit)	$	20,100		$	385		$	1.05			1.43	%	$	20,100		$	368	$	1.01		1.35	%
TOTAL ALL EXPENSES		$	1,219,677		$	23,365		$	64.01			86.87	%	$	1,202,183		$	22,018	$	60.32		80.72	%
EXPENSE RATIO			86.9	%											80.7	%
NET OPERATING INCOME		$	184,372		$	3,532		$	9.68			13.13	%	$	287,063		$	5,258	$	14.40		19.28	%
OCCUPANCY			77.9	%											81.5	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

		2002												2003 Annualized
		(January - December)												(January - August)
		Amount			$/Resident			PRD			% of EGI			Amount			$/Resident			PRD			% of EGI
REVENUES
Rental Income		$	1,342,420		$	25,619		$	70.19			87.39	%	$	1,610,543		$	26,634		$	72.97			86.76	%
Rent Concessions		$	(22,684	)	$	(433	)	$	(1.19	)		-1.48	%	$	(45,101	)	$	(746	)	$	(2.04	)		-2.43	%
Additional Personal Care		$	167,785		$	3,202		$	8.77			10.92	%	$	201,765		$	3,337		$	9.14			10.87	%
Second Occupant		$	—		$	—		$	—			0.00	%	$	—		$	—		$	—			0.00	%
New Resident Fees		$	43,000		$	821		$	2.25			2.80	%	$	80,351		$	1,329		$	3.64			4.33	%
Other Income		$	5,595		$	107		$	0.29			0.36	%	$	8,835		$	146		$	0.40			0.48	%
GROSS POTENTIAL REV.		$	1,536,116		$	29,315		$	80.32			100.00	%	$	1,856,393		$	30,699		$	84.11			100.00	%
Vacancy/Collection Loss		Inc. Above												Inc. Above
TOTAL NET REVENUE		$	1,536,116		$	29,315		$	80.32			100.00	%	$	1,856,393		$	30,699		$	84.11			100.00	%
OPERATING EXPENSES
Departmental
	General/Administrative	$	50,048		$	955		$	2.62			3.26	%	$	46,283		$	765		$	2.10			2.49	%
	Payroll (Wages)	$	539,233		$	10,291		$	28.19			35.10	%	$	557,735		$	9,223		$	25.27			30.04	%
	Payroll Taxes & Benefits	$	221,245		$	4,222		$	11.57			14.40	%	$	265,032		$	4,383		$	12.01			14.28	%
	Resident Care	$	2,187		$	42		$	0.11			0.14	%	$	2,636		$	44		$	0.12			0.14	%
	Food Services	$	110,904		$	2,116		$	5.80			7.22	%	$	125,457		$	2,075		$	5.68			6.76	%
	Activities	$	9,582		$	183		$	0.50			0.62	%	$	12,479		$	206		$	0.57			0.67	%
	Housekeeping/Laundry	$	17,228		$	329		$	0.90			1.12	%	$	10,785		$	178		$	0.49			0.58	%
	Plant Operations	$	60,534		$	1,155		$	3.17			3.94	%	$	77,186		$	1,276		$	3.50			4.16	%
	Utilities	$	112,495		$	2,147		$	5.88			7.32	%	$	119,979		$	1,984		$	5.44			6.46	%
	Marketing/Promotions	$	38,740		$	739		$	2.03			2.52	%	$	37,088		$	613		$	1.68			2.00	%
Non-Departmental
	Real Estate Taxes	$	52,589		$	1,004		$	2.75			3.42	%	$	52,778		$	873		$	2.39			2.84	%
	Insurance	$	36,297		$	693		$	1.90			2.36	%	$	35,993		$	595		$	1.63			1.94	%
	Management Fees (5% of EGI)	$	76,806		$	1,466		$	4.02			5.00	%	$	92,820		$	1,535		$	4.21			5.00	%
	Replacement Reserves ($/Unit)	$	20,100		$	384		$	1.05			1.31	%	$	20,100		$	332		$	0.91			1.08	%
TOTAL ALL EXPENSES		$	1,347,988		$	25,725		$	70.48			87.75	%	$	1,456,347		$	24,084		$	65.98			78.45	%
EXPENSE RATIO			87.8	%											78.5	%
NET OPERATING INCOME		$	188,128		$	3,590		$	9.84			12.25	%	$	400,046		$	6,616		$	18.12			21.55	%
OCCUPANCY			78.2	%											90.3	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

		C&W Forecast
		Stabilized Year
		Amount			$/Resident		PRD		% of EGI
REVENUES
Rental Income		$	1,820,400		$	27,170	$	84.59
Rent Concessions		#REF!			#REF!		#REF!
Additional Personal Care		$	225,120		$	3,360	$	10.46
Second Occupant		$	—		$	—	$	—
New Resident Fees		$	53,600		$	800	$	2.49
Other Income		$	10,000		$	149	$	0.46
GROSS POTENTIAL REV.		$	2,109,120		$	31,479	$	95.56
Vacancy/Collection Loss		$	(253,094	)
TOTAL NET REVENUE		$	1,856,026		$	31,479	$	86.24
OPERATING EXPENSES
Departmental
	General/Administrative	$	52,000		$	882	$	2.42		2.80	%
	Payroll (Wages)	$	560,000		$	9,498	$	26.02		30.17	%
	Payroll Taxes & Benefits	$	250,000		$	4,240	$	11.62		13.47	%
	Resident Care	$	16,000		$	271	$	0.74		0.86	%
	Food Services	$	125,000		$	2,120	$	5.81		6.73	%
	Activities	$	14,000		$	237	$	0.65		0.75	%
	Housekeeping/Laundry	$	20,000		$	339	$	0.93		1.08	%
	Plant Operations	$	80,000		$	1,357	$	3.72		4.31	%
	Utilities	$	115,000		$	1,950	$	5.34		6.20	%
	Marketing/Promotions	$	50,000		$	848	$	2.32		2.69	%
Non-Departmental
	Real Estate Taxes	$	54,600		$	926	$	2.54		2.94	%
	Insurance	$	40,000		$	678	$	1.86		2.16	%
	Management Fees (5% of EGI)	$	92,801		$	1,574	$	4.31		5.00	%
	Replacement Reserves ($/Unit)	$	20,100		$	341	$	0.93		1.08	%
TOTAL ALL EXPENSES		$	1,489,501		$	25,263	$	69.21		80.25	%
EXPENSE RATIO			80.3	%
NET OPERATING INCOME		$	366,524		$	6,216	$	17.03		19.75	%
OCCUPANCY			88.0	%

VALUATION SERVICES 88 A D V I S O R Y G R O U P

INCOME CAPITALIZATION APPROACH

Assisted Living Rate Analysis

The subject has an effective capacity of 67 residents and/or beds. The facility is of average quality construction with a layout and design typical to its age, which makes marketing a challenge relative to the competition. The following is a description of the types of accommodations that are available at the subject.

Assisted living residents at the subject have the choice of studio and one-bedroom apartment units. We note that the subject units are small in relation to the marketplace and feature private bathrooms, kitchenettes and limited closet areas. All of the residents are provided with three daily meals, weekly housekeeping, utilities (except telephone), activities, and scheduled transportation included in their monthly rent. Assisted living or personal care services are an additional monthly fee.

The subject’s actual rental rates (rent roll) were tested for reasonableness against similar facilities in the subject’s market area. In the Competitive Market Analysis section, we identified several existing facilities considered to provide competition for the subject. Data sheets were provided in the Competitive Market Analysis section presented previously. The complexes we surveyed are all considered comparable given that they all provide assisted living units. We note that the facilities are all adequately maintained and they all have a similar amenity package. All of the competing facilities have been discussed in detail in the Competitive Market Analysis section of the report.

The table below summarizes the subject’s unit types and the actual and asking monthly rents.

Retirement Inn of Burlingame

							In House Rents				Asking Rents
			No.		Occ.		Monthly		$/Unit		Monthly		$/Unit
Unit			Units		Units		Revenue		Per Mo.		Revenue		Per Mo.
Assisted Living
Small Studio				36		32	$	64,600	$	2,019	$	77,400	$	2,150
Medium Studio				25		20	$	42,850	$	2,143	$	58,750	$	2,350
		Total - Studio		61		52	$	107,450	$	2,066	$	136,150	$	2,232
One-Bedroom				6		3	$	9,190	$	3,063	$	19,500	$	3,250
	Total - Companion Suite			6		3	$	9,190	$	3,063	$	19,500	$	3,250
Assisted Totals				67		55	$	116,640	$	2,121	$	155,650	$	2,323
Totals				67		55	$	116,640	$	2,121	$	155,650	$	2,323

It appears that the current in-house average rates generally fall above most of the asking rates at the subject. This is reportedly due to recent rent increases. Overall, the average rate is $2,121 per month, which is 9.5 percent below the average asking rate of $3,246 per month. We feel an slight increase for the in-house rates is reasonable, noting that a rate increase was just recently instigated in October 2003. This increase will not adversely affect the stabilized occupancy level at the subject.

VALUATION SERVICES 89 ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Base Rental Rates

The following chart details our reconciled base rental rates for all unit types at the subject. These rates were concluded to in the Competitive Market Analysis section of the report.

Retirement Inn of Burlingame

Reconciled Market Rental Rates

	Resident	No.		No.		Market
Unit Type	Type	Units		Beds		Rent
Small Studio	AL		36		36	$	2,100
Medium Studio	AL		25		25	$	2,250
One-Bedroom	AL		6		6	$	3,100
Totals			67		67

Other Revenues

In addition to room revenues, the subject receives additional income from additional personal care, respite care, new resident fees (entrance fees), second person fees, as well as miscellaneous revenue from such items as barber/beauty income, laundry services, meal and guest fees, food catering, health supplies, etc.

Additional Personal Care

This relates to the additional costs for personal care to those residents who require additional care. The historical, current and forecast revenue from this source is shown below.

Year		Total		$/Resident		PRD
	2000	$	191,927	$	3,677	$	10.07
	2001	$	157,252	$	2,880	$	7.89
	2002	$	167,785	$	3,202	$	8.77
2003 Annualized		$	201,765	$	3,337	$	9.14
C&W Forecast		$	225,120	$	3,360	$	10.46

The base monthly rates at the subject do not include any personal care. All personal care at the subject is charged in addition to the base monthly rental rate. Specifically, there are eight base levels or tiers of care services available (based on a point system) that are determined from a monthly need assessment basis. The levels of personal care range from $225 per month (Level A) up to an additional $1,425 per month for Level 7 services. If a resident requires services above Level 7, there is an additional charge of $5.00 per point.

Review of the rent roll showed that of the existing residents, 77 residents (63 percent of existing total) were paying for personal care services. The average charge equated to $842.27 per

VALUATION SERVICES 90 ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

month, which would indicate an average Level 3 care level. Based on the data, we have forecast that 40 percent of the resident mix will pay an average of $700 per month for personal care services. This equates to Year 1 revenue of $225,120, which is consistent with the recent pattern at the subject.

New Resident Fees

New resident fees at the subject are $2,000 per resident, which falls within the upper end of the range of the comparables from $950 to $2,500. This amount is considered reasonable given the subject’s location and occupancy rate.

The typical turnover in an assisted living facility is between 20 and 28 months with a midrange of two years. This is equivalent to 50 percent of the census turning over each year. For the subject, we are estimating that 40 percent of the residents will pay entry or new resident fees during the subsequent 12 months. The historical, current and forecast revenue from this source is shown below.

Year		Total		$/Resident
	2000	$	0	$	0
	2001	$	12,200	$	223
	2002	$	43,000	$	821
2003 Annualized		$	80,351	$	1,329
C&W Forecast		$	53,600	$	800

Based on the data, we have forecast Year 1 new resident fees at $53,600. The annualized 2003 data indicates a relatively high revenue, however, this is due to high number of new residents that moved into the facility after seeing atypical attrition in the mid to latter part of 2002. Our forecast is consistent with previous trends that reflected normal occupancy.

Second Person Fees

The subject charges a fee of $800 per month for a double occupant in the same unit. This would be applicable to a spouse or sibling. The historical revenue data for the subject did not include any line item breakdown for this category. At the time of inspection, there were only two double occupancies at the subject. Due to the smaller unit composition of the subject, any revenue from double occupancies is minimal. We believe that our other income forecast that follows would more than account for any revenue from this source.

Other Income

This category includes revenue received from the subject’s barber/beauty income, laundry services, respite income, cable TV revenue, meal and guest fees, food catering, health supplies, parking, etc. The historic costs for this category are shown in the following table.

VALUATION SERVICES 91 ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Year		Total		$/Resident		PRD
	2000	$	6,647	$	127	$	0.35
	2001	$	6,416	$	118	$	0.32
	2002	$	5,595	$	107	$	0.29
2003 Annualized		$	8,835	$	146	$	0.40
C&W Forecast		$	10,000	$	149	$	2.49

Based on the data, we have forecast Year 1 revenue from this source at $10,000. This is seen as being consistent with the historic revenue for the subject.

Concessions/Rental Allowances

At the time of inspection, the subject was not offering rent concessions. The property, however, had been offering concessions in 2002 and in the first part of 2003 in attempt to stimulate the below stabilized occupancy problems. This, along with aggressive marketing has helped to strengthen occupancy to its current level near 90 percent. Although concessions will not likely be seen consistently in the market going forward, newer product will likely use them to stimulate any unforeseen vacancies, while older properties like the subject may use concessions more frequently. Nonetheless, no allowance for rent concessions will be applied to the subject as we have accounted for this potential through a lower occupancy rate and rental rate forecast.

Vacancy and Collection Loss

Both the investor and the appraiser are primarily interested in the annual revenue an income property is likely to produce over a specified period of time, rather than the income it could produce if it were always 100 percent occupied and all tenants were paying their rent in full and on time. A normally prudent practice is to expect some income loss as tenants vacate, fail to pay rent, or pay their rent late. Model units or other rent loss, if necessary, is addressed separately.

The subject, as of the most current rent roll provided, was 88 percent occupied. This is higher than current average occupancy levels for the market area overall. Rent comparable occupancies range from 93 to 100 percent with a general tendency around 90 to 95 percent. Occupancy at the facility was 78 percent in 2000, 82 percent in 2001, 78 percent in 2002 and year-to-date 2003 annualizes out to 90 percent.

In consideration of the above, as well as the general market conditions and market positioning of the subject, we have forecasted a stabilized vacancy and collection loss of 12.00 percent for the subject.

Effective Gross Income

The following table summarizes the projected estimate of stabilized income based on the above findings. The stabilized revenues reflect what we believe would be anticipated by a purchaser of the subject and are based on current market rents and trends.

VALUATION SERVICES 92 ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Retirement Inn of Burlingame

STABILIZED OPERATING INCOME

												PER
	RESIDENT	NO.		NO.			MONTHLY					ACTUAL
UNIT TYPE	TYPE	UNITS		BEDS			RATE		INCOME			RESIDENT
Small Studio	AL		36		36		$	2,100	$	907,200
Medium Studio	AL		25		25		$	2,300	$	690,000
One-Bedroom	AL		6		6		$	3,100	$	223,200
Total			67		67				$	1,820,400		$	27,170
Additional Personal Care					40	%	$	700	$	225,120		$	3,360
Second Person					0	%	$	800	$	—		$	—
New Resident Fees					40	%	$	2,000	$	53,600		$	800
Other									$	10,000		$	149
TOTAL POTENTIAL GROSS INCOME									$	2,109,120		$	31,479
LESS: VACANCY @					12.0	%			$	(253,094	)
EFFECTIVE GROSS INCOME									$	1,856,026		$	31,479

Opinion of Expenses

We have developed an opinion of the property’s annual operating expenses after reviewing its historical performance and reviewing the operating statements of similar senior living properties. We were provided with operating statements for 2000, 2001, 2002, and year-to-date 2003. This information was previously summarized.

We were not provided with the staffing requirements for the facility and we were not able to analyze the expenses on this basis. We have supported our estimate of projected expenses with other senior living facilities in the region, as well as from overall industry statistics. We also note that the reader is cautioned when reviewing the comparable expenses for individual facilities, in that the reporting of expenses varies by property and that different congregate living facilities offer different services. All comparisons will be made on an actual resident basis.

Expense Comparables

The expense comparables have been summarized on the following page.

VALUATION SERVICES 93 ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

SUMMARY OF COMPARABLE OPERATING EXPENSES
ASSISTED LIVING FACILITIES

							ASHA				ASHA
							Lower		ASHA		Upper
Facility	Confidential		Confidential		Confidential		Quartile		Median		Quartile
Reporting Period	2002		2002		2002			2002		2002		2002
Year Built	1999		2001		1990			N/A		N/A		N/A
No. of IL Units	0		42		176			N/A		N/A		N/A
No. of AL Units	89		72		11			N/A		N/A		N/A
No. of ALZ Units	13		0		0			N/A		N/A		N/A
Total Units	102		114		187			N/A		N/A		N/A
Occupancy	83	%	85	%	98	%		N/A		N/A		N/A
Resident Days	30,901		35,493		66,890

		Per					% of			Per					% of
		Resident			$/RD		EGI			Resident			$/RD		EGI
TOTAL NET REVENUES		$	37,505		$	102.75				$	25,443		$	69.71
EXPENSES
	General & Administrative	$	756		$	2.07		2.02	%	$	1,110		$	3.04		3.25	%
	Payroll (Wages/Salaries)	$	11,593		$	31.76		30.91	%	$	8,553		$	23.43		23.52	%
	Payroll Taxes & Benefits	$	3,815		$	10.45		10.17	%	$	2,144		$	5.88		8.62	%
	Resident Care	$	219		$	0.60		0.59	%	$	609		$	1.67		0.82	%
	Food Services	$	1,786		$	4.89		4.76	%	$	1,207		$	3.31		6.32	%
	Activities	$	58		$	0.16		0.16	%	$	58		$	0.16		0.53	%
	Housekeeping	$	119		$	0.32		0.32	%	$	101		$	0.28		0.86	%
	Plant Operations	$	644		$	1.77		1.72	%	$	510		$	1.40		4.05	%
	Utilities	$	1,536		$	4.21		4.09	%	$	1,180		$	3.23		5.19	%
	Marketing/Promotions	$	527		$	1.44		1.41	%	$	439		$	1.20		1.57	%
	Real Estate Taxes	$	705		$	1.93		1.88	%	$	520		$	1.43		3.62	%
	Insurance	$	611		$	1.67		1.63	%	$	400		$	1.10		3.32	%
ADJUSTED OPERATING EXPENSES		$	22,369		$	73.84		59.64	%	$	16,832		$	55.56		61.66	%
Management Fee		$	1,875		$	5.14		5.00	%	$	1,272		$	3.49		5.00	%
Expense Ratio Before
	Reserves		65	%							71	%
Reserves			—			—		—			—			—		—

[Additional columns below]

[Continued from above table, first column(s) repeated]

		Per					% of
		Resident			$/RD		EGI
TOTAL NET REVENUES		$	34,768		$	95.26				$	29,046		$	34,264		$	38,878
EXPENSES
	General & Administrative	$	1,129		$	3.09		3.25	%	$	1,115		$	1,433		$	1,889
	Payroll (Wages/Salaries)	$	8,179		$	22.41		23.52	%		N/A			N/A			N/A
	Payroll Taxes & Benefits	$	2,996		$	8.21		8.62	%	$	1,575		$	2,068		$	3,003
	Resident Care	$	286		$	0.78		0.82	%	$	4,253		$	6,123		$	7,259
	Food Services	$	2,196		$	6.02		6.32	%	$	2,704		$	3,529		$	4,892
	Activities	$	184		$	0.50		0.53	%		N/A			N/A			N/A
	Housekeeping	$	299		$	0.82		0.86	%	$	532		$	815		$	1,130
	Plant Operations	$	1,409		$	3.86		4.05	%	$	580		$	916		$	1,356
	Utilities	$	1,805		$	4.94		5.19	%	$	1,086		$	1,306		$	1,526
	Marketing/Promotions	$	546		$	1.49		1.57	%	$	858		$	1,349		$	2,008
	Real Estate Taxes	$	1,257		$	3.45		3.62	%	$	648		$	1,011		$	1,597
	Insurance	$	1,154		$	3.16		3.32	%	$	278		$	463		$	726
ADJUSTED OPERATING EXPENSES		$	21,439		$	70.77		61.66	%	$	20,959		$	24,058		$	29,438
Management Fee		$	1,738		$	0.00		5.00	%	$	1,249		$	1,713		$	2,082
Expense Ratio Before											76	%		75	%		81	%
	Reserves		67	%
Reserves			—			—		—		$	181		$	326		$	525

Source: The State of Seniors Housing, 2002, ASHA. (Data is for Assisted Living Facilities)

Note: Each line expense for ASHA derived from seperately sorted data columns and may not add up under totals.

* All comparable categories based on Actual Unit (Per Resident)

INCOME CAPITALIZATION APPROACH

General & Administrative

These costs, for the basis of the subject analysis, include office supplies, licenses/permits, dues/subscriptions, travel/meals, communications/telephone, resident activities and transportation. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	60,410	$	1,157	$	3.17		4.30	%
2001	$	48,570	$	890	$	2.44		3.26	%
2002	$	50,048	$	955	$	2.62		3.26	%
2003 Annualized	$	46,283	$	765	$	2.10		2.49	%
C&W Forecast	$	52,000	$	882	$	2.42		2.80	%

The expense comparables showed expenses for this category from $ 756 to $1,129 per resident (average of $ 999 per resident), while the industry data showed a range from $1,115 to $1,889 per resident (median of $1,433 per resident). The subject’s actual expenses fall towards the lower end of the range of the comparable properties. We believe that a higher cost would be warranted for the property based on the market data. We have forecast Year 1 general and administrative costs at $52,000 or $ 882 per resident.

Payroll (Wages and Salaries)

These costs, for the basis of the subject analysis, include all wage and salary costs for the employees. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	485,209	$	9,295	$	25.47		34.56	%
2001	$	507,752	$	9,299	$	25.48		34.09	%
2002	$	539,233	$	10,291	$	28.19		35.10	%
2003 Annualized	$	557,735	$	9,223	$	25.27		30.04	%
C&W Forecast	$	560,000	$	9,498	$	26.02		30.17	%

The expense comparables showed expenses for this category from $8,179 to $11,593 per resident (average of $9,442 per resident), while no data was provided by the ASHA industry data. The subject’s actual expenses are bracketed by the comparable range. We have forecast Year 1 wages and salary costs at $560,000 or $9,498 per resident.

VALUATION SERVICES	95	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Payroll Taxes and Benefits

These costs, for the basis of the subject analysis, include cost for the employee pension plan, employee incentives, vacation pay, employee benefits and payroll taxes. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	162,645	$	3,116	$	8.54		11.58	%
2001	$	159,797	$	2,927	$	8.02		10.73	%
2002	$	221,245	$	4,222	$	11.57		14.40	%
2003 Annualized	$	265,032	$	4,383	$	12.01		14.28	%
C&W Forecast	$	250,000	$	4,240	$	11.62		13.47	%

The expense comparables showed expenses for this category from $2,144 to $3,815 per resident (average of $2,985 per resident), while the industry data showed a range from $1,575 to $3,003 per resident (median of $2,068 per resident). The subject’s actual expenses fall slightly above the range by the comparable properties, but are considered reasonable. We have forecast Year 1 payroll taxes and benefits costs at $250,000 or $4,240 per resident.

Resident Care

This expense is for the costs associated with the personal or assisted living services for the assisted living residents. These include all health care and special needs supplies and related activities, but does not include payroll. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	2,763	$	53	$	0.15		0.20	%
2001	$	3,146	$	58	$	0.16		0.21	%
2002	$	2,187	$	42	$	0.11		0.14	%
2003 Annualized	$	2,636	$	44	$	0.12		0.14	%
C&W Forecast	$	16,000	$	271	$	0.74		0.86	%

The expense comparables showed expenses for this category from $ 219 to $ 609 per resident (average of $ 371 per resident), while the industry data showed a range from $4,253 to $7,259 per resident (median of $6,123 per resident). The industry data included wages and salaries that we have categorized separately. The subject’s actual expenses are seen as falling well below the average costs by the comparable properties. As such, we believe a prudent operator

VALUATION SERVICES	96	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

would allocate a higher allowance, especially as over 50 percent of the subject’s residents are paying for additional resident or personal care. Based on this, we have forecast Year 1 resident care costs at $16,000 or $ 271 per resident.

Food Services

These costs include raw food costs, as well as kitchen supplies. The residents at the subject are provided with three complete meals per day. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	119,856	$	2,296	$	6.29		8.54	%
2001	$	100,225	$	1,836	$	5.03		6.73	%
2002	$	110,904	$	2,116	$	5.80		7.22	%
2003 Annualized	$	125,457	$	2,075	$	5.68		6.76	%
C&W Forecast	$	125,000	$	2,120	$	5.81		6.73	%

The expense comparables showed expenses for this category from $1,207 to $2,196 per resident (average of $1,729 per resident), while the industry data showed a range from $2,704 to $4,892 per resident (median of $3,529 per resident). The subject’s actual expenses are bracketed by the expense comparisons. We have forecast Year 1 food services costs at $125,000 or $2,120 per resident.

Activities

This category is for the activities and recreation costs, as well as transportation costs. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	12,980	$	249	$	0.68		0.92	%
2001	$	10,088	$	185	$	0.51		0.68	%
2002	$	9,582	$	329	$	0.90		1.12	%
2003 Annualized	$	12,479	$	206	$	0.57		0.67	%
C&W Forecast	$	14,000	$	237	$	0.65		0.75	%

The expense comparables showed expenses for this category from $ 58 to $ 184 per resident (average of $ 100 per resident), while no data was provided by the ASHA industry data. The

VALUATION SERVICES	97	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

subject’s actual expenses fall at the upper end of the range shown by the comparable properties. We have forecast Year 1 activities costs at $14,000 or $ 237 per resident.

Housekeeping/Laundry

This category is for all housekeeping costs, including all supplies requisite to housekeeping and laundry services. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	22,405	$	429	$	1.18		1.60	%
2001	$	20,832	$	382	$	1.05		1.40	%
2002	$	17,228	$	329	$	0.90		1.12	%
2003 Annualized	$	10,785	$	178	$	0.49		0.58	%
C&W Forecast	$	20,000	$	339	$	0.93		1.08	%

The expense comparables showed expenses for this category from $ 101 to $ 299 per resident (average of $ 173 per resident), while the industry data showed a range from $ 532 to $1,130 per resident (median of $ 815 per resident). The industry data included wages and salaries that we have categorized separately. The subject’s actual expenses are supported by the comparable properties. We have forecast Year 1 housekeeping costs at $20,000 or $ 339 per resident.

Plant Operations

These costs include general repairs and maintenance, elevator contracts, supplies and equipment purchases for the facility. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	61,075	$	1,170	$	3.21		4.35	%
2001	$	41,548	$	761	$	2.08		2.79	%
2002	$	60,534	$	1,155	$	3.17		3.94	%
2003 Annualized	$	77,186	$	1,276	$	3.50		4.16	%
C&W Forecast	$	80,000	$	1,357	$	3.72		4.31	%

VALUATION SERVICES	98	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

The expense comparables showed expenses for this category from $ 510 to $1,409 per resident (average of $ 854 per resident), while the industry data showed a range from $ 580 to $1,356 per resident (median of $ 916 per resident). The subject’s actual expenses are supported by the comparable properties. We have forecast Year 1 plant operations costs at $80,000 or $1,357 per resident.

Utilities

This expense is for the annual cost for natural gas, electricity, water/sewer, cable TV and trash removal. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	88,939	$	1,704	$	4.67		6.33	%
2001	$	114,812	$	2,103	$	5.76		7.71	%
2002	$	112,495	$	2,147	$	5.88		7.32	%
2003 Annualized	$	119,979	$	1,984	$	5.44		6.46	%
C&W Forecast	$	115,000	$	1,950	$	5.34		6.20	%

The expense comparables showed expenses for this category from $1,180 to $1,805 per resident (average of $1,507 per resident), while the industry data showed a range from $1,086 to $1,526 per resident (median of $1,306 per resident). The subject’s actual expenses fall slightly above the range shown by the comparable data, yet are considered reasonable as utilities are property specific. We have forecast Year 1 utility costs at $115,000 or $1,950 per resident.

Marketing/Promotions

This expense is directly connected to the advertising and marketing of the complex for such things as newspapers and brochures, resident retention, etc. These costs also include the payroll costs of the marketing staff. The historical costs, as well as our forecast for this category are shown below.

VALUATION SERVICES	99	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Year	Total		$/Resident		PRD		% of EGI
2000	$	46,365	$	888	$	2.43		3.30	%
2001	$	29,118	$	533	$	1.46		1.96	%
2002	$	38,740	$	739	$	2.03		2.52	%
2003 Annualized	$	37,088	$	613	$	1.68		2.00	%
C&W Forecast	$	50,000	$	848	$	2.32		2.69	%

The expense comparables showed expenses for this category from $ 439 to $ 546 per resident (average of $ 504 per resident), while the industry data showed a range from $ 858 to $2,008 per resident (median of $1,349 per resident). The subject’s actual expenses are supported by the comparable properties. We have forecast Year 1 marketing costs at $50,000 or $ 848 per resident.

Real Estate Taxes

This cost is for the annual real and personal property tax liability for the subject. The historical costs, as well as our forecast for this category are shown below.

Year	Total		$/Resident		PRD		% of EGI
2000	$	54,221	$	1,039	$	2.85		3.86	%
2001	$	51,546	$	944	$	2.59		3.46	%
2002	$	52,589	$	1,004	$	2.75		3.42	%
2003 Annualized	$	52,778	$	873	$	2.39		2.84	%
C&W Forecast	$	54,600	$	926	$	2.54		2.94	%

The expense comparables showed expenses for this category from $ 520 to $1,257 per resident (average of $ 828 per resident), while the industry data showed a range from $ 648 to $1,597 per resident (median of $1,011 per resident). Please refer to the Real Estate Taxes and Assessments section of the report for a discussion on how the Year 1 taxes were estimated. We have forecast the Year 1 real estate tax expense at $54,600 or $ 926 per resident and which is based on a market value premise.

Insurance

This cost is for the annual liability insurance for the property. The historical costs, as well as our forecast for this category are shown below.

VALUATION SERVICES	100	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Year	Total		$/Resident		PRD		% of EGI
2000	$	12,507	$	240	$	0.66		0.89	%
2001	$	20,187	$	370	$	1.01		1.36	%
2002	$	36,297	$	693	$	1.90		2.36	%
2003 Annualized	$	35,993	$	595	$	1.63		1.94	%
C&W Forecast	$	40,000	$	678	$	1.86		2.16	%

The expense comparables showed expenses for this category from $ 400 to $1,154 per resident (average of $ 722 per resident), while the industry data showed a range from $ 278 to $ 726 per resident (median of $ 463 per resident). Insurance costs for senior living properties have increased strongly over the last one to two years. The subject’s actual expenses are supported by the comparable properties. We have forecast Year 1 insurance costs at $40,000 or $ 678 per resident.

Management Fee

The subject is managed by ARV at a rate equal to 5.0 percent of effective gross income. According to data by The 2002 State of Senior Housing Report, the median management fee for congregate living facilities is 5.0 percent, with a general range from 5.0 to 7.0 percent. We have concluded to a 5.0 percent management fee and which equates to a Year 1 expense of $92,801 or $1,574 per resident in our analysis.

Replacement Reserves

Replacement reserves are necessary for replacement of roof covering, mechanical systems, furnishings, appliances, etc. For a facility such as the subject, it is reasonable to deduct one to two percent of net resident revenues for replacement reserves. The ASHA industry data shows a range of reserve unit allowances from $ 181 to $ 525 per unit with a median of $ 326 per unit. In the case of the subject and its date of construction, we have deducted an amount equal to $300 per unit and which equates to a total cost of $20,100 or $ 341 per resident, which is well supported by the industry data.

Expense Summary

Overall, the first year expenses for the subject (including management fees and reserves) are projected at $1,489,501 ($25,263 per resident) and 80.25 percent of effective gross income. The sale comparables indicated expense ratios from 52.75 to 69.17 percent (average of 63.90 percent), while the industry data showed a range from 76 to 81 percent (median of 75 percent). Additionally, the subject has operated at expense ratios ranging from 80.7 to 87.8 percent over the last three years (includes management and reserve allowances).

We note that, according to The Senior Care Acquisition Report 2003, that the average expense ratio for assisted living facilities was 75.8 percent in 2002 and which represented an approximately eight percent increase from 70.4 percent in 2001. The survey noted, however, that many of the properties used in the sampling were troubled which resulted in a higher reported operating expense basis.

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Furthermore, operating margins for assisted living facilities were reported at 30.8 percent for the median, 18.4 percent for the lower quartile and 34.7 percent for the upper quartile according to the State of Senior Housing Report 2002.

Our conclusion equates to a net operating income per resident of $6,216, which is below the most recent full operating year (2002) of $3,590 per resident. The difference, however, is directly related to our stabilized market occupancy that is higher than that witnessed in 2002, as well as having increased some expense levels to market levels. As such, our expense and resultant net operating income estimate is considered reasonable in light of the historical data. A summary of our Year 1 proforma is presented below.

Retirement Inn of Burlingame
STABILIZED OPERATING STATEMENT

							Total		PR		PRD		% of EGI
EFFECTIVE GROSS INCOME							$	1,856,026	$	31,479	$	86.24
EXPENSES
	General/Administrative						$	52,000	$	882	$	2.42		2.80	%
	Payroll (Wages)						$	560,000	$	9,498	$	26.02		30.17	%
	Payroll Taxes & Benefits						$	250,000	$	4,240	$	11.62		13.47	%
	Resident Care						$	16,000	$	271	$	0.74		0.86	%
	Food Services						$	125,000	$	2,120	$	5.81		6.73	%
	Activities						$	14,000	$	237	$	0.65		0.75	%
	Housekeeping/Laundry						$	20,000	$	339	$	0.93		1.08	%
	Plant Operations						$	80,000	$	1,357	$	3.72		4.31	%
	Utilities						$	115,000	$	1,950	$	5.34		6.20	%
	Marketing/Promotions						$	50,000	$	848	$	2.32		2.69	%
	Real Estate Taxes						$	54,600	$	926	$	2.54		2.94	%
	Insurance						$	40,000	$	678	$	1.86		2.16	%
TOTAL OPERATING EXPENSES					74.2	%	$	1,376,600	$	23,348	$	63.97		74.17	%
	Management Fees		5.0	%			$	92,801	$	1,574	$	4.31		5.00	%
	Replacement Reserves	$	300				$	20,100	$	341	$	0.93		1.08	%
TOTAL EXPENSES							$	1,489,501	$	25,263	$	69.21		80.25	%
NET OPERATING INCOME							$	366,524	$	6,216	$	17.03		19.75	%

(*) Per Actual Resident

Direct Capitalization Rate Analysis

In determining an appropriate capitalization rate, the rates of return have been derived by applying three different methods: market extraction from the sales comparables, our findings reported in The Senior Care Acquisition Report, 2003, published by Irving Levin Associates, Inc., findings from the Senior Care Participants Survey completed by Cushman & Wakefield, Inc., and from Band-of-Investment.

The capitalization rate was determined by analyzing investment rates of return acceptable to buyers. The rate of return on an investment is determined by analyzing several aspects of that

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investment and then assigning a risk associated with those aspects. Elements usually considered are:

• Reliability of the gross income prediction. How certain is it that the income will be forthcoming? Income is more dependable when the property is leased on a long-term basis to financially responsible tenants than when rented on a month-to-month basis to less reliable tenants.

• Reliability of the expense prediction. Is there great danger of having expenses increase materially, or is there a fair chance that they will remain about the same or even decrease?

• Expense ratio. If the expenses are low in relation to gross income, the quality of the net income may be better, because a moderate reduction in gross income or a moderate increase in expenses does not affect the net income substantially.

• Burden of management. Even when real estate management is employed, a property that requires constant attention, because of either maintenance or rent collection problems, is less desirable than one that needs minimal management. A long-term lease that requires a tenant to take care of all repairs and to pay taxes and insurance presents a situation that is relatively free from this burden of management.

• Marketability of the property. An investment that has marketability and liquidity appeals to a wider group of investors than one lacking those attributes.

• Stability of value. The value or market price of a piece of real property tends to remain within a narrower range for longer periods of time than do most other commodities.

As described previously, the gross income projected for the property is subject to such uncertainties as competition from other facilities and fluctuations in demand for the subject’s services. Moreover, the subject property has limited marketability and liquidity because a purchaser must have the appropriate operating license from the applicable state regulatory agencies, which limit the number of potential investors and would, in any potential sale of the property, create impediments and delays.

Going-In Capitalization Rate

The first method used to derive the capitalization rate was a review of comparable sales that have occurred in the subject’s regional area. The overall capitalization rates derived from the assisted living facility sales used in the Sales Comparison Approach are summarized below:

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CAPITALIZATION RATE SUMMARY

		Date	Year					Capitalization
No.	Property Name	of Sale	Built		Occupancy			Rate
1	Carmel Village	Jan-03		1986		97	%		11.14	%
2	Emerald Hills	Sep-02		1999		95	%		11.19	%
3	Mapleride of Laguna Creek	Jan-02		1999		95	%		10.55	%
4	Woodmark at Summit Ridge	Feb-02		1998		95	%		12.94	%
5	Manor at Lakeside	Aug-01		1981		95	%		11.56	%
6	Atria Redding	Jul-01		2000		95	%		12.50	%
Low				1981		95	%		10.55	%
High				2000		97	%		12.94	%
Median				1999		95	%		11.38	%
Average				1994		95	%		11.65	%

The overall capitalization rates of the comparable sales range from 10.55 to 12.94 percent, with an average indicated of 11.65 percent. These rates are reported to be after management fee and reserves. The capitalization rates reflect actual buyer expectations of existing facilities and are directly applicable to the subject and the spread in the capitalization rates is 239 basis points. Although this is a relatively wide range in rates, the sales nevertheless are felt to provide a good comparison of estimating a market capitalization rate. We believe that based on the market positioning, age, quality and condition of the subject, a capitalization rate in the lower to middle portion of the range would be warranted. From this, we have concluded to a range from 11.00 to 11.50 percent for the subject.

Industry Findings

To further test the capitalization rates, data on assisted living acquisition trends in The Senior Care Acquisition Report, Eighth Edition, 2003, was consulted. The report indicated that after two years of declining capitalization rates for assisted living properties, 2002 saw an increase in rates to a reported average of 12.20 percent. This information is summarized in the graph below.

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In addition, Cushman & Wakefield, Inc. has surveyed senior care participants regarding their investment parameters for senior housing properties. This recent information has been summarized in the following table.

2003 Participants Survey

							Change From 2002					Change From 2001
				Survey
Property Type	Survey Range			Average			Basis Point		%			Basis Point		%
Capitalization Rates
55+ Senior Apartments		7.00% - 10.25	%		8.15	%		-7		0.9	%		-68		-7.6	%
Independent Living		9.00% - 10.50	%		9.55	%		-5		0.5	%		-30		-3.0	%
Assisted Living		10.00% - 12.25	%		10.85	%		-17		1.6	%		-8		-7.2	%
Skilled Nursing		11.50% - 18.00	%		14.15	%		16		-1.1	%		-61		-4.2	%
Continuing Care Retirement Community		9.00% - 11.50	%		10.40	%		-35		3.4	%		-15		-1.4	%
Internal Rates of Return
55+ Senior Apartments		9.50% - 15.00	%		10.60	%		-15		1.4	%		-20		-1.8	%
Independent Living		10.00% - 15.00	%		11.90	%		-25		2.1	%		-65		-5.7	%
Assisted Living		12.00% - 17.00	%		15.30	%		42		-2.7	%		-22		-1.5	%
Skilled Nursing		13.00% - 20.00	%		16.30	%		-25		1.5	%		-165		-9.1	%
Continuing Care Retirement Community		9.00% - 17.00	%		13.00	%		-25		1.9	%		-135		-9.2	%

Source: Senior Care Participants Survey, 2003 by Cushman & Wakefield, Inc.

In reviewing the 2003 survey, capitalization rates for assisted living facilities ranged from 10.00 to 12.25 percent with an average indication of 10.85 percent. This data is seen as being nearly 135 basis points below that reported previously in The Senior Care Acquisition Report, Eighth Edition, 2003. The 2003 C&W survey also shows that capitalization rates have declined slightly over those reported in 2002 and 2001.

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INCOME CAPITALIZATION APPROACH

In choosing the appropriate capitalization rate for the subject, we have considered its location, occupancy, as well as the overall condition and utility of the property. The subject is a mid-sized assisted living facility located in a favorable demographic area in California. The market area is considered to be at an equilibrium basis with no under- or over-supply at this time. Based on the data and characteristics of the subject and marketplace, we believe a capitalization rate of between 11.00 to 11.50 percent to be appropriate for the property.

Band of Investment

The Band of Investment technique accounts for the combination of equity and prevailing financing which are banded together to finance this type of real estate. The rate developed is a weighted average, the weights being percentages of the total value, which are occupied by the mortgage and equity positions.

After surveying several commercial mortgage lenders and consulting the most recent Senior Care Participants Survey, published by Cushman & Wakefield, Inc. and the Senior Care Acquisition Report, published by Irving Levin Associates, it is our opinion that a typical creditworthy owner could obtain financing from a lending source in an amount equal to 75 percent of value at an annual interest rate of 8.50 percent. A typical loan period for this type of real estate ranges from 20 to 30 years. Utilizing a 25-year amortization period at an 8.50 percent interest rate (payable monthly) yields a mortgage constant of 0.0966273.

For a review of investor rates of return, reference is made to the previous table, which showed investment parameters for assisted living properties.

As shown in the table, internal rates of return or equity dividend rates for senior housing properties ranged from 9.50 to 20.00 percent. Independent living facilities fall within the lower to middle portion of the range from 10.00 to 15.0 percent with an average indicated rate of 11.90 percent. Assisted living facilities fall within the middle portion at 12.00 to 17.0 percent with an average indicated rate of 15.30 percent.

Based on the data, we believe a prudent investor in a senior housing property like the subject would accept an initial annual return of between 10 percent and 15 percent of an equity investment in anticipation of a stable income flow and property appreciation over time. From this, and based on the subject’s physical, locational and competitive structure, a rate from within the middle portion of the latter range, or 14.0 percent would be reasonable.

It should be emphasized that the equity dividend rate is not necessarily the same as an equity yield rate or true rate of return on equity capital. The equity dividend rate is an equity capitalization that reflects all benefits that can be recognized by the equity investor as of the date of purchase. The overall capitalization rate is developed as follows:

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Band of Investment Technique

75.0	%	MORTGAGE	X	0.0966273 Mortgage Constant	=	0.0724
25.0	%	Equity	X	0.1400 Equity Dividend	=	0.0350
100.0	%	Total				0.1074
				OAR = 10.74%

Direct Capitalization Method Conclusion

We estimated a capitalization rate of 10.55 to 12.94 percent through our direct comparison analysis, while the band-of-investment technique correlated to 10.74 percent. Utilizing both methods to develop a capitalization rate, tempered with investor criteria and the specific attributes of the subject, we feel a rate of 11.50 percent is warranted for the property. We note that this rate is applied after reserves. Our conclusion via the Direct Capitalization Method is as follows:

DIRECT CAPITALIZATION METHOD

Net Operating Income $366,524

Sensitivity Analysis (0.25% OAR Spread)	Value		$/Unit
Based on Low-Range of 11.25%	$	3,257,994	$	48,627
Based on Most Probable Range of 11.50%	$	3,187,168	$	47,570
Based on High-Range of 11.75%	$	3,119,356	$	46,558
Reconciled Value	$	3,187,168	$	47,570
Rounded to nearest $100,000	$	3,200,000	$	47,761

Value Conclusion: $3,200,000

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RECONCILIATION AND FINAL VALUE OPINION

Valuation Methodology Review and Reconciliation

This Appraisal employs all three typical approaches to determine value: the Cost Approach, the Sales Comparison Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion that all approaches would be considered meaningful and applicable in developing a credible value conclusion.

The approaches indicated the following values:

Cost Approach	$	3,900,000
Sales Comparison Approach:	$	3,300,000
Income Capitalization Approach:	$	3,200,000

Due to the fact that the subject is an income producing property, investors are primarily concerned with their return on equity. Therefore, the Income Capitalization Approach was given most weight in our final value conclusion. The Sales Comparison and Cost Approaches provide a reasonable check on the value derived via the Income Capitalization Approach.

The Cost Approach provides a reliable estimate of value for proposed or newly constructed improvements. However, as the property ages and obsolescence occurs, it is increasingly difficult to quantify the resultant depreciation. As the subject represents older construction, the degree of depreciation was moderate, yet believed reasonable based on the market data. This approach, however, falls above the indications provided by the Sales Comparison and Income Capitalization Approaches with the difference related to potentially some degree of external obsolescence from the older age of the property and inability to achieve rents consistent with the newer properties in the marketplace. As such, this approach has been given only limited support for our findings via the other two approaches to value.

The Sales Comparison Approach reflects an estimate of value as indicated by the actual sales of assisted living facilities. In this approach, we searched the state for transactions of similar property types. Given that these types of properties are typically purchased based on their income producing capabilities, this approach was useful in providing support for our findings in the Income Capitalization Approach.

The Income Capitalization Approach is typically considered the most appropriate approach to utilize when valuing going concerns such as nursing homes and assisted living facilities. This approach considers the income potential of the property. In our Income Capitalization Approach to value, the anticipated monetary benefits of ownership were converted into a value estimate. Within the Income Capitalization Approach, direct capitalization was used as it is the most common method used by investors and purchasers in acquiring existing and stabilized properties of this nature.

Based on our Complete Appraisal as defined by the Uniform Standards of Professional Appraisal Practice, we have developed an opinion that the “as-is” going concern market value of the fee simple estate of the referenced property, subject to the assumptions, limiting conditions, certifications, and definitions, on October 15, 2003 was:

THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS

$3,250,000

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Personal Property Allocation

Included in the above estimate of market value is the contributing value of the personal property at the subject property, or the furnishings, fixtures and equipment (FF&E). FF&E is generally considered to be part of the assisted living facility and is typically sold with the building. It is therefore considered to be a part of the property’s total value. FF&E includes the unit and public area furnishings, kitchen equipment, service/maintenance equipment and other machinery. Based on previous analysis of the subject, we estimated the value of the FF&E as new to be $269,675, including a 15 percent factor for entrepreneurial profit.

Physical deterioration (depreciation) must be deducted for the FF&E. The subject opened in 1977. Based on our physical inspection of the property, we are of the opinion that the property is currently in average physical condition. We have estimated that the subject’s FF&E has a useful life of 10 years and we have estimated the current effective age at 8 years. This equates to a 80 percent depreciation factor, as summarized in the following table.

Furniture, Fixtures and Equipment

Total Value of FF&E As New	$	269,675
Physical Life (Yrs)		10
Effective Age (Yrs)		8
Percent Depreciated (%)		80
Percent Value Remaining (%)		20
Depreciated Value	$	53,935
Rounded	$	50,000

The contributing value of the FF&E is believed to be the cost of the FF&E less its accrued depreciation. This equates to $50,000 rounded.

Business Value (Going Concern)

Assisted living facilities are undisputedly a combination of business and real estate; the day-to-date operation of an assisted living facility represents a business over and above the real estate value. Numerous theories have been developed over time in an attempt to isolate the business component of a senior housing facility.

In our analysis, we have determined the value of the real estate in the Cost Approach to be $3,900,000. As the value of the going concern (Income Capitalization and Sales Comparison Approaches) was determined to be $3,250,000 (which includes the $50,000 in FF&E), this indicates that there is $0 in business value.

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ASSUMPTIONS AND LIMITING CONDITIONS

“Report” means the appraisal or consulting report and conclusions stated therein, or a letter opinion, to which these Assumptions and Limiting Conditions are annexed.

“Property” means the subject of the Report

“C&W” means Cushman & Wakefield, Inc. or its subsidiary that issued the Report.

“Appraiser(s)” means the employee(s) of C&W who prepared and signed the Report.

The Report has been made subject to the following assumptions and limiting conditions:

1.	No opinion is intended to be expressed and no responsibility is assumed for the legal description or for any matters that are legal in nature or require legal expertise or specialized knowledge beyond that of a real estate appraiser. Title to the Property is assumed to be good and marketable and the Property is assumed to be free and clear of all liens unless otherwise stated. No survey of the Property was undertaken.
2.	The information contained in the Report or upon which the Report is based has been gathered from sources the Appraiser assumes to be reliable and accurate. The owner of the Property may have provided some of such information. Neither the Appraiser nor C&W shall be responsible for the accuracy or completeness of such information, including the correctness of estimates, opinions, dimensions, sketches, exhibits and factual matters. Any authorized user of the Report is obligated to bring to the attention of C&W any inaccuracies or errors that it believes are contained in the Report.
3.	The opinions are only as of the date stated in the Report. Changes since that date in external and market factors or in the Property itself can significantly affect the conclusions.
4.	The Report is to be used in whole and not in part. No part of the Report shall be used in conjunction with any other analyses. Publication of the Report or any portion thereof without the prior written consent of C&W is prohibited. Reference to the Appraisal Institute or to the MAI designation is prohibited. Except as may be otherwise stated in the letter of engagement, the Report may not be used by any person other than the party to whom it is addressed or for purposes other than that for which it was prepared. No part of the Report shall be conveyed to the public through advertising, or used in any sales or promotional or offering or SEC material without C&W’s prior written consent.
	Any authorized user of this Report who provides a copy to, or permits reliance thereon by, any person or entity not authorized by C&W in writing to use or rely thereon, hereby agrees to indemnify and hold C&W, its affiliates and their respective shareholders, directors, officers and employees, harmless from and against all damages, expenses, claims and costs, including attorneys’ fees, incurred in investigating and defending any claim arising from or in any way connected to the use of, or reliance upon, the Report by any such unauthorized person or entity.
5.	Except as may be otherwise stated in the letter of engagement, the Appraiser shall not be required to give testimony in any court or administrative proceeding relating to the Property or the Appraisal.
6.	The Report assumes (a) responsible ownership and competent management of the Property; (b) there are no hidden or unapparent conditions of the Property, subsoil or structures that render the Property more or less valuable (no responsibility is assumed for such conditions or for arranging for engineering studies that may be required to

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	discover them); (c) full compliance with all applicable federal, state and local zoning and environmental regulations and laws, unless noncompliance is stated, defined and considered in the Report; and (d) all required licenses, certificates of occupancy and other governmental consents have been or can be obtained and renewed for any use on which the value estimate contained in the Report is based.
7.	The physical condition of the improvements considered by the Report is based on visual inspection by the Appraiser or other person identified in the Report. C&W assumes no responsibility for the soundness of structural members nor for the condition of mechanical equipment, plumbing or electrical components.
8.	The forecasted potential gross income referred to in the Report may be based on lease summaries provided by the owner or third parties. The Report assumes no responsibility for the authenticity or completeness of lease information provided by others. C&W recommends that legal advice be obtained regarding the interpretation of lease provisions and the contractual rights of parties.
9.	The forecasts of income and expenses are not predictions of the future. Rather, they are the Appraiser’s best estimates of current market thinking on future income and expenses. The Appraiser and C&W make no warranty or representation that these forecasts will materialize. The real estate market is constantly fluctuating and changing. It is not the Appraiser’s task to predict or in any way warrant the conditions of a future real estate market; the Appraiser can only reflect what the investment community, as of the date of the Report, envisages for the future in terms of rental rates, expenses, and supply and demand.
10.	Unless otherwise stated in the Report, the existence of potentially hazardous or toxic materials that may have been used in the construction or maintenance of the improvements or may be located at or about the Property was not considered in arriving at the opinion of value. These materials (such as formaldehyde foam insulation, asbestos insulation and other potentially hazardous materials) may adversely affect the value of the Property. The Appraisers are not qualified to detect such substances. C&W recommends that an environmental expert be employed to determine the impact of these matters on the opinion of value.
11.	Unless otherwise stated in the Report, compliance with the requirements of the Americans with Disabilities Act of 1990 (ADA) has not been considered in arriving at the opinion of value. Failure to comply with the requirements of the ADA may adversely affect the value of the Property. C&W recommends that an expert in this field be employed.
12.	If the Report is submitted to a lender or investor with the prior approval of C&W, such party should consider this Report as only one factor together with its independent investment considerations and underwriting criteria, in its overall investment decision. Such lender or investor is specifically cautioned to understand all Extraordinary Assumptions and Hypothetical Conditions and the Assumptions and Limiting Conditions incorporated in this Report.
13.	In the event of a claim against C&W or its affiliates or their respective officers or employees or the Appraisers in connection with or in any way relating to this Report or this engagement, the maximum damages recoverable shall be the amount of the monies

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	actually collected by C&W or its affiliates for this Report and under no circumstances shall any claim for consequential damages be made.
14.	If the Report is referred to or included in any offering material or prospectus, the Report shall be deemed referred to or included for informational purposes only and C&W, its employees and the Appraiser have no liability to such recipients. C&W disclaims any and all liability to any party other than the party which retained C&W to prepare the Report.
15.	By use of this Report each party that uses this Report agrees to be bound by all of the Assumptions and Limiting Conditions stated herein.

Extraordinary Assumptions

An extraordinary assumption is defined as “an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal or economic characteristics of the subject property or about conditions external to the property, such as market conditions or trends, or the integrity of data used in an analysis.” (USPAP 2001 Edition, ASB of The Appraisal Foundation, 1/1/2001, page 2).

This appraisal assumes that the property meets the licensing requirements of the State of California as a residential care facility for the elderly and continues to remain in compliance with applicable life safety codes.

This Appraisal employs no other Extraordinary Assumptions.

Hypothetical Conditions

A hypothetical condition is defined as “that which is contrary to what exists, but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property or about conditions external to the property, such as market conditions or trends, or the integrity of data used in an analysis.” (USPAP 2001 Edition, ASB of The Appraisal Foundation, 1/1/2001, page 3).

This Appraisal employs no Hypothetical Conditions.

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CERTIFICATION OF APPRAISAL

We certify that, to the best of our knowledge and belief:

1.	The statements of fact contained in this report are true and correct.
2.	The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is our personal, impartial, and unbiased professional analyses, opinions, and conclusions.
3.	We have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved.
4.	We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
5.	Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
6.	Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
7.	Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.
8.	Mark E. Bryant made a personal inspection of the property that is the subject of this report. John M. Vissotzky, MAI, Managing Director, Valuation Advisory Services, reviewed and approved the report but did not inspect the property.
9.	No one provided significant real property appraisal assistance to the persons signing this report.
10.	The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
11.	As of the date of this report, Appraisal Institute continuing education for John M. Vissotzky, MAI is current.

Mark E. Bryant	John M. Vissotzky, MAI
Managing Director	Managing Director
Senior Housing/Healthcare Industry Group
California Certified General Appraiser
License No. AG02572

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ADDENDA

Addenda Contents

ADDENDUM A:	Letter of Engagement
ADDENDUM B:	Legal Description
ADDENDUM C:	Demographics
ADDENDUM D:	Property Exhibits
ADDENDUM E:	Historical Operating Statements
ADDENDUM F:	Comparable Land Sale Data Sheets
ADDENDUM G:	Comparable Improved Sale Data Sheets
ADDENDUM H:	Qualifications of the Appraisers

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ADDENDA

ADDENDUM A: Letter of Engagement

	Cushman & Wakefield of Georgia, Inc.
	3300 One Atlantic Center
	1201 West Peachtree Street
	Atlanta, GA 30309
	404-859-5351 Tel
	404-874-8046 Fax
	Norman_LeZotte@Cushwake.com

September 30, 2003

Mr. Douglas Armstrong
General Counsel
ARV Assisted Living, Inc.
245 Fischer Avenue, D-1
Costa Mesa, CA 92626

Re:	12 Assisted Living Facilities
	In California and Arizona

Dear Mr. Armstrong:

Thank you for requesting our proposal for appraisal services. This proposal letter, with its attachments, will become, upon your acceptance, our letter of engagement to provide the services outlined herein.

THE PARTIES TO THIS AGREEMENT: Cushman & Wakefield of Georgia, Inc. Cushman & Wakefield of California, Inc, and Cushman & Wakefield of Arizona, Inc. will prepare the appraisals. We understand that ARV Assisted Living, Inc. (“ARV”) and its affiliates are the clients in this assignment and will be referred to herein, collectively, at times as the “Client” and the report will be addressed to ARV and/or one or more of its affiliates as requested by ARV.

The appraisal will be prepared and submitted to the Client for use only in connection with the proxy solicitation/tender offers filed with the SEC and distributed to the holders of limited partnership interests in American Retirement Villas Properties II and American Retirement Villas Properties III, L.P. (the “Partnerships”). Unless we otherwise consent in writing, the appraisal cannot be used (other than in the material related to the proxy solicitation/tender offer referred to above) for any purpose. If the Appraisal is submitted to a lender or investor with the prior approval of C&W, such party should consider this Appraisal as only one factor together with its independent investment considerations and underwriting criteria, in its overall investment decision. Such lender or investor is specifically cautioned to understand all Extraordinary Assumptions and Hypothetical Conditions and the Assumptions and Limiting Conditions incorporated in the Appraisal.

REPORTING REQUIREMENTS: We have agreed to prepare a Complete Appraisal in a Self-Contained format. The market value of the Fee Simple or Leasehold Interest will be presented As Is. You have also requested that we include the Going Concern Value as of the specified date of value. The valuation methods utilized in these reports will include the Income Approach, Sale Comparison Approach, and Cost Approach if all deemed applicable in producing a credible value estimate. The appraisal reports will be signed by an Appraisal Institute member holding the title of MAI (Member Appraisal Institute). any appraisal report will

VALUATION SERVICES	ADVISORY GROUP

Mr. Douglas Armstrong
ARV Assisted Living, Inc.
September 30, 2003
Page 2

contain reliance language to the effect that the report is for the use and benefit of ARV, any of its affiliates, agents, and advisors and that the report and references to the report may be included and quoted in any tender offer or solicitation document (whether electronic or hard copy format) in connection with the transactions involving the Partnership referred to above.

PROPERTY INFORMATION: The twelve subject properties are:

ARV PORTFOLIO

Property	Units		City	State	YR Built		Appraisal fee
Covina Villa		63	Covina	CA		1977	$	5,500
Montego Heights Lodge		163	Walnut Creek	CA		1978	$	4,500
R.I. Of Burlingame		67	Burlingame	CA		1977	$	4,500
R.I. Of Campbell		71	Campbell	CA		1977	$	4,500
R.I. Of Daly City		95	Daly City	CA		1975	$	4,500
R.I. Of Fremont		68	Fremont	CA		1977	$	4,500
R.I. Of Fullerton		68	Fullerton	CA		1974	$	4,500
R.I. Of Sunnyvale		120	Sunnyvale	CA		1977	$	4,500
Valley View Lodge		125	Walnut Creek	CA		1986	$	4,500
Inn @ Willow Glen		83	San Jose	CA		1977	$	5,000
Chandler Villas		164	Chandler	AZ		1988	$	5,500
Villa Las Posas		123	Camarillo	CA		1997	$	5,500
		1,210					$	57,500

The entire fee is inclusive of any travel expenses and is a net fee to ARV or its Designated Affiliates

REGULATIONS OR FEDERAL AGENCIES: Federal banking regulations require banks and savings and loan associations to employ appraisers where a FIRREA compliant appraisal must be used in connection with mortgage loans or other transactions involving federally regulated lending institutions, including mortgage bankers/brokers. The appraisal being prepared would comply with the requirements of FIRREA if it were being delivered for use by a federally regulated institution. This appraisal will be prepared in accordance with the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation, the Standards of Professional Practice and the Code of Ethics of the Appraisal Institute.

STANDARD ASSUMPTIONS AND LIMITING CONDITIONS: Our report will be subject to our standard Assumptions and Limiting Conditions, which will be incorporated into the appraisal. The appraisal report may also be subject to any Extraordinary Assumptions and Hypothetical Conditions.

CONSENT: We understand that you intend to include, in the tender offer/proxy solicitation materials referred to above, a copy of our appraisal report, a description of the report and a summary of the procedures we followed in preparing our report, and our basis for, and the

VALUATION SERVICES	ADVISORY GROUP

Mr. Douglas Armstrong
ARV Assisted Living, Inc.
September 30, 2003
Page 3

methods we used in arriving at, the conclusions reflected in our report. We agree to assist in the preparation of such description and summary and consent to your inclusion in the tender officer/proxy solicitation material of a copy of the appraisal report and a description and summary reasonably acceptable to us. Furthermore, you agree to pay the reasonable fees of our legal counsel for the review of any such description and summary to be included in such material which is the subject of the requested consent.

In the event the Client provides a copy of this appraisal to, or permits reliance thereon by, any person or entity not authorized by C&W in writing to use or rely thereon, ARV hereby agrees to indemnify and hold C&W, its affiliates and their respective shareholders, directors, officers and employees, harmless from and against all damages, expenses, claims and costs, including reasonable attorneys’ fees, incurred in investigating and defending any claim arising from the use of, or reliance upon, the appraisal by any such unauthorized person or entity. ARV also hereby agrees to indemnify and hold C&W, its affiliates and their respective shareholders, directors, officers, and employees harmless from and against all damages, expenses, claims, costs, including reasonable attorneys’ fees, incurred in investigating and defending any claim arising from the reliance upon the appraisal by any limited partner of the Partnerships or in connection with the tender offer/proxy solicitation material described herein. Notwithstanding the foregoing, neither ARV nor any of its affiliates shall be required to indemnify or hold harmless C&W, its affiliates or any of their respective shareholders, directors, officers or employees for or against any losses, damages, expenses, claims or costs resulting from the gross negligence, willful misconduct or bad faith of C&W, its affiliates or any of their respective shareholders, directors, officers, or employees. This indemnification shall be binding on ARV, its successors and assigns.

If the Appraisal is referred to or included in any offering material or prospectus, (other than the proxy solicitation/tender offer material referred to above), the Appraisal shall be deemed referred to or included for informational purposes only and C&W, its employees and the Appraiser have no liability to such recipients. C&W disclaims any and all liability to any party other than the party which retained C&W to prepare the Appraisal.

INFORMATION NEEDED TO COMPLETE THE ASSIGNMENT: We understand that you will provide the following information for our review, if available.

• Plot Plan/Survey and Legal Description

• Building plans

• Original construction and site acquisition costs

• Cost of any major expansions, modifications or repairs incurred over the past three years/Capital Expense Budget

• Operating Statements for three previous years plus year-to-date

• Most recent real estate tax bill or statement

• Operating Budgets

VALUATION SERVICES	ADVISORY GROUP

Mr. Douglas Armstrong
ARV Assisted Living, Inc.
September 30, 2003
Page 4

• Sales history of the subject property over the past three years at a minimum

• Rent roll

• On Site Contact – Name and Phone #

When appropriate, we will include graphics such as maps, photographs and charts to assist in visualizing our findings. The final reports will be delivered electronically. We will provide hard copies upon request.

Fee and Schedule of Payment: The fee for this assignment shall be $57,500 in total (please see previous chart for individual fees), payable at the time of transmission of the report electronically or in three (3) bound copies. A retainer equal to fifty percent ($28,750) of the fee shall be paid when you return this engagement letter signed by you below authorizing the assignment to us. The balance of the fee will be due upon delivery of the report. Payment of the fee is not contingent on the appraised value, outcome of the consultation report, a loan closing, or any other prearranged condition.

Additional fees will be charged on an hourly basis for any work which exceeds the scope of this proposal, including performing additional valuation scenarios, additional research and conference calls or meetings with any party which exceed the time allotted for an assignment of this nature. If we are requested to stop working on this assignment, for any reason, prior to our completion of the appraisal, we will be entitled to bill you for the time put in to date at our hourly rates.

Response to Review: We agree to respond to your review of our report within five (5) business days of your communication to us. Correspondingly, you will have twenty-one (21) days from receipt of our report to communicate your review. We reserve the right to bill you for responding to your review beyond this time period.

Authorizing the Assignment and Report Delivery: We agree to complete the assignment within (21) days of receipt of your written authorization to proceed. You may authorize the assignment by signing this letter and returning it to us with the requested retainer.

Responding to Subpoena or Other Judicial Command to Produce Documents: If we receive a subpoena or other judicial command to produce documents or to provide testimony involving this assignment in connection with a lawsuit or proceeding, we will use reasonable efforts to notify you of our receipt of same. However, if we are not a party to these proceedings, you agree to reimburse us for the reasonable out-of-pocket expenses that we incur in responding to any subpoena or judicial command, including reasonable attorneys’ fees, if any, as they are incurred. We will be compensated at the then prevailing hourly rates of the personnel responding to the subpoena or command for testimony.

Limitation on Liability: By signing this agreement, except as may be prohibited by applicable law, Client expressly agrees that its sole and exclusive remedy for any and all losses or damages relating to this agreement shall be limited to the amount of the appraisal fee paid by the Client. In the event that the Client, or any other party entitled to do so, makes a claim against C&W or any of its affiliates or any of their respective officers or employees in connection with or in any way relating to this engagement or the appraisal, the maximum damages recoverable from C&W or any of its affiliates or their respective officers or employees shall be

VALUATION SERVICES	ADVISORY GROUP

Mr. Douglas Armstrong
ARV Assisted Living, Inc.
September 30, 2003
Page 5

the amount of the monies actually collected by us for this assignment and under no circumstances shall any claim for consequential damages be made.

You acknowledge that any opinions and conclusions expressed by the Cushman & Wakefield professionals during this assignment are representations made as employees and not as individuals. C&W’s responsibility is limited to the client.

Thank you for calling on us to render these services and we look forward to working with you.

Sincerely,

VALUATION SERVICES	ADVISORY GROUP

ADDENDA

ADDENDUM B: Legal Description

EXHIBIT “A”

PARCEL “A”, AS SHOWN ON THAT CERTAIN MAP ENTITLED “PARCEL MAP LANDS OF WARREN P. HOUCK BY DEED RECORDED MARCH 21, 1974 IN BOOK 6574, OF OFFICIAL RECORDS AT PAGE 133”, WHICH MAP WAS FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, ON AUGUST 3, 1976 IN BOOK 32 OF PARCEL MAPS AT PAGE 44.

Assessor’s Parcel No: 029-215-240-2

ADDENDA

ADDENDUM C: Demographics

Senior Life Report
Area(s): Radius 3.0

250 MYRTLE RD
BURLINGAME, CA 94010-3030 Latitude:
Longitude: 37.580479
-122.342736

		2000					2002					2007
Population by Age		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Population			96,556					98,708					103,760
	Age 45 - 54		13,769		14.26	%		14,603		14.79	%		16,159		15.57	%
	Age 55 - 59		4,840		5.01	%		5,436		5.51	%		6,527		6.29	%
	Age 60 - 64		3,775		3.91	%		4,038		4.09	%		5,066		4.88	%
	Age 65 - 69		3,187		3.30	%		3,199		3.24	%		3,626		3.49	%
	Age 70 - 74		3,421		3.54	%		3,359		3.40	%		3,301		3.18	%
	Age 75 - 79		3,393		3.51	%		3,356		3.40	%		3,344		3.22	%
	Age 80 - 84		2,503		2.59	%		2,665		2.70	%		2,799		2.70	%
	Age 85 and over		2,593		2.69	%		2,775		2.81	%		3,213		3.10	%
Age 55 and over			23,713		24.56	%		24,828		25.15	%		27,875		26.87	%
Age 65 and over			15,098		15.64	%		15,353		15.55	%		16,282		15.69	%
Total Population, Male			46,828					47,820					50,171
	Age 45 - 54		6,684		14.27	%		7,065		14.77	%		7,833		15.61	%
	Age 55 - 59		2,284		4.88	%		2,558		5.35	%		3,091		6.16	%
	Age 60 - 64		1,789		3.82	%		1,906		3.99	%		2,389		4.76	%
	Age 65 - 69		1,433		3.06	%		1,442		3.02	%		1,620		3.23	%
	Age 70 - 74		1,462		3.12	%		1,435		3.00	%		1,406		2.80	%
	Age 75 - 79		1,365		2.91	%		1,355		2.83	%		1,349		2.69	%
	Age 80 - 84		933		1.99	%		976		2.04	%		1,022		2.04	%
	Age 85 and over		766		1.64	%		797		1.67	%		927		1.85	%
Age 55 and over			10,033		21.43	%		10,469		21.89	%		11,804		23.53	%
Age 65 and over			5,959		12.73	%		6,005		12.56	%		6,324		12.61	%
Total Population, Female			49,729					50,888					53,589
	Age 45 - 54		7,084		14.25	%		7,538		14.81	%		8,326		15.54	%
	Age 55 - 59		2,556		5.14	%		2,878		5.66	%		3,436		6.41	%
	Age 60 - 64		1,985		3.99	%		2,133		4.19	%		2,678		5.00	%
	Age 65 - 69		1,754		3.53	%		1,756		3.45	%		2,006		3.74	%
	Age 70 - 74		1,959		3.94	%		1,924		3.78	%		1,894		3.54	%
	Age 75 - 79		2,028		4.08	%		2,002		3.93	%		1,996		3.72	%
	Age 80 - 84		1,570		3.16	%		1,688		3.32	%		1,776		3.31	%
	Age 85 and over		1,827		3.67	%		1,978		3.89	%		2,286		4.27	%

  Prepared on: October 20, 2003  8:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 1 of 24

Senior Life Report
Area(s): Radius 3.0

250 MYRTLE RD
BURLINGAME, CA 94010-3030 Latitude:
Longitude: 37.580479
-122.342736

	2000					2002					2007
Population by Age	Census		Pct.			Estimate		Pct.			Projection		Pct.
Age 55 and over		13,680		27.51	%		14,359		28.22	%		16,072		29.99	%
Age 65 and over		9,139		18.38	%		9,348		18.37	%		18.37		18.58	%

  Prepared on: October 20, 2003  08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 2 of 24

Senior Life Report
Area(s): Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		2000					2002					2007
Population by Single Race Classification		Census		Pct.			Estimate		Pct.			Projection		Pct.
White Alone			66,782					66,803					66,628
	Age 65 and over		12,683		18.99	%		12,794		19.15	%		13,226		19.85	%
Black or African American Alone			2,053					2,008					1,971
	Age 65 and over		281		13.67	%		298		14.84	%		300		15.20	%
American Indian and Alaska Native Alone			410					442					535
	Age 65 and over		28		6.82	%		28		6.33	%		37		6.92	%
Asian Alone			14,005					15,024					17,330
	Age 65 and over		1,534		10.96	%		1,613		10.74	%		1,939		11.19	%
Native Hawaiian and Other Pacific Islander Alone			1,424					1,492					1,671
	Age 65 and over		99		6.92	%		104		6.95	%		118		7.06	%
Some Other Race Alone			7,529					8,377					10,324
	Age 65 and over		253		3.36	%		291		3.48	%		386		3.74	%
Two or More Races			4,354					4,562					5,301
	Age 65 and over		220		5.05	%		224		4.92	%		277		5.23	%

		2000					2002					2007
Population by Hispanic or Latino		Census		Pct.			Estimate		Pct.			Projection		Pct.
Hispanic or Latino			17,611					18,575					20,975
	Age 65 and over		867		4.92	%		907		4.88	%		1,019		4.86	%
Not Hispanic or Latino			78,946					80,133					82,785
	Age 65 and over		14,231		18.03	%		14,446		18.03	%		15,263		18.44	%

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 55 - 64			4,887					5,384					6,417
	Income less than $15,000		444		9.09	%		242		4.49	%		187		2.92	%
	Income $15,000 - $24,999		582		11.90	%		190		3.52	%		177		2.75	%
	Income $25,000 - $34,999		555		11.35	%		199		3.70	%		186		2.90	%
	Income $35,000 - $49,999		918		18.79	%		473		8.78	%		325		5.06	%
	Income $50,000 - $74,999		965		19.74	%		846		15.71	%		769		11.99	%
	Income $75,000 - $99,999		547		11.18	%		785		14.58	%		796		12.41	%
	Income $100,000 - $149,999		473		9.68	%		980		18.20	%		1,200		18.70	%
	Income $150,000 - $249,999		279		5.72	%		901		16.73	%		1,251		19.49	%
	Income $250,000 - $499,999		151		3.09	%		492		9.15	%		944		14.71	%
	Income $500,000 and more		122		2.50	%		277		5.14	%		581		9.06	%
Median Household Income			50,505					98,678					131,994

  Prepared on: October 20, 2003  08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 3 of 24

Senior Life Report
Area(s): Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

  Prepared on: October 20, 2003  08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 4 of 24

Senior Life Report
Area(s): Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 65 - 69			2,732					1,846					2,027
	Income less than $15,000		423		15.49	%		101		5.45	%		68		3.37	%
	Income $15,000 - $24,999		371		13.57	%		130		7.05	%		93		4.58	%
	Income $25,000 - $34,999		439		16.06	%		142		7.67	%		132		6.49	%
	Income $35,000 - $49,999		459		16.81	%		210		11.38	%		174		8.60	%
	Income $50,000 - $74,999		361		13.22	%		355		19.24	%		292		14.41	%
	Income $75,000 - $99,999		177		6.47	%		281		15.21	%		313		15.46	%
	Income $100,000 - $149,999		164		6.00	%		228		12.35	%		359		17.71	%
	Income $150,000 - $249,999		98		3.57	%		209		11.30	%		265		13.06	%
	Income $250,000 - $499,999		56		2.05	%		113		6.11	%		189		9.35	%
	Income $500,000 and more		45		1.65	%		78		4.24	%		141		6.98	%
Median Household Income			37,071					73,912					95,303
Householder Age 70 - 74			2,379					1,950					1,879
	Income less than $15,000		418		17.59	%		115		5.92	%		68		3.62	%
	Income $15,000 - $24,999		344		14.45	%		141		7.24	%		91		4.86	%
	Income $25,000 - $34,999		451		18.97	%		149		7.64	%		119		6.34	%
	Income $35,000 - $49,999		445		18.70	%		211		10.80	%		161		8.57	%
	Income $50,000 - $74,999		359		15.08	%		391		20.04	%		274		14.58	%
	Income $75,000 - $99,999		154		6.48	%		298		15.28	%		301		16.00	%
	Income $100,000 - $149,999		146		6.12	%		236		12.09	%		330		17.57	%
	Income $150,000 - $249,999		88		3.69	%		206		10.56	%		234		12.47	%
	Income $250,000 - $499,999		52		2.20	%		124		6.34	%		174		9.27	%
	Income $500,000 and more		31		1.30	%		80		4.09	%		126		6.71	%
Median Household Income			35,994					72,954					93,771
Householder Age 75 - 79			2,261					2,188					2,126
	Income less than $15,000		683		30.20	%		281		12.86	%		168		7.90	%
	Income $15,000 - $24,999		395		17.46	%		279		12.77	%		197		9.25	%
	Income $25,000 - $34,999		274		12.13	%		228		10.41	%		213		10.04	%
	Income $35,000 - $49,999		312		13.81	%		266		12.17	%		233		10.94	%
	Income $50,000 - $74,999		284		12.54	%		320		14.63	%		307		14.47	%
	Income $75,000 - $99,999		95		4.21	%		261		11.94	%		241		11.32	%
	Income $100,000 - $149,999		87		3.86	%		250		11.42	%		311		14.61	%
	Income $150,000 - $249,999		52		2.29	%		165		7.54	%		234		10.99	%
	Income $250,000 - $499,999		28		1.24	%		81		3.69	%		135		6.34	%

  Prepared on: October 20, 2003  08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 5 of 24

Senior Life Report
Area(s): Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
	Income $500,000 and more		21		0.93	%		56		2.57	%		88		4.14	%
Median Household Income			26,345					53,037					70,455

  Prepared on: October 20, 2003  08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 6 of 24

Senior Life Report
Area(s): Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 80 - 84			1,514					1,750					1,798
	Income less than $15,000		480		31.71	%		223		12.76	%		136		7.56	%
	Income $15,000 - $24,999		289		19.12	%		219		12.50	%		163		9.06	%
	Income $25,000 - $34,999		183		12.12	%		196		11.21	%		180		9.99	%
	Income $35,000 - $49,999		205		13.55	%		250		14.29	%		216		12.02	%
	Income $50,000 - $74,999		194		12.84	%		277		15.84	%		295		16.41	%
	Income $75,000 - $99,999		74		4.88	%		208		11.91	%		221		12.30	%
	Income $100,000 - $149,999		65		4.30	%		177		10.11	%		256		14.23	%
	Income $150,000 - $249,999		34		2.24	%		111		6.31	%		173		9.63	%
	Income $250,000 - $499,999		18		1.19	%		53		3.01	%		97		5.40	%
	Income $500,000 and more		17		1.12	%		36		2.06	%		61		3.39	%
Median Household Income			25,543					49,133					67,314
Householder Age 85 and over			1,201					1,773					2,022
	Income less than $15,000		380		31.67	%		268		15.11	%		191		9.46	%
	Income $15,000 - $24,999		214		17.85	%		247		13.91	%		195		9.64	%
	Income $25,000 - $34,999		149		12.42	%		203		11.47	%		209		10.35	%
	Income $35,000 - $49,999		157		13.10	%		233		13.13	%		236		11.67	%
	Income $50,000 - $74,999		147		12.26	%		255		14.37	%		316		15.61	%
	Income $75,000 - $99,999		44		3.65	%		199		11.24	%		229		11.33	%
	Income $100,000 - $149,999		45		3.74	%		191		10.77	%		288		14.23	%
	Income $150,000 - $249,999		25		2.08	%		92		5.19	%		198		9.79	%
	Income $250,000 - $499,999		13		1.08	%		54		3.04	%		98		4.85	%
	Income $500,000 and more		12		0.97	%		31		1.77	%		62		3.08	%
Median Household Income			24,837					45,783					64,201

  Prepared on: October 20, 2003  08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 7 of 24

Senior Life Report
Area(s):   Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Households by Household Income		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Households			37,490					39,532					40,889
	Income less than $15,000		4,390		11.71	%		2,041		5.16	%		1,373		3.36	%
	Income $15,000 - $24,999		4,313		11.50	%		1,857		4.70	%		1,357		3.32	%
	Income $25,000 - $34,999		5,449		14.53	%		2,197		5.56	%		1,727		4.22	%
	Income $35,000 - $49,999		7,163		19.11	%		3,655		9.25	%		2,668		6.53	%
	Income $50,000 - $74,999		7,421		19.79	%		7,148		18.08	%		5,506		13.47	%
	Income $75,000 - $99,999		3,331		8.89	%		6,419		16.24	%		5,821		14.24	%
	Income $100,000 - $149,999		2,730		7.28	%		7,046		17.82	%		8,298		20.29	%
	Income $150,000 - $249,999		1,441		3.84	%		5,460		13.81	%		7,111		17.39	%
	Income $250,000 - $499,999		737		1.97	%		2,439		6.17	%		4,599		11.25	%
	Income $500,000 and more		557		1.48	%		1,270		3.21	%		2,430		5.94	%
Average Household Income		$	64,822				$	130,951				$	169,187
Median Household Income		$	44,662				$	86,164				$	112,015
Per Capita Income		$	27,000				$	51,546				$	64,996

		1990*					2002					2007
Specified Owner-Occupied Housing Unit Values		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Specified Owner-Occupied Housing Unit Values			16,545					17,543					18,056
	Value less than $25,000		31		0.19	%		16		0.09	%		13		0.07	%
	Value $25,000 - $49,999		64		0.38	%		60		0.34	%		29		0.16	%
	Value $50,000 - $74,999		45		0.27	%		33		0.19	%		44		0.25	%
	Value $75,000 - $99,999		40		0.24	%		33		0.19	%		32		0.18	%
	Value $100,000 - $149,999		222		1.34	%		66		0.38	%		49		0.27	%
	Value $150,000 - $199,999		486		2.94	%		134		0.76	%		82		0.45	%
	Value $200,000 - $299,999		3,221		19.47	%		603		3.44	%		323		1.79	%
	Value $300,000 - $399,999		3,095		18.71	%		1,714		9.77	%		907		5.03	%
	Value $400,000 - $499,999		2,179		13.17	%		3,017		17.20	%		1,564		8.66	%
	Value $500,000 Or More		7,162		43.29	%		11,867		67.64	%		15,012		83.14	%
Median Specified Owner-Occupied Housing Unit Value			449,151					630,488					699,394

Prepared on: October 20, 2003      08:18 AM

© 2002 Claritas. All rights reserved. (800) 866-6511 Page 8 of 24

Senior Life Report
Area(s):   Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		2000					2002					2007
Group Quarters by Population Type		Census		Pct.			Estimate		Pct.			Projection		Pct.
Institutionalized:			775					776					781
	Correctional Institutions		16		2.05	%		16		2.05	%		16		2.04	%
	Nursing Homes		721		93.00	%		722		93.01	%		725		92.92	%
	Other Institutions		38		4.95	%		38		4.94	%		39		5.04	%
Noninstitutionalized			722					722					724

	2000		2002		2007
Tenure of Occupied Housing Units	Census		Estimate		Projection
Owner Occupied		21,373		21,696		22,360
Renter Occupied		17,516		17,836		18,529

			Pop 65
1990* Census Household Type and Relationship			and Over		Pct.
Total				15,888
In Family Households				9,863		62.08	%
	Householder			5,144		32.38	%
	Spouse			3,695		23.26	%
	Other relative			970		6.11	%
	Non-Relative			53		0.33	%
In Group Quarters				970		6.11	%
	Institutionalized			939		5.91	%
	Other			31		0.19	%
In Non-Family Households				5,055		31.81	%
	Male Householder			1,160		7.30	%
		Living Alone		996		6.27	%
		Not Living Alone		164		1.03	%
	Female Householder			3,767		23.71	%
		Living Alone		3,625		22.82	%
		Not Living Alone		142		0.89	%
	Non-Relative			128		0.81	%

Prepared on: October 20, 2003      08:18 AM

© 2002 Claritas. All rights reserved. (800) 866-6511 Page 9 of 24

Senior Life Report
Area(s):   Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

1990* Census Household Income - Monthly Owner							65 Yrs
Costs as a Percent of 1989 Household Income		Total Units		Pct.			and Over		Pct.
Total Specified Owner-Occupied Housing Units			16,826					5,981
	Less than 20%		8,774		52.15	%		4,441		74.26	%
	20 to 24%		1,514		9.00	%		367		6.14	%
	25 to 29%		1,149		6.83	%		201		3.37	%
	30 to 34%		1,120		6.65	%		146		2.45	%
	35% or more		4,093		24.33	%		713		11.93	%
	Not Computed		176		1.05	%		111		1.86	%

1990* Census Household Income							65 Yrs
Gross Rent as a Percent of 1989 Household Income		Total Units		Pct.			and Over		Pct.
Total Specified Owner-Occupied Housing Units			17,274					2,990
	Less than 20%		4,356		25.22	%		291		9.72	%
	20 to 24%		2,901		16.80	%		326		10.90	%
	25 to 29%		2,335		13.52	%		278		9.31	%
	30 to 34%		1,837		10.63	%		244		8.16	%
	35% or more		5,390		31.21	%		1,650		55.16	%
	Not Computed		454		2.63	%		202		6.74	%

						65 Yrs
1990* Census Occupied Housing Units	Total Units		Pct.			and Over		Pct.
Owner Occupied Units		20,117		53.76	%		7,301		70.95	%
Renter Occupied Units		17,300		46.24	%		2,989		29.05	%
Complete Plumbing Facilities		37,301		99.69	%		10,275		99.84	%
Lacking Plumbing Facilities		116		0.31	%		14		0.14	%
With Telephone		37,079		99.10	%		10,247		99.57	%
No Telephone		336		0.90	%		47		0.46	%
One or more Vehicles		34,616		92.52	%		8,540		82.99	%
No Vehicles Available		2,801		7.48	%		1,751		17.02	%

Prepared on: October 20, 2003      08:18 AM

© 2002 Claritas. All rights reserved. (800) 866-6511 Page 10 of 24

Senior Life Report
Area(s):   Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

1990* Census Poverty Status													75 Yrs
By Household Type By Age of Householder			Total		Pct.			Age 65 - 74		Pct.			and Over		Pct.
Total Households				37,532					5,087					4,983
Married Couple Family				18,729		49.90	%		2,659		52.27	%		1,711		34.33	%
Other Family				4,107		10.94	%		411		8.07	%		362		7.26	%
	Male Householder			1,256		3.35	%		59		1.17	%		36		0.73	%
	Female Householder			2,852		7.60	%		351		6.91	%		325		6.53	%
Non-Family				14,695		39.15	%		2,017		39.66	%		2,911		58.41	%
	Householder Living Alone			11,981		31.92	%		1,837		36.11	%		2,788		55.94	%
	Householder not Living Alone			2,714		7.23	%		181		3.55	%		123		2.47	%
Above Poverty				35,444		94.44	%		4,865		95.64	%		4,492		90.14	%
	Married Couple Family			18,239		48.60	%		2,592		50.97	%		1,645		33.01	%
	Other Family			3,706		9.87	%		375		7.37	%		336		6.74	%
		Male Householder		1,162		3.10	%		59		1.17	%		36		0.73	%
		Female Householder		2,544		6.78	%		315		6.20	%		300		6.01	%
	Non-Family			13,499		35.97	%		1,898		37.31	%		2,511		50.39	%
		Householder Living Alone		11,019		29.36	%		1,718		33.78	%		2,405		48.26	%
		Householder not Living Alone		2,479		6.61	%		179		3.53	%		106		2.13	%
Below Poverty				2,088		5.56	%		222		4.36	%		492		9.86	%
	Married Couple Family			490		1.30	%		66		1.30	%		66		1.33	%
	Other Family			402		1.07	%		36		0.71	%		26		0.52	%
		Male Householder		94		0.25	%		0		0.00	%		0		0.00	%
		Female Householder		308		0.82	%		36		0.71	%		26		6.43	%
	Non-Family			1,197		3.19	%		120		2.35	%		400		8.02	%
		Householder Living Alone		962		2.56	%		119		2.33	%		383		7.68	%
		Householder not Living Alone		235		0.63	%		1		0.02	%		17		0.34	%

Prepared on: October 20, 2003      08:18 AM

© 2002 Claritas. All rights reserved. (800) 866-6511 Page 11 of 24

Senior Life Report
Area(s):   Radius 3.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

1990* Census Mobility and Disability								65 Yrs					75 Yrs
Civilian Noninstitutionalized Persons Age 16 and Over			Total		Pct.			and Over		Pct.			and Over		Pct.
Persons				74,138					14,943					6,954
With Mblty or Care Lmts				4,323		5.83	%		2,527		16.91	%		1,807		25.98	%
	Mobility Limits Only			1,243		1.68	%		908		6.08	%		658		9.46	%
	Self Care Limits Only			1,667		2.25	%		630		4.22	%		340		4.89	%
	Both Limits			1,413		1.91	%		989		6.62	%		809		11.63	%
No Mblty or Care Limits				69,815		94.17	%		12,416		83.09	%		5,148		74.02	%
With a Work Disability				6,491		8.76	%		3,624		24.25	%
	In Labor Force			1,719		2.32	%		196		1.31	%
		Employed		1,529		2.06	%		187		1.25	%
		Unemployed		190		0.26	%		8		0.06	%
	Not in Labor Force			4,772		6.44	%		3,428		22.94	%
		Prevented from Working		3,871		5.22	%		2,846		19.04	%
		Not Prevented from Wrk		902		1.22	%		582		3.90	%
No Work Disability				67,647		91.24	%		11,319		75.75	%
	In Labor Force			49,030		66.13	%		2,356		15.76	%
		Employed		47,178		63.64	%		2,236		14.97	%
		Unemployed		1,852		2.50	%		119		0.80	%
	Not in Labor Force			18,617		25.11	%		8,964		59.99	%

* Census 2000 SF3 (long form) data is not yet available. Data Items resented 1990 Census figures converted to Census 2000 geographies.

Prepared on: October 20, 2003      08:18 AM

© 2002 Claritas. All rights reserved. (800) 866-6511 Page 12 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		2000					2002					2007
Population by Age		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Population			199,044					202,988					212,215
	Age 45 - 54		28,967		14.55	%		30,653		15.10	%		33,741		15.90	%
	Age 55 - 59		10,586		5.32	%		11,802		5.81	%		14,125		6.66	%
	Age 60 - 64		8,351		4.20	%		8,906		4.39	%		11,138		5.25	%
	Age 65 - 69		7,064		3.55	%		7,061		3.48	%		7,959		3.75	%
	Age 70 - 74		7,062		3.55	%		6,920		3.41	%		6,756		3.18	%
	Age 75 - 79		6,730		3.38	%		6,625		3.26	%		6,581		3.10	%
	Age 80 - 84		4,687		2.35	%		4,972		2.45	%		5,183		2.44	%
	Age 85 and over		4,562		2.29	%		4,874		2.40	%		5,596		2.64	%
Age 55 and over			49,041		24.64	%		51,160		25.20	%		57,337		27.02	%
Age 65 and over			30,105		15.12	%		30,452		15.00	%		32,075		15.11	%
Total Population, Male			96,883					98,686					102,979
	Age 45 - 54		13,994		14.44	%		14,770		14.97	%		16,270		15.80	%
	Age 55 - 59		5,030		5.19	%		5,601		5.68	%		6,714		6.52	%
	Age 60 - 64		3,933		4.06	%		4,186		4.24	%		5,232		5.08	%
	Age 65 - 69		3,217		3.32	%		3,211		3.25	%		3,607		3.50	%
	Age 70 - 74		3,082		3.18	%		3,017		3.06	%		2,942		2.86	%
	Age 75 - 79		2,778		2.87	%		2,735		2.77	%		2,714		2.64	%
	Age 80 - 84		1,797		1.86	%		1,876		1.90	%		1,953		1.90	%
	Age 85 and over		1,386		1.43	%		1,455		1.47	%		1,668		1.62	%
Age 55 and over			21,223		21.91	%		22,082		22.38	%		24,829		24.11	%
Age 65 and over			12,260		12.65	%		12,295		12.46	%		12,883		12.51	%
Total Population, Female			102,161					104,301					109,236
	Age 45 - 54		14,973		14.66	%		15,883		15.23	%		17,471		15.99	%
	Age 55 - 59		5,556		5.44	%		6,201		5.95	%		7,411		6.78	%
	Age 60 - 64		4,418		4.32	%		4,720		4.53	%		5,906		5.41	%
	Age 65 - 69		3,847		3.77	%		3,850		3.69	%		4,353		3.98	%
	Age 70 - 74		3,980		3.90	%		3,903		3.74	%		3,814		3.49	%
	Age 75 - 79		3,952		3.87	%		3,889		3.73	%		3,867		3.54	%
	Age 80 - 84		2,889		2.83	%		3,096		2.97	%		3,230		2.96	%
	Age 85 and over		3,175		3.11	%		3,419		3.28	%		3,928		3.60	%

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 13 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

	2000					2002					2007
Population by Age	Census		Pct.			Estimate		Pct.			Projection		Pct.
Age 55 and over		27,818		27.23	%		29,078		27.88	%		32,509		29.76	%
Age 65 and over		17,844		17.47	%		18,157		17.41	%		17.41		17.57	%

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 14 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		2000					2002					2007
Population by Single Race Classification		Census		Pct.			Estimate		Pct.			Projection		Pct.
White Alone			133,898					133,178					131,053
	Age 65 and over		25,088		18.74	%		25,175		18.90	%		25,674		19.59	%
Black or African American Alone			3,671					3,613					3,607
	Age 65 and over		395		10.75	%		413		11.44	%		427		11.84	%
American Indian and Alaska Native Alone			710					757					897
	Age 65 and over		46		6.43	%		47		6.15	%		57		6.39	%
Asian Alone			36,214					38,994					45,255
	Age 65 and over		3,478		9.60	%		3,640		9.33	%		4,461		9.86	%
Native Hawaiian and Other Pacific Islander Alone			2,530					2,668					3,034
	Age 65 and over		158		6.23	%		168		6.28	%		187		6.16	%
Some Other Race Alone			12,725					14,052					17,114
	Age 65 and over		452		3.56	%		511		3.64	%		657		3.84	%
Two or More Races			9,296					9,726					11,255
	Age 65 and over		489		5.26	%		499		5.13	%		611		5.43	%

		2000					2002					2007
Population by Hispanic or Latino		Census		Pct.			Estimate		Pct.			Projection		Pct.
Hispanic or Latino			30,837					32,408					36,304
	Age 65 and over		1,744		5.66	%		1,801		5.56	%		1,999		5.51	%
Not Hispanic or Latino			168,207					170,580					175,911
	Age 65 and over		28,361		16.86	%		28,651		16.80	%		30,076		17.10	%

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 55 - 64			10,763					11,711					13,979
	Income less than $15,000		792		7.36	%		421		3.60	%		331		2.37	%
	Income $15,000 - $24,999		1,032		9.59	%		341		2.91	%		299		2.14	%
	Income $25,000 - $34,999		1,147		10.66	%		404		3.45	%		353		2.53	%
	Income $35,000 - $49,999		2,033		18.89	%		848		7.24	%		617		4.41	%
	Income $50,000 - $74,999		2,424		22.52	%		1,801		15.38	%		1,532		10.96	%
	Income $75,000 - $99,999		1,518		14.10	%		1,881		16.07	%		1,781		12.74	%
	Income $100,000 - $149,999		1,032		9.59	%		2,481		21.18	%		2,925		20.92	%
	Income $150,000 - $249,999		421		3.91	%		2,400		20.50	%		3,255		23.29	%
	Income $250,000 - $499,999		214		1.99	%		771		6.58	%		2,075		14.85	%
	Income $500,000 and more		149		1.38	%		362		3.09	%		810		5.79	%
Median Household Income			53,887					103,194					135,484

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 15 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 16 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 65 - 69			5,640					4,092					4,504
	Income less than $15,000		843		14.95	%		235		5.73	%		153		3.41	%
	Income $15,000 - $24,999		817		14.49	%		282		6.88	%		204		4.53	%
	Income $25,000 - $34,999		941		16.68	%		303		7.39	%		286		6.34	%
	Income $35,000 - $49,999		976		17.30	%		471		11.52	%		374		8.30	%
	Income $50,000 - $74,999		878		15.56	%		863		21.10	%		717		15.92	%
	Income $75,000 - $99,999		404		7.17	%		640		15.63	%		739		16.41	%
	Income $100,000 - $149,999		308		5.46	%		580		14.18	%		822		18.26	%
	Income $150,000 - $249,999		134		2.37	%		455		11.12	%		644		14.30	%
	Income $250,000 - $499,999		73		1.29	%		165		4.03	%		373		8.29	%
	Income $500,000 and more		53		0.94	%		98		2.41	%		192		4.25	%
Median Household Income			36,698					71,875					92,534
Householder Age 70 - 74			4,517					4,034					3,869
	Income less than $15,000		797		17.64	%		247		6.12	%		150		3.87	%
	Income $15,000 - $24,999		750		16.61	%		290		7.19	%		189		4.88	%
	Income $25,000 - $34,999		866		19.17	%		304		7.53	%		249		6.43	%
	Income $35,000 - $49,999		830		18.37	%		453		11.23	%		320		8.27	%
	Income $50,000 - $74,999		785		17.38	%		857		21.24	%		611		15.79	%
	Income $75,000 - $99,999		339		7.51	%		614		15.22	%		642		16.59	%
	Income $100,000 - $149,999		254		5.61	%		579		14.36	%		695		17.97	%
	Income $150,000 - $249,999		109		2.42	%		426		10.55	%		544		14.05	%
	Income $250,000 - $499,999		61		1.35	%		168		4.16	%		309		8.00	%
	Income $500,000 and more		36		0.80	%		97		2.41	%		160		4.14	%
Median Household Income			35,003					71,106					91,258
Householder Age 75 - 79			3,837					4,265					4,143
	Income less than $15,000		1,180		30.75	%		505		11.84	%		297		7.18	%
	Income $15,000 - $24,999		724		18.87	%		498		11.68	%		361		8.72	%
	Income $25,000 - $34,999		501		13.06	%		476		11.15	%		405		9.77	%
	Income $35,000 - $49,999		493		12.84	%		595		13.96	%		495		11.96	%
	Income $50,000 - $74,999		475		12.38	%		714		16.73	%		698		16.85	%
	Income $75,000 - $99,999		159		4.14	%		471		11.04	%		500		12.08	%
	Income $100,000 - $149,999		105		2.74	%		555		13.01	%		585		14.12	%
	Income $150,000 - $249,999		59		1.54	%		286		6.71	%		481		11.61	%
	Income $250,000 - $499,999		29		0.76	%		104		2.44	%		215		5.19	%

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 17 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
	Income $500,000 and more		22		0.57	%		62		1.46	%		105		2.54	%
Median Household Income			24,552					52,066					68,374

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 18 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 80 - 84			2,429					3,200					3,270
	Income less than $15,000		803		33.05	%		392		12.24	%		237		7.24	%
	Income $15,000 - $24,999		474		19.52	%		378		11.81	%		299		9.14	%
	Income $25,000 - $34,999		319		13.14	%		371		11.58	%		317		9.68	%
	Income $35,000 - $49,999		317		13.04	%		467		14.58	%		407		12.46	%
	Income $50,000 - $74,999		307		12.63	%		543		16.96	%		561		17.16	%
	Income $75,000 - $99,999		110		4.52	%		365		11.42	%		416		12.72	%
	Income $100,000 - $149,999		76		3.13	%		376		11.77	%		459		14.04	%
	Income $150,000 - $249,999		37		1.52	%		199		6.21	%		346		10.57	%
	Income $250,000 - $499,999		20		0.82	%		71		2.22	%		156		4.76	%
	Income $500,000 and more		17		0.70	%		39		1.22	%		73		2.23	%
Median Household Income			24,179					49,775					66,748
Householder Age 85 and over			1,898					2,891					3,269
	Income less than $15,000		633		33.37	%		419		14.50	%		296		9.05	%
	Income $15,000 - $24,999		335		17.65	%		381		13.18	%		310		9.50	%
	Income $25,000 - $34,999		246		12.98	%		319		11.05	%		335		10.24	%
	Income $35,000 - $49,999		235		12.36	%		394		13.64	%		378		11.57	%
	Income $50,000 - $74,999		228		11.99	%		476		16.47	%		545		16.67	%
	Income $75,000 - $99,999		70		3.68	%		315		10.88	%		408		12.47	%
	Income $100,000 - $149,999		47		2.49	%		347		12.02	%		455		13.93	%
	Income $150,000 - $249,999		25		1.32	%		148		5.12	%		339		10.36	%
	Income $250,000 - $499,999		14		0.74	%		57		1.97	%		136		4.16	%
	Income $500,000 and more		13		0.68	%		34		1.18	%		67		2.05	%
Median Household Income			23,612					47,380					64,469

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 19 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

		1990*					2002					2007
Households by Household Income		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Households			76,977					80,766					83,469
	Income less than $15,000		7,881		10.24	%		3,626		4.49	%		2,465		2.95	%
	Income $15,000 - $24,999		7,882		10.24	%		3,286		4.07	%		2,428		2.91	%
	Income $25,000 - $34,999		10,446		13.57	%		3,985		4.93	%		3,136		3.76	%
	Income $35,000 - $49,999		14,535		18.88	%		6,836		8.46	%		4,871		5.84	%
	Income $50,000 - $74,999		17,046		22.14	%		14,447		17.89	%		10,865		13.02	%
	Income $75,000 - $99,999		8,815		11.45	%		13,071		16.18	%		11,752		14.08	%
	Income $100,000 - $149,999		6,378		8.29	%		16,445		20.36	%		17,541		21.01	%
	Income $150,000 - $249,999		2,257		2.93	%		13,365		16.55	%		17,030		20.40	%
	Income $250,000 - $499,999		1,094		1.42	%		4,024		4.98	%		9,862		11.81	%
	Income $500,000 and more		680		0.88	%		1,681		2.08	%		3,521		4.22	%
Average Household Income		$	62,753				$	123,830				$	158,016
Median Household Income		$	47,689				$	90,690				$	117,730
Per Capita Income		$	25,766				$	48,710				$	61,071

		1990*					2002					2007
Specified Owner-Occupied Housing Unit Values		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Specified Owner-Occupied Housing Unit Values			37,730					39,614					40,789
	Value less than $25,000		58		0.16	%		23		0.06	%		22		0.05	%
	Value $25,000 - $49,999		195		0.52	%		125		0.32	%		59		0.15	%
	Value $50,000 - $74,999		113		0.30	%		132		0.33	%		119		0.29	%
	Value $75,000 - $99,999		107		0.28	%		88		0.22	%		106		0.26	%
	Value $100,000 - $149,999		450		1.19	%		152		0.38	%		125		0.31	%
	Value $150,000 - $199,999		959		2.54	%		294		0.74	%		183		0.45	%
	Value $200,000 - $299,999		7,285		19.31	%		1,187		3.00	%		633		1.55	%
	Value $300,000 - $399,999		10,032		26.59	%		4,006		10.11	%		2,027		4.97	%
	Value $400,000 - $499,999		7,617		20.19	%		7,663		19.34	%		3,765		9.23	%
	Value $500,000 Or More		10,913		28.92	%		25,945		65.49	%		33,750		82.74	%
Median Specified Owner-Occupied Housing Unit Value			396,666					618,332					697,896

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 20 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

	2000					2002					2007
Group Quarters by Population Type	Census		Pct.			Estimate		Pct.			Projection		Pct.
Institutionalized:		1,613					1,614					1,624
Correctional Institutions		16		1.00	%		16		1.00	%		16		0.99	%
Nursing Homes		1,306		80.97	%		1,307		80.98	%		1,314		80.91	%
Other Institutions		291		18.04	%		291		18.03	%		294		18.10	%
Noninstitutionalized		943					941					941

	2000		2002		2007
Tenure of Occupied Housing Units	Census		Estimate		Projection
Owner Occupied		46,449		47,157		48,620
Renter Occupied		33,050		33,609		34,849

			Pop 65
1990* Census Household Type and Relationship			and Over		Pct.
Total				29,520
In Family Households				19,023		64.44	%
		Householder		9,881		33.47	%
		Spouse		6,944		23.52	%
		Other relative		2,108		7.14	%
		Non-Relative		89		0.30	%
In Group Quarters				1,679		5.69	%
		Institutionalized		1,632		5.53	%
		Other		47		0.16	%
In Non-Family Households				8,818		29.87	%
	Male Householder			2,044		6.92	%
		Living Alone		1,776		6.02	%
		Not Living Alone		268		0.91	%
	Female Householder			6,422		21.75	%
		Living Alone		6,125		20.75	%
		Not Living Alone		297		1.01	%
	Non-Relative			352		1.19	%

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 21 of 24

Senior Life Report
Area(s): Radius 5.0
250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

1990* Census Household Income - Monthly Owner							65 Yrs
Costs as a Percent of 1989 Household Income		Total Units		Pct.			and Over		Pct.
Total Specified Owner-Occupied Housing Units			38,609					11,872
	Less than 20%		19,481		50.46	%		8,779		73.95	%
	20 to 24%		3,615		9.36	%		725		6.10	%
	25 to 29%		3,364		8.71	%		509		4.29	%
	30 to 34%		2,870		7.43	%		316		2.66	%
	35% or more		8,915		23.09	%		1,331		11.21	%
	Not Computed		365		0.95	%		213		1.79	%

1990* Census Household Income							65 Yrs
Gross Rent as a Percent of 1989 Household Income		Total Units		Pct.			and Over		Pct.
Total Specified Owner-Occupied Housing Units			32,449					5,056
	Less than 20%		8,050		24.81	%		486		9.61	%
	20 to 24%		5,662		17.45	%		519		10.27	%
	25 to 29%		4,544		14.00	%		471		9.31	%
	30 to 34%		3,432		10.58	%		431		8.52	%
	35% or more		9,914		30.55	%		2,824		55.87	%
	Not Computed		847		2.61	%		325		6.42	%

						65 Yrs
1990* Census Occupied Housing Units	Total Units		Pct.			and Over		Pct.
Owner Occupied Units		44,508		57.80	%		13,778		73.15	%
Renter Occupied Units		32,493		42.20	%		5,057		26.85	%
Complete Plumbing Facilities		76,816		99.76	%		18,804		99.84	%
Lacking Plumbing Facilities		185		0.24	%		24		0.13	%
With Telephone		76,485		99.33	%		18,723		99.41	%
No Telephone		514		0.67	%		110		0.58	%
One or more Vehicles		72,187		93.75	%		15,723		83.48	%
No Vehicles Available		4,814		6.25	%		3,112		16.52	%

  Prepared on: October 20, 2003     08:18 AM

  © 2002 Claritas. All rights reserved. (800) 866-6511 Page 22 of 24

Senior Life Report
Area(s): Radius 5.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

1990* Census Poverty Status													75 Yrs
By Household Type By Age of Householder			Total		Pct.			Age 65 - 74		Pct.			and Over		Pct.
Total Households				77,013					10,268					8,076
Married Couple Family				41,220		53.52	%		5,515		53.71	%		2,850		35.28	%
Other Family				8,347		10.84	%		838		8.16	%		672		8.32	%
	Male Householder			2,344		3.04	%		127		1.23	%		119		1.47	%
	Female Householder			6,003		7.80	%		711		6.93	%		553		6.84	%
Non-Family				27,445		35.64	%		3,916		38.13	%		4,555		56.40	%
	Householder Living Alone			21,586		28.03	%		3,555		34.62	%		4,350		53.86	%
	Householder not Living Alone			5,859		7.61	%		360		3.51	%		205		2.54	%
Above Poverty				73,350		95.24	%		9,834		95.77	%		7,305		90.45	%
	Married Couple Family			40,301		52.33	%		5,393		52.52	%		2,719		33.67	%
	Other Family			7,640		9.92	%		788		7.68	%		643		7.96	%
		Male Householder		2,157		2.80	%		127		1.23	%		119		1.47	%
		Female Householder		5,483		7.12	%		662		6.44	%		524		6.48	%
	Non-Family			25,409		32.99	%		3,652		35.57	%		3,942		48.82	%
		Householder Living Alone		19,910		25.85	%		3,303		32.17	%		3,755		46.49	%
		Householder not Living Alone		5,499		7.14	%		349		3.40	%		188		2.33	%
Below Poverty				3,663		4.76	%		434		4.23	%		771		9.55	%
	Married Couple Family			920		1.19	%		121		1.18	%		130		1.61	%
	Other Family			707		0.92	%		50		0.48	%		29		0.36	%
		Male Householder		187		0.24	%		0		0.00	%		0		0.00	%
		Female Householder		520		0.68	%		50		0.48	%		29		4.74	%
	Non-Family			2,036		2.64	%		263		2.57	%		612		7.58	%
		Householder Living Alone		1,677		2.18	%		252		2.46	%		595		7.37	%
		Householder not Living Alone		360		0.47	%		11		0.11	%		17		0.21	%

	Prepared on: October 20, 2003 08:18 AM	Page 23 of 24
	© 2002 Claritas. All rights reserved. (800) 866-6511

Senior Life Report
Area(s): Radius 5.0

250 MYRTLE RD	Latitude:	37.580479
BURLINGAME, CA 94010-3030	Longitude:	-122.342736

1990* Census Mobility and Disability								65 Yrs					75 Yrs
Civilian Noninstitutionalized Persons Age 16 and Over			Total		Pct.			and Over		Pct.			and Over		Pct.
Persons				154,647					27,882					11,715
With Mblty or Care Lmts				8,047		5.20	%		4,353		15.61	%		2,952		25.20	%
	Mobility Limits Only			2,331		1.51	%		1,664		5.97	%		1,136		9.70	%
	Self Care Limits Only			3,279		2.12	%		1,050		3.76	%		544		4.64	%
	Both Limits			2,437		1.58	%		1,639		5.88	%		1,272		10.86	%
No Mblty or Care Limits				146,600		94.80	%		23,529		84.39	%		8,763		74.80	%
With a Work Disability				12,628		8.17	%		6,682		23.97	%
	In Labor Force			3,595		2.32	%		428		1.53	%
		Employed		3,202		2.07	%		389		1.39	%
		Unemployed		393		0.25	%		39		0.14	%
	Not in Labor Force			9,033		5.84	%		6,255		22.43	%
		Prevented from Working		7,326		4.74	%		5,131		18.40	%
		Not Prevented from Wrk		1,708		1.10	%		1,123		4.03	%
No Work Disability				142,019		91.83	%		21,201		76.04	%
	In Labor Force			105,116		67.97	%		4,306		15.44	%
		Employed		101,396		65.57	%		4,120		14.78	%
		Unemployed		3,720		2.41	%		186		0.67	%
	Not in Labor Force			36,903		23.86	%		16,895		60.59	%

*     Census 2000 SF3 (long form) data is not yet available. Data Items resented 1990 Census figures converted to Census 2000 geographies.

	Prepared on: October 20, 2003 08:18 AM	Page 24 of 24
	© 2002 Claritas. All rights reserved. (800) 866-6511

ADDENDA

ADDENDUM D: Property Exhibits

ADDENDA

ADDENDUM E: Historical Operating Statements

PII - ITEM A-6

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2003
	Version	AA
	Community	R.I. of Burlingame
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable	JAN			FEB			MAR			APR			MAY
40005 Revenue-Rental		132,408			128,221			137,817			103,948			170,402
40010 Revenue-Rent Refunds/Proration		(1,229	)		(4,113	)		(3,727	)		(460	)		(2,365	)
Total Rental Revenue		131,160			124,108			134,090			103,488			168,037
40110 Revenue-AL Level 1		4,800			4,680			4,479			4,332			7,418
40115 Revenue-AL Level 2		2,588			3,668			4,125			2,070			4,147
40120 Revenue-AL Level 3		5,550			3,075			2,450			1,878			3,022
40125 Revenue-AL Level 4		1,000			1,448			3,050			3,162			4,824
40130 Revenue-AL Level 5		—			1,175			411			(249	)		(76	)
40135 Revenue-AL Level 6		1,425			—			—			922			1,686
40140 Revenue-AL Level 7		—			—			300			307			93
40170 Revenue-Alzh Lev 1		—			—			—			—			—
Total AL Services Revenue		15,363			14,046			14,814			12,421			21,114
40515 Revenue-Other		390			724			960			663			877
40525 Revenue-Processing/App Fees		3,500			11,000			10,000			3,067			6,000
Total Other Revenue		3,890			11,724			10,960			3,730			6,877
40575 Rev-Process Fee Concessions		—			(6,000	)		(10,000	)		(3,067	)		(6,000	)
40015 Rev-Rent Concessions		—			—			—			(575	)		(1,925	)
40215 Rev-A/L Concessions		—			—			—			—			—
Total Concessions		—			(6,000	)		(10,000	)		(3,642	)		(7,925	)
Total Revenue		150,432			143,878			149,865			115,998			188,103
50005 Payroll Expense-Regular		46,120			38,608			44,012			36,015			56,822
50405 Payroll Expense-Overtime		714			1,147			917			850			991
50705 Payroll Expense-Doubletime		8			16			—			16			—
51005 Bonuses		2,312			3,487			3,912			2,083			3,191
51505 Vacation, Sick, Holiday		2,593			3,864			3,463			3,728			5,453
51805 Employee Recognition		—			188			54			—			149
52005 Payroll Taxes		5,755			4,558			4,593			3,530			5,477
52505 401K401A		68			116			55			42			181
52805 Group Insurance		2,967			3,179			3,363			3,600			3,073
53005 Worker’s Comp Insurance		4,500			4,500			4,535			17,971			4,593
Total Payroll Expenses		65,035			59,661			64,904			67,834			79,929
53305 Outside Service - Medical		—			—			—			—			—
53505 Temporary Services		—			—			—			—			—
53510 Temporary Services - AL		—			—			—			—			—
54005 Payroll Service		260			639			261			(40	)		374
55005 Outside Service Other		—			—			—			—			—
Total Purchase Services		260			639			261			(40	)		374
Total Payroll Related		65,295			60,301			65,165			67,794			80,303
Total Payroll Related % Total Revenue		43	%		42	%		43	%		58	%		43	%
56505 Food		8,581			7,532			8,807			7,636			10,891
57005 Housekeeping		425			597			1,487			878			1,807
57505 Kitchen Supplies		1,958			793			890			722			2,243
58005 Assisted Living Supplies		135			113			114			18			182
58505 Alzheimer Supplies		—			—			—			215			—
59005 Laundry & Linen/Uniforms		—			—			—			—			—
59010 Laun/Lin/Unif Kitchen		148			272			167			190			164
59015 Laund/Lin/Unif Housekeeping		—			—			—			—			—
59505 Activities-Asst Lving		795			574			691			742			749
59510 Banquet Expense		300			300			300			230			370
59555 NMS-Foodservices		—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—
Total Variable Expense		12,342			10,180			12,456			10,631			16,405
60005 Office Supplies		654			694			680			328			889
61005 Repairs and Maint - Building		—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—
61015 Repairs - Electrical		228			317			474			99			171
61020 Repairs - Plumbing		299			463			712			2,543			1,375
61025 Repairs - Fire Systems		—			—			428			—			—
61030 Repairs - HVAC		18			110			1,218			—			20
61035 Repairs - Gen. Supplies		497			263			405			163			348
61040 Repairs - Equipment		257			1,082			1,945			356			91
61045 Repairs - Other Interior		136			670			469			1,830			203
61055 Repairs - Other Exterior		620			12			—			60			1
61100 Loss on Early Retirement Asset		712			—			—			300			—
Total Repair & Maintenance		2,768			2,918			5,651			5,350			2,209
61505 Contracts - Elevator		361			361			641			276			445
61510 Contracts - Floor Maint		—			—			—			—			—
61515 Contracts - AlarmFire		(25	)		323			489			124			2,447
61520 Contracts-HVAC		161			(161	)		—			—			328
61525 Contracts - Pest Control		771			161			169			139			252
61535 Contracts - Other		104			44			214			74			405
Total Service Contracts		1,372			727			1,513			614			3,877
62005 Land Maintenance		1,030			300			300			230			555
Total Land Maintenance		1030			300			300			230			555
62505 Rental/Lease - Cable		402			403			406			311			501
62510 Rental/Lease - Security		—			—			—			—			—
62525 Rental/Lease - Furniture		—			—			—			—			—
62535 Rental/Lease - Equipment		191			1,016			1,016			539			2,364
62540 Rental/Lease - Auto		—			32			—			—			—
62555 Rental/Lease - Other		—			—			—			38			12
Total Rental and Leases		594			1,451			1,423			889			2,876
63010 Utilities - Electricity		3,646			3,074			4,421			2,556			5,042

[Additional columns below]

[Continued from above table, first column(s) repeated]

OLAPTable	JUN			JUL			AUG			AUG YTD
40005 Revenue-Rental		139,063			146,432			137,037			1,095,329
40010 Revenue-Rent Refunds/Proration		(2,177	)		(3,803	)		(3,761	)		(21,633	)
Total Rental Revenue		136,886			142,629			133,276			1,073,695
40110 Revenue-AL Level 1		5,675			6,444			6,238			44,066
40115 Revenue-AL Level 2		3,750			3,750			3,169			27,266
40120 Revenue-AL Level 3		2,450			3,275			2,505			24,205
40125 Revenue-AL Level 4		3,773			4,519			4,075			25,852
40130 Revenue-AL Level 5		—			—			—			1,261
40135 Revenue-AL Level 6		1,158			400			2,930			8,520
40140 Revenue-AL Level 7		490			726			1,425			3,341
40170 Revenue-Alzh Lev 1		—			—			—			—
Total AL Services Revenue		17,296			19,114			20,342			134,510
40515 Revenue-Other		926			675			675			5,890
40525 Revenue-Processing/App Fees		10,000			4,000			6,000			53,567
Total Other Revenue		10,926			4,675			6,675			59,457
40575 Rev-Process Fee Concessions		(8,000	)		(2,000	)		(6,000	)		(41,067	)
40015 Rev-Rent Concessions		(2,000	)		(2,750	)		(3,750	)		(11,000	)
40215 Rev-A/L Concessions		—			—			—			—
Total Concessions		(10,000	)		(4,750	)		(9,750	)		(52,067	)
Total Revenue		155,108			161,668			150,543			1,215,595
50005 Payroll Expense-Regular		45,232			46,279			47,158			360,246
50405 Payroll Expense-Overtime		1,198			1,935			1,217			8,968
50705 Payroll Expense-Doubletime		—			5			—			44
51005 Bonuses		4,344			3,081			4,364			26,773
51505 Vacation, Sick, Holiday		4,044			4,009			3,795			30,949
51805 Employee Recognition		80			80			369			920
52005 Payroll Taxes		4,086			4,040			4,380			36,419
52505 401K401A		144			144			203			952
52805 Group Insurance		3,261			4,361			4,542			28,344
53005 Worker’s Comp Insurance		3,618			5,054			7,559			52,330
Total Payroll Expenses		66,007			68,987			73,587			545,946
53305 Outside Service - Medical		—			—			—			—
53505 Temporary Services		—			225			—			225
53510 Temporary Services - AL		—			—			—			—
54005 Payroll Service		342			218			287			2,340
55005 Outside Service Other		—			—			—			—
Total Purchase Services		342			443			287			2,565
Total Payroll Related		66,349			69,430			73,873			548,511
Total Payroll Related % Total Revenue		43	%		43	%		49	%		46	%
56505 Food		8,799			11,174			8,120			71,540
57005 Housekeeping		873			1,216			(102	)		7,181
57505 Kitchen Supplies		1,339			1,149			1,494			10,587
58005 Assisted Living Supplies		195			153			632			1,542
58505 Alzheimer Supplies		—			—			—			215
59005 Laundry & Linen/Uniforms		9			—			—			9
59010 Laun/Lin/Unif Kitchen		185			199			187			1,511
59015 Laund/Lin/Unif Housekeeping		—			—			—			—
59505 Activities-Asst Lving		966			525			879			5,919
59510 Banquet Expense		300			300			300			2,400
59555 NMS-Foodservices		—			—			—			—
59560 NMS-Housekeeping		—			—			—			—
Total Variable Expense		12,666			14,716			11,510			100,905
60005 Office Supplies		1,283			1,009			385			5,921
61005 Repairs and Maint - Building		—			—			—			—
61010 Repairs - Phone System		—			—			—			—
61015 Repairs - Electrical		—			—			756			2,046
61020 Repairs - Plumbing		450			1,940			80			7,861
61025 Repairs - Fire Systems		—			—			—			428
61030 Repairs - HVAC		567			140			608			2,680
61035 Repairs - Gen. Supplies		4			63			65			1,809
61040 Repairs - Equipment		172			365			385			4,654
61045 Repairs - Other Interior		887			(1,227	)		265			3,232
61055 Repairs - Other Exterior		13			32			44			783
61100 Loss on Early Retirement Asset		—			1,797			277			3,086
Total Repair & Maintenance		2,093			3,111			2,480			26,580
61505 Contracts - Elevator		361			360			361			3,164
61510 Contracts - Floor Maint		—			—			—			—
61515 Contracts - AlarmFire		(1,173	)		623			893			3,700
61520 Contracts-HVAC		—			(328	)		—			—
61525 Contracts - Pest Control		182			196			196			2,069
61535 Contracts - Other		96			166			46			1,148
Total Service Contracts		(534	)		1,018			1,496			10,081
62005 Land Maintenance		300			300			313			3,328
Total Land Maintenance		300			300			313			3,328
62505 Rental/Lease - Cable		403			414			414			3,255
62510 Rental/Lease - Security		—			—			—			—
62525 Rental/Lease - Furniture		—			—			—			—
62535 Rental/Lease - Equipment		965			1,081			959			8,131
62540 Rental/Lease - Auto		—			—			—			32
62555 Rental/Lease - Other		—			—			—			50
Total Rental and Leases		1,368			1495			1,373			11,468
63010 Utilities - Electricity		7,593			5,961			5,545			37,838

Pll - ITEM A-6

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2003
	Version	AA
	Community	R.I. of Burlingame
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable	JAN			FEB			MAR			APR			MAY
63015 Utilities -Water		1,362			1,997			2,404			1,620			3,364
63020 Utilities -Gas		3,492			1,858			2,188			1,532			1,869
63025 Utilities - Telephone		438			417			453			415			589
63030 Utilities -Trash		561			791			785			486			781
Total Utilities		9,500			8,136			10,250			6,608			11,645
63505 Marketing and Advertising		535			275			613			405			957
63510 Printed Materials		149			825			851			220			842
63515 Special Events		341			193			1,410			315			528
63520 Yellow Pages		571			664			764			437			575
63525 Newspaper and Magazine		258			78			78			488			(410	)
63530 Advertising		54			27			(81	)		—			—
64005 Referral Fees - Residents		2,345			—			—			1,000			1,488
Total Marketing and Advertising		4,253			2,060			3,634			2,865			3,979
60510 Delivery		—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			195
65005 Gas		221			139			220			188			200
65010 Auto Service And Repair		—			215			—			—			12
65015 Other Automobile		16			—			14			—			2
65505 Travel & Lodging		7			49			12			83			30
66005 Mileage		61			46			91			131			77
66505 Meals & Entertainment		—			—			5			—			117
67005 License and Fingerprints		512			621			251			481			452
68005 Dues and Subscriptions		183			462			267			263			79
68505 Seminars and Training		140			—			270			—			364
69005 Employee Recruiting		—			—			—			—			—
69505 Other		197			30			169			119			227
69605 Discounts Lost		—			—			—			—			—
69610 Discounts Taken		—			—			(32	)		(45	)		(57	)
69525 Sales & Use Tax Due		—			—			—			—			—
Total Misc. Expenses		1,335			1,562			1,268			1,220			1,697
Total Operating Expense		99,142			88,329			102,340			96,528			124,436
Gross Margin		51,291		$	55,549			47,526			19,469			63,667
Gross Margin Percent		34	%		39	%		32	%		17	%		34	%
69705 Casualty Loss		—			—			—			—			—
69805 Bad Debt Expense		—			—			—			—			—
70005 Corporate Allocation		—			—			—			—			—
72305 Property Taxes		4,416			4,416			4,416			3,497			5,335
72405 Insurance-Liability & Hazard		3,844			3,118			3,049			2,900			1,457
Total Other Fees		8,259			7,534			7,465			6,397			6,792
72505 Accounting		796			796			796			1,413			366
73005 Legal		511			443			523			258			608
73510 Donations & Contributions		—			—			—			—			89
74005 Consulting Fees		—			—			—			—			251
74015 Professional Fees - Other		—			—			—			—			500
75005 Property Management Fees		7,522			7,194			7,493			5,800			9,405
75105 Partnership Admin Fees		538			1,112			439			(1,854	)		1,253
75510 Other Penalties/Fin. Fee		—			—			—			—			—
75515 Licenses & Fees Legal		—			157			—			—			—
75505 Bank Charges		—			—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			800			—
75525 Collection Fees		—			—			—			—			—
Total Professional Fees		9,366			9,702			9,251			6,418			12,472
EBITDAR		33,665			38,314			30,810			6,654			44,404
EBITDAR Percent		22	%		27	%		21	%		6	%		24	%
77005 Operating Lease		—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—
Total Leases		—			—			—			—			—
80005 Interest Income		(111	)		(53	)		(48	)		(54	)		(75	)
80505 Other Non-Operating Income		—			(30	)		15			—			—
87010 Extraordinary Items - Net Tax		—			—			—			—			—
Total Non-Operating Income/Expense		(111	)		(83	)		(33	)		(54	)		(75	)
83005 Interest Expense		20,864			20,853			20,864			15,897			25,677
83025 Int Exp MIP		1,339			1,339			1,339			1,027			1,643
Total Interest Expense		22,204			22,193			22,204			16,924			27,321
EBTDA		11,572			16,204			8,639			(10,216	)		17,158
EBTDA Percent		8	%		11	%		6	%		-9	%		9	%
77505 Depreciation		7,131			7,190			7,214			5,541			8,959
78005 Amortization		219			219			219			168			270
78015 Amortization - Start Up		—			—			—			—			—
Total Depreciation & Amortization		7,350			7,409			7,433			5,709			9,229
Net Income (Loss)		4,222			8,795			1,206			(15,924	)		7,929

[Additional columns below]

[Continued from above table, first column(s) repeated]

OLAPTable	JUN			JUL			AUG			AUG YTD
63015 Utilities -Water		2,379			2,762			2,567			18,456
63020 Utilities -Gas		862			1,347			1,068			14,217
83025 Utilities - Telephone		535			810			516			4,172
63030 Utilities - Trash		633			633			633			5,303
Total Utilities		12,003			11,514			10,330			79,986
63505 Marketing and Advertising		485			928			654			4,852
63510 Printed Materials		191			418			194			3,690
63515 Special Events		992			1,054			429			5,261
63520 Yellow Pages		555			555			555			4,674
63525 Newspaper and Magazine		763			85			78			1,416
63530 Advertising		—			—			—			(0	)
64005 Referral Fees - Residents		—			—			—			4,833
Total Marketing and Advertising		2,985			3,039			1,909			24,725
60510 Delivery		—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			195
65005 Gas		190			100			150			1,408
65010 Auto Service And Repair		350			—			—			578
65015 Other Automobile		—			—			—			31
65505 Travel & Lodging		—			—			1			182
66005 Mileage		91			46			19			562
66505 Meals & Entertainment		116			13			—			251
67005 License and Fingerprints		388			331			252			3,286
68005 Dues and Subscriptions		79			577			83			1,993
68505 Seminars and Training		898			—			—			1,672
69005 Employee Recruiting		—			75			535			610
69505 Other		115			139			80			1,076
69605 Discounts Lost		—			—			—			—
69610 Discounts Taken		(43	)		(51	)		(59	)		(287	)
69525 Sales & Use Tax Due		—			—			—			—
Total Misc. Expenses		2,184			1,229			1,061			11,556
Total Operating Expense		100,696			106,860			104,730			823,061
Gross Margin		54,412			54,808			45,813			392,534
Gross Margin Percent		35	%		34	%		30	%		32	%
69705 Casualty Loss		—			—			—			—
69805 Bad Debt Expense		—			—			—			—
70005 Corporate Allocation		—			—			—			—
72305 Property Taxes		4,416			4,095			4,595			35,185
72405 Insurance-Liability & Hazard		2,809			3,471			3,348			23,995
Total Other Fees		7,225			7,566			7,943			59,180
72505 Accounting		2,013			983			1,051			8,213
73005 Legal		507			664			403			3,917
73510 Donations & Contributions		—			—			—			89
74005 Consulting Fees		130			—			—			381
74015 Professional Fees - Other		—			128			151			778
75005 Property Management Fees		7,755			8,083			7,527			60,780
75105 Partnership Admin Fees		788			935			0			3,211
75510 Other Penalties/Fin. Fee		—			—			—			—
75515 Licenses & Fees Legal		—			—			—			157
75505 Bank Charges		—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			800
75525 Collection Fees		—			—			—			—
Total Professional Fees		11,193			10,793			9,131			78,325
EBITDAR		35,994			36,450			28,738			255,029
EBITDAR Percent		23	%		23	%		19	%		21	%
77005 Operating Lease		—			—			—			—
77010 Add’l Lease		—			—			—			—
Total Leases		—			—			—			—
80005 Interest Income		—			(150	)		(75	)		(564	)
80505 Other Non-Operating Income		—			1,136			1,136			2,257
87010 Extraordinary Items - Net Tax		—			—			—			—
Total Non-Operating Income/Expense		—			986			1,061			1,692
83005 Interest Expense		20,525			20,775			20,763			166,218
83025 Int Exp MIP		1,331			1,331			1,331			10,681
Total Interest Expense		21,856			22,106			22,094			176,900
EBTDA		14,138			13,358			5,583			76,437
EBTDA Percent		9	%		8	%		4	%		6	%
77505 Depreciation		7,273			7,414			7,462			58,182
78005 Amortization		219			219			219			1,753
78015 Amortization - Start Up		—			—			—			—
Total Depreciation & Amortization		7,492			7,633			7,681			59,935
Net Income (Loss)		6,647			5,725			(2,097	)		16,502

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2002
	Version	AA
	Community	R.I. of Burlingame
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN			JUL
40005 Revenue-Rental		109,541			101,899			105,005			107,138			113,998			115,165			113,413
40010 Revenue-Rent Refunds/Proration		(227	)		(61	)		(2,555	)		(910	)		—			(1,592	)		—
Total Rental Revenue		109,314			101,838			102,450			106,228			113,998			113,573			113,413
40110 Revenue-AL Level 1		3,200			3,200			2,350			2,800			2,893			3,333			5,200
40115 Revenue-AL Level 2		4,325			4,525			2,934			4,125			4,150			2,150			2,350
40120 Revenue-AL Level 3		1,000			—			600			1,600			800			800			800
40125 Revenue-AL Level 4		3,000			3,000			5,173			5,425			7,400			5,021			5,519
40130 Revenue-AL Level 5		1,200			—			2,400			1,200			1,600			1,200			—
40135 Revenue-AL Level 6		1,400			—			1,400			—			—			1,400			1,400
40140 Revenue-AL Level 7		—			—			(1,400	)		—			—			—			—
40180 Revenue-Extended Cong Care		50			—			—			—			—			—			—
Total AL Services Revenue		14,175			10,725			13,456			15,150			16,843			13,904			15,269
40515 Revenue-Other		398			45			379			650			415			620			379
40525 Revenue-Processing/App Fees		2,000			1,500			3,000			2,000			2,000			6,500			3,000
Total Other Revenue		2,398			1,545			3,379			2,650			2,415			7,120			3,379
40575 Rev-Process Fee Concessions		—			—			—			—			—			—			—
40015 Rev-Rent Concessions		—			(3,136	)		(3,336	)		(3,936	)		(3,936	)		(2,068	)		(1,868	)
40215 Rev-A/L Concessions		—			—			—			—			—			—			—
Total Concessions		—			(3,136	)		(3,336	)		(3,936	)		(3,936	)		(2,068	)		(1,868	)
Total Revenue		125,887			110,972			115,949			120,092			129,320			132,529			130,193
50005 Payroll Expense-Regular		45,466			40,961			45,700			41,951			39,187			39,812			44,543
50405 Payroll Expense-Overtime		2,659			1,611			1,059			960			781			975			1,069
50705 Payroll Expense-Doubletime		618			9			—			17			84			71			—
51005 Bonuses		2,110			2,710			2,260			2,560			2,560			4,210			2,660
51505 Vacation, Sick, Holiday		3,190			3,495			4,585			3,469			3,133			3,836			3,837
51805 Employee Recognition		21			—			—			—			—			—			75
52005 Payroll Taxes		6,028			4,574			4,798			4,386			3,310			3,469			3,872
52505 401K/401A		65			66			53			61			128			60			68
52805 Group Insurance		2,720			3,468			2,983			2,494			2,530			2,674			3,092
53005 Worker’s Comp Insurance		4,437			4,314			6,507			4,916			4,265			4,574			4,879
Total Payroll Expenses		67,314			61,209			67,946			60,813			55,978			59,680			64,095
53305 Outside Service - Medical		—			—			—			—			—			—			—
53505 Temporary Services		—			—			—			—			—			—			—
53510 Temporary Services - AL		—			—			—			—			—			—			—
54005 Payroll Service		266			225			451			297			240			146			313
55005 Outside Service Other		—			36			—			—			—			—			43
Total Purchase Services		266			261			451			297			240			146			357
Total Payroll Related		67,580			61,469			68,398			61,110			56,217			59,826			64,451
Total Payroll Related % Total Revenue		54	%		55	%		59	%		51	%		43	%		45	%		50	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	AUG			SEP			OCT			NOV			DEC			DEC YTD
40005 Revenue-Rental		115,454			113,257			116,945			119,276			120,086			1,351,177
40010 Revenue-Rent Refunds/Proration		(1,200	)		(2,213	)		—			—			—			(8,757	)
Total Rental Revenue		114,254			111,045			116,945			119,276			120,086			1,342,420
40110 Revenue-AL Level 1		4,800			3,600			4,347			3,200			3,667			42,590
40115 Revenue-AL Level 2		2,575			3,025			2,713			3,588			3,279			39,738
40120 Revenue-AL Level 3		2,450			3,213			2,890			3,240			3,275			20,667
40125 Revenue-AL Level 4		2,850			2,710			2,025			1,825			800			44,747
40130 Revenue-AL Level 5		1,045			(204	)		—			—			—			8,441
40135 Revenue-AL Level 6		1,400			1,400			1,400			1,400			2,825			14,025
40140 Revenue-AL Level 7		—			—			—			—			(1,073	)		(2,473	)
40180 Revenue-Extended Cong Care		—			—			—			—			—			50
Total AL Services Revenue		15,120			13,743			13,374			13,252			12,773			167,785
40515 Revenue-Other		495			422			415			764			613			5,595
40525 Revenue-Processing/App Fees		4,000			—			12,000			—			7,000			43,000
Total Other Revenue		4,495			422			12,415			764			7,613			48,595
40575 Rev-Process Fee Concessions		—			—			—			—			—			—
40015 Rev-Rent Concessions		(1,868	)		(1,868	)		(1,268	)		(868	)		868			(23,284	)
40215 Rev-A/L Concessions		—			—			(600	)		(600	)		600			(600	)
Total Concessions		(1,868	)		(1,868	)		(1,868	)		(1,468	)		1,468			(23,884	)
Total Revenue		132,001			123,342			140,866			131,824			141,939			1,534,916
50005 Payroll Expense-Regular		43,373			43,699			43,896			45,226			44,712			518,527
50405 Payroll Expense-Overtime		754			1,121			2,057			996			1,432			15,473
50705 Payroll Expense-Doubletime		1,190			13			—			69			23			2,093
51005 Bonuses		(2,864	)		(3,014	)		(1,014	)		(1,764	)		(1,364	)		9,050
51505 Vacation, Sick, Holiday		1,472			3,021			3,468			3,552			3,502			40,561
51805 Employee Recognition		—			—			—			—			55			151
52005 Payroll Taxes		3,971			3,997			3,833			4,303			4,021			50,561
52505 401K/401A		68			60			59			58			57			832
52805 Group Insurance		3,641			3,723			1,882			3,224			3,252			35,683
53005 Worker’s Comp Insurance		5,009			22,216			7,267			8,361			7,661			84,406
Total Payroll Expenses		56,615			74,865			61,448			64,025			63,352			757,338
53305 Outside Service - Medical		—			—			—			—			—			—
53505 Temporary Services		—			—			—			—			—			—
53510 Temporary Services - AL		—			—			—			—			—			—
54005 Payroll Service		269			159			305			299			14			2,985
55005 Outside Service Other		32			—			44			—			—			155
Total Purchase Services		301			159			349			299			14			3,140
Total Payroll Related		56,915			75,025			61,796			64,324			63,366			760,478
Total Payroll Related % Total Revenue		43	%		61	%		44	%		49	%		45	%		50	%

	JAN			FEB		MAR		APR			MAY			JUN		JUL
56505 Food		8,008			8,933		6,920		6,660			9,696			6,753		7,195
67005 Housekeeping		1,205			1,325		615		1,187			991			1,130		1,786
57505 Kitchen Supplies		1,263			591		110		1,543			1,242			930		1,392
58005 Assisted Living Supplies		493			275		202		86			148			84		87
59005 Laundry & Linen/Uniforms		633			254		174		—			236			—		222
59010 Laun/Lin/Unif Kitchen		—			—		33		209			347			431		282
59015 Laund/Lin/Unif Housekeeping		—			—		—		142			—			—		—
59505 Activities-Asst Living		845			241		573		664			975			491		884
59510 Banquet Expense		300			300		300		300			300			300		300
59555 NMS-Foodservices		—			—		—		—			—			—		—
59560 NMS-Housekeeping		—			—		—		—			—			—		—
Total Variable Expense		12,747			11,920		8,926		10,793			13,936			10,118		12,148
60005 Office Supplies		1,198			829		593		388			1,344			438		430
61005 Repairs and Maint - Building		—			—		—		—			—			—		—
61010 Repairs - Phone System		—			—		—		—			—			—		—
61015 Repairs - Electrical		—			—		—		—			2			87		—
61020 Repairs - Plumbing		1,067			—		339		418			(12	)		—		16
61025 Repairs - Fire Systems		—			—		—		—			—			—		—
61030 Repairs-HVAC		1,500			—		—		—			—			—		—
61035 Repairs - Gen. Supplies		(242	)		193		86		75			44			344		60
61040 Repairs - Equipment		264			302		1,233		84			1,259			1,061		6
61045 Repairs - Other Interior		366			—		87		150			47			117		198
61055 Repairs - Other Exterior		—			—		—		439			—			—		—
61100 Loss on Early Retierment Asset		—			—		—		—			—			—		—
Total Repair & Maintenance		2,955			495		1,745		1,167			1,340			1,609		281
61505 Contracts -Elevator		361			361		361		581			361			361		361
61510 Contracts - Floor Maint		—			—		—		—			—			—		—
61515 Contracts - Alarm/Fire		—			—		—		—			108			180		136
61520 Contracts-HVAC		235			235		87		803			480			302		82
61525 Contracts - Pest Control		1			151		151		448			358			182		182
61535 Contracts -Other		102			70		60		104			311			104		104
Total Service Contracts		699			816		659		1,935			1,618			1,128		864
62005 Land Maintenance		—			—		—		941			300			300		677
Total Land Maintenance		—			—		—		941			300			300		677
62505 Rental/Lease - Cable		509			513		402		402			402			402		402
62510 Rental/Lease - Security		—			136		136		—			—			—		—
62525 Rental/Lease - Furniture		—			—		—		—			—			—		—
62535 Rental Lease - Equipment		170			360		358		(488	)		339			456		216
62540 Rental/Lease - Auto		—			—		—		—			—			—		—
62555 Rental/Lease - Other		333			553		443		443			443			443		443
Total Rental and Leases		1,011			1,561		1,339		357			1,184			1,301		1,061
63010 Utilities - Electricity		4,137			2,112		4,153		3,594			4,286			6,264		5,358
63015 Utilities - Water		2,462			2,181		2,068		2,212			2,607			2,322		2,418
63020 Utilities - Gas		2,384			1,642		905		1,139			1,172			934		582
63025 Utilities -Telephone		887			728		567		377			706			485		463

[Additional columns below]

[Continued from above table, first column(s) repeated]

	AUG		SEP		OCT		NOV		DEC			DEC YTD
56505 Food		10,992		5,009		8,686		8,949		5,939			93,740
67005 Housekeeping		642		1,952		1,305		1,806		1,400			15,345
57505 Kitchen Supplies		1,231		1,647		1,514		1,887		1,277			14,627
58005 Assisted Living Supplies		184		167		82		203		175			2,187
59005 Laundry & Linen/Uniform		41		—		—		—		80			1,639
59010 Laun/Lin/Unif Kitchen		185		294		194		273		289			2,537
59015 Laund/Lin/Unif Housekeeping		103		—		—		—		—			244
59505 Activities-Asst Living		987		632		752		656		548			8,249
59510 Banquet Expense		300		300		300		300		(1,967	)		1,333
59555 NMS-Foodservices		—		—		—		—		—			—
59560 NMS-Housekeeping		—		—		—		—		—			—
Total Variable Expense		14,665		10,001		12,833		14,074		7,740			139,902
60005 Office Supplies		1,336		810		950		748		861			9,923
61005 Repairs and Maint - Building		—		—		—		—		—			—
61010 Repairs - Phone System		—		—		—		—		—			—
61015 Repairs - Electrical		57		69		—		199		120			534
61020 Repairs - Plumbing		361		1,753		198		777		2,338			7,254
61025 Repairs - Fire Systems		1,318		—		—		—		—			1,318
61030 Repairs-HVAC		4,056		—		—		—		—			5,556
61035 Repairs - Gen. Supplies		209		173		256		487		472			2,158
61040 Repairs - Equipment		200		—		36		1		2,573			7,020
61045 Repairs Other Interior		154		577		592		296		478			3,063
61055 Repairs - Other Exterior		45		18		158		26		82			769
61100 Loss on Early Retierment Asset		—		—		—		—		—			—
Total Repair & Maintenance		6,400		2,590		1,240		1,786		6,063			27,672
61505 Contracts -Elevator		361		361		361		361		361			4,546
61510 Contracts - Floor Maint		—		—		—		—		—			—
61515 Contracts - Alarm/Fire		264		—		—		80		25			793
61520 Contracts-HVAC		404		82		82		427		161			3,380
61525 Contracts - Pest Controls		182		186		184		182		2			2,208
61535 Contracts - Other		44		260		194		263		624			2,238
Total Service Contracts		1,254		889		820		1,313		1,173			13,166
62005 Land Maintenance		600		300		435		435		340			4,328
Total Land Maintenance		600		300		435		435		340			4,328
62505 Rental/Lease - Cable		402		402		402		402		402			5,044
62510 Rental/Lease - Security		—		—		—		—		—			272
62525 Rental/Lease - Furniture		—		—		—		—		—			—
62535 Rental Lease - Equipment		474		303		256		255		452			3,150
62540 Rental/Lease - Auto		—		—		—		—		—			—
62555 Rental/Lease - Other		443		443		—		—		(532	)		3,451
Total Rental and Leases		1,318		1,147		658		657		322			11,917
63010 Utilities - Electricity		6,440		5,791		5,533		5,597		1,641			54,905
63015 Utilities - Water		2,403		2,951		2,628		2,690		2,672			29,614
63020 Utilities - Gas		738		936		1,301		1,201		1,241			14,176
63025 Utilities - Telephone		482		463		440		468		501			6,566

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2002
	Version	AA
	Community	R.I. of Burlingame
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows
OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN			JUL
63030 Utilities-Trash		561			561			561			634			629			625			561
Total Utilities		10,431			7,224			8,255			7,957			9,401			10,629			9,382
63505 Marketing and Advertising		1,615			299			411			236			506			336			712
63510 Printed Materials		14			2,873			735			257			1,095			351			50
63515 Special Events		165			568			222			339			157			195			559
63520 Yellow Pages		638			2,348			1,016			1,198			1,466			1,111			1,238
63525 Newspaper and Magazine		—			127			64			357			841			127			242
63530 Advertising		—			—			—			—			—			—			—
64005 Referred Fees - Residents		—			—			—			—						950			1,328
Total Marketing and Advertising		2,431			6,215			2,448			2,386			4,066			3,070			4,128
60510 Delivery		—			—			—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			27			—			—
65005 Gas		66			85			109			160			120			81			192
65010 Auto Service And Repair		654			—			—			—			2,265			—			—
65015 Other Automobile		74			—			—			—			—			—			—
65505 Travel & Lodging		21			667			1,598			759			1,012			267			18
66005 Mileage		204			424			51			93			132			38			100
66505 Meals & Entertainment		419			294			331			—			118			—			—
67005 License and Fingerprints		323			230			769			268			159			454			1,103
68005 Dues and Subscriptions		368			81			169			357			651			(171	)		79
68505 Seminars and Training		944			20			194			24			100			—			245
69005 Employee Recruiting		—			—			—			—			179			646			815
69505 Other		99			16			853			389			25			190			879
69605 Discounts Lost		6			—			—			—			—			—			—
69610 Discounts Taken		(6	)		—			—			—			—			—			—
69525 Sales & Use Tax Due		—			—			—			—			—			—			—
Total Misc. Expenses		3,172			1,817			4,074			2,049			4,787			1,505			3,431
Total Operating Expense		102,224			92,346			96,435			89,082			94,192			89,924			96,852
Gross Margin		23,663			18,826			19,515			31,010			35,128			42,606			33,341
Gross Margin Percent		19	%		17	%		17	%		26	%		27	%		32	%		26	%
69705 Casualty Loss		—			—			—			—			—			—			—
69805 Bad Debt Expense		4			—			—			—			—			—			5,082
70005 Corporate Allocation		—			—			—			—			—			—			—
72305 Property Taxes		4,349			4,349			4,349			4,349			4,349			4,349			4,461
72405 Insurance - Liability & Hazard		1,868			1,868			1,868			3,129			3,129			3,129			3,129
Total Other Fees		6,221			6,217			6,217			7,478			7,478			7,477			12,672
72505 Accounting		91			891			891			891			1,211			1,316			940
73005 Legal		656			446			784			530			400			486			426
73510 Donations & Contributions		—			—			—			—			—			—			500
74005 Consulting Fees		—			—			—			—			—			—			—
74015 Professional Fees - Other		—			—			—			37			—			—			—
75005 Property Management Fees		6,294			5,532			5,797			6,005			6,466			6,626			6,510
75105 Partnership Admin Fees		—			—			—			—			—			—			—
75510 Other Penalties/Fin. Fee		—			0			—			—			—			—			347
75515 Licenses & Fees Legal		—			—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—			—
75520 Franchise Tax Filling Fee		—			—			—			800			—			—			—
75525 Collection Fees		—			—			—			—			—			—			—
Total Professional Fees		7,041			6,869			7,473			8,263			8,077			8,429			8,722
EBITDAR		10,402			5,540			5,825			15,270			19,573			26,700			11,947
EBITDAR Percent		8	%		5	%		5	%		13	%		15	%		20	%		9	%
77005 Operating Lease		—			—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—			—
Total Leases		—			—			—			—			—			—			—
80005 Interest Income		(266	)		(273	)		(262	)		(126	)		27			(142	)		(125	)
80505 Other Non-Operating Income		—			—			—			(32,000	)		—			32,000			—
87010 Extraordinary Items -Net Tax		—			—			—			—			—			—			—
Total Non-Operating Income/Expense		(266	)		(273	)		(262	)		(32,125	)		27			31,858			(125	)
83005 Interest Expense		20,990			20,990			20,929			20,990			20,898			20,928			20,918
83025 Int Exp MIP		929			929			929			929			1,339			1,339			1,339
Total Interest Expense		21,919			21,919			21,858			21,919			22,237			22,268			22,257
EBTDA		(11,252	)		(16,106	)		(15,771	)		25,476			(2,692	)		(27,426	)		(10,185	)
EBTDA Percent		-9	%		-15	%		-14	%		21	%		-2	%		-21	%		-8	%
77505 Depreciation		5,321			5,582			5,627			5,638			5,871			5,786			5,801
78005 Amortization		219			219			219			220			219			219			219
78015 Amortization - Start Up		—			—			—			—			—			—			—
Total Depreciation & Amortization		5,540			5,800			5,846			5,858			6,090			6,005			6,020
Net Income (Loss)		(16,791	)		(21,906	)		(21,617	)		19,618			(8,781	)		(33,431	)		(16,206	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

	AUG			SEP			OCT			NOV			DEC			DEC YTD
63030 Utilities-Trash		561			561			791			629			561			7,234
Total Utilities		10,624			10,700			10,693			10,585			6,616			112,495
63505 Marketing and Advertising		761			571			1,304			414			330			7,494
63510 Printed Materials		516			198			403			399			549			7,440
63515 Special Events		852			335			733			172			234			4,531
63520 Yellow Pages		(1,771	)		1,349			665			581			571			10,409
63525 Newspaper and Magazine		164			64			533			390			78			2,986
63530 Advertising		—			—			—			—			—			—
64005 Referred Fees - Residents		1,445			1,535			—			—			623			5,880
Total Marketing and Advertising		1,968			4,051			3,637			1,956			2,384			38,740
60510 Delivery		—			—			—			—			—			—
64505 Computer/Peripherals/Software		—			—			—			—			164			191
65005 Gas		182			96			145			86			244			1,566
65010 Auto Service And Repair		—			—			—			317			15			3,25
65015 Other Automobile		—			—			3			—			—			76
65505 Travel & Lodging		2			—			—			—			2			4,345
66005 Mileage		24			164			46			46			46			1,366
66505 Meals & Entertainment		—			—			24			12			42			1,240
67005 Licence and Fingerprints		839			150			314			626			279			5,510
68005 Dues and Subscriptions		99			145			105			250			60			2,193
68505 Seminars and Training		255			245			—			—			70			2,096
69005 Employee Recruiting		175			100			632			359			—			2,907
69505 Other		488			446			131			33			(87	)		3,462
69605 Discounts Lost		—			—			—			—			—			6
69610 Discounts Taken		—			—			—			—			—			(6	)
69525 Sales & Use Tax Due		—			—			—			—			—			—
Total Misc. Expenses		2,064			1,344			1,400			1,728			834			28,203
Total Operating Expense		97,144			106,858			94,462			97,606			89,698			1,146,822
Gross Margin		34,857			16,484			46,404			34,219			52,242			388,094
Gross Margin Percent		26	%		13	%		33	%		26	%		37	%		25	%
69705 Casualty Loss		—			—			—			—			—			—
69805 Bad Debt Expense		—			—			—			206			—			5,292
70005 Corporate Allocation		—			—			—			—			—			—
72305 Property Taxes		4,461			4,461			4,371			4,371			4,371			52,589
72405 Insurance - Liability & Hazard		4,979			2,960			3,783			3,816			2,641			36,297
Total Other Fees		9,440			7,421			8,154			8,392			7,012			94,177
72505 Accounting		891			1,211			1,911			2,048			(2,171	)		10,121
73005 Legal		350			475			423			429			392			5,798
73510 Donations & Contributions		(500	)		—			—			—			—			—
74005 Consulting Fees		—			—			250			—			—			250
74015 Professional Fees - Other		—			510			(510	)		—			—			37
75005 Property Management Fees		6,600			6,182			6,598			7,038			7,097			76,746
75105 Partnership Admin Fees		—			—			—			—			—			—
75510 Other Penalties/Fin. Fee		—			—			—			—			—			347
75515 Licenses & Fees Legal		—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			—			—			800
75525 Collection Fees		—			—			—			—			—			—
Total Professional Fees		7,342			8,378			8,672			9,515			6,319			94,099
EBITDAR		18,076			685			29,579			16,311			39,911			199,819
EBITDAR Percent		14	%		1	%		21	%		12	%		28	%		13	%
77005 Operating Lease		—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—
Total Lease		—			—			—			—			—			—
80005 Interest Income		(141	)		(154	)		(134	)		(152	)		(155	)		(1,903	)
80505 Other Non-Operating Income		—			—			—			(214	)		—			(214	)
87010 Extraordinary Items -Net Tax		—			—			—			—			—			—
Total Non-Operating Income/Expense		(141	)		(154	)		(134	)		(366	)		(155	)		(2,117	)
83005 Interest Expense		20,907			20,806			20,977			20,907			20,832			251,072
83025 Int Exp MIP		1,339			1,339			1,339			1,339			1,339			14,432
Total Interest Expense		22,247			22,145			22,316			22,247			22,172			265,504
EBTDA		(4,030	)		(21,306	)		7,397			(5,570	)		17,895			(63,568	)
EBTDA Percent		-3	%		-17	%		5	%		-4	%		13	%		-4	%
77505 Depreciation		6,301			6,433			6,461			6,812			7,014			72,648
78005 Amortization		219			219			219			219			219			2,630
78015 Amortization - Start Up		—			—			—			—			—			—
Total Depreciation & Amortization		6,520			6,652			6,681			7,031			7,233			75,278
Net Income (Loss)		(10,550	)		(27,958	)		716			(12,600	)		10,662			(138,846	)

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2001
	Version	AA
	Community	R.I. Of Burlingame
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable

	JAN			FEB		MAR			APR		MAY			JUN
40005 Revenue-Rental		108,531			106,344		109,481			108,157		95,627			118,997
40010 Revenue-Rent Refunds/Proration		(575	)		—		(517	)		—		(1,471	)		(500	)
Total Rental Revenue		107,956			106,344		108,965			108,157		94,156			118,497
40110 Revenue-AL Level 1		3,405			2,754		5,035			4,600		4,000			5,100
40115 Revenue-AL Level 2		5,725			5,505		5,842			4,265		3,450			4,825
40120 Revenue-AL Level 3		(400	)		317		2,125			1,938		387			—
40125 Revenue-AL Level 4		775			975		975			975		—			—
40130 Revenue-AL Level 5		1,175			1,175		1,175			1,175		1,175			1,175
40135 Revenue-AL Level 6		1,375			1,375		1,375			1,375		177			—
40140 Revenue-AL Level 7		—			—		25			—		—			—
40170 Revenue-Alzh Lev 1		—			—		—			—		—			—
Total AL Services Revenue		12,055			12,101		16,552			14,328		9,190			11,100
40515 Revenue-Other		806			192		538			301		143			313
40525 Revenue-Processing/App Fees		—			—		1,000			2,200		1,250			750
Total Other Revenue		806			192		1,538			2,501		1,393			1,063
40575 Rev-Process Fee Concessions		—			—		—			—		—			—
40015 Rev-Rent Concessions		—			—		—			—		—			—
40215 Rev-A/L Concessions		—			—		—			—		—			—
Total Concessions		—			—		—			—		—			—
Total Revenue		120,817			118,637		127,055			124,986		104,739			130,660
50005 Payroll Expense-Regular		36,192			32,886		37,039			36,624		40,853			35,697
50405 Payroll Expense-Overtime		2,460			4,004		3,069			2,233		2,314			2,163
50705 Payroll Expense-Doubletime		909			861		1,219			335		299			322
51005 Bonuses		1,818			2,766		3,180			2,859		1,228			2,366
51505 Vacation, Sick, Holiday		3,713			4,270		3,480			3,307		1,502			4,215
51805 Employee Recognition		—			134		80			—		—			—
52005 Payroll Taxes		5,501			4,536		4,542			3,967		4,038			3,055
52505 401K/401A		112			134		79			100		92			92
52805 Group Insurance		2,378			2,713		2,519			2,606		2,623			559
53005 Worker’s Comp Insurance		3,021			2,989		2,737			2,737		2,857			3,089
Total Payroll Expenses		56,104			55,294		57,944			54,789		55,807			51,559
53305 Outside Service - Medical		—			—		—			—		—			—
53505 Temporary Services		—			—		—			—		—			12
53510 Temporary Services - AL		—			—		—			—		—			—
54005 Payroll Service		82			83		84			101		84			86
55005 Outside Service Other		65			—		32			—		132			33
Total Purchase Services		147			83		116			101		216			131
Total Payroll Related		56,251			55,377		58,060			54,890		56,023			51,689

[Additional columns below]

[Continued from above table, first column(s) repeated]

	JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
40005 Revenue-Rental		111,699			114,397			112,090			114,696			108,775			108,556			1,317,350
40010 Revenue-Rent Refunds/Proration		(713	)		1,058			(250	)		(111	)		(893	)		—			(3,971	)
Total Rental Revenue		110,986			115,455			111,840			114,585			107,882			108,556			1,313,378
40110 Revenue-AL Level 1		4,978			3,807			3,193			3,851			3,600			1,400			45,723
40115 Revenue-AL Level 2		4,475			4,675			4,075			4,100			4,125			4,125			55,187
40120 Revenue-AL Level 3		993			2,128			1,600			1,200			2,200			723			13,210
40125 Revenue-AL Level 4		—			—			1,625			3,000			2,000			3,000			13,325
40130 Revenue-AL Level 5		1,466			3,188			3,575			1,200			1,200			1,200			18,879
40135 Revenue-AL Level 6		—			—			425			1,400			1,400			1,400			10,302
40140 Revenue-AL Level 7		600			—			—			—			—			—			625
40170 Revenue-Alzh Lev 1		—			—			—			—			—			—			—
Total AL Services Revenue		12,512			13,797			14,493			14,751			14,525			11,848			157,252
40515 Revenue-Other		435			525			1,325			525			863			450			6,416
40525 Revenue-Processing/App Fees		—			2,500			1,500			1,500			—			1,500			12,200
Total Other Revenue		435			3,025			2,825			2,025			863			1,950			18,616
40575 Rev-Process Fee Concessions		—			—			—			—			—			—			—
40015 Rev-Rent Concessions		—			—			—			—			—			—			—
40215 Rev-A/L Concessions		—			—			—			—			—			—			—
Total Concessions		—			—			—			—			—			—			—
Total Revenue		123,933			132,277			129,158			131,361			123,269			122,354			1,489,245
50005 Payroll Expense-Regular		36,137			40,359			40,838			42,039			42,587			42,935			464,187
50405 Payroll Expense-Overtime		4,212			4,274			3,917			2,006			2,426			3,082			36,159
50705 Payroll Expense-Doubletime		810			—			159			—			114			498			5,526
51005 Bonuses		3,730			5,901			(380	)		(6,363	)		(5,314	)		(5,912	)		5,881
51505 Vacation, Sick, Holiday		3,115			4,038			2,831			3,122			3,257			4,222			41,073
51805 Employee Recognition		—			—			—			—			115			—			329
52005 Payroll Taxes		3,794			3,731			4,281			3,963			3,119			3,989			48,534
52505 401K/401A		70			65			68			56			66			107			1,040
52805 Group Insurance		2,186			2,627			3,134			256			3,740			2,292			27,635
53005 Worker’s Comp Insurance		2,854			3,058			3,476			2,628			2,628			3,232			35,307
Total Payroll Expenses		56,908			64,053			58,323			47,707			52,738			54,445			665,669
53305 Outside Service - Medical		—			—			—			—			—			—			—
53505 Temporary Services		—			—			—			—			—			2			14
53510 Temporary Services - AL		—			—			—			—			—			—			—
54005 Payroll Service		86			86			86			235			217			258			1,489
55005 Outside Service Other		64			(9	)		35			27			—			—			377
Total Purchase Services		150			77			121			262			217			260			1,880
Total Payroll Related		57,057			64,129			58,444			47,969			52,955			54,705			667,549

	JAN			FEB			MAR			APR			MAY			JUN
Total Payroll Related % Total Revenue		47	%		47	%		46	%		44	%		53	%		40	%
56505 Food		6,174			8,465			7,393			6,833			7,242			7,460
57005 Housekeeping		1,364			894			1,447			1,907			1,118			802
57505 Kitchen Supplies		530			727			604			1,003			754			629
58005 Assisted Living Supplies		98			259			221			291			43			302
59005 Laundry & Linen/Uniforms		461			283			309			259			767			516
59010 Laun/Lin/Unif Kitchen		—			—			—			—			—			—
59015 Laund/Lin/Unif Housekeeping		—			—			—			—			—			—
59505 Activities-Asst Living		941			40			743			573			545			276
59510 Banquet Expense		300			300			300			300			300			300
59555 NMS-Foodservices		—			—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—			—
Total Variable Expense		9,868			10,969			11,015			11,166			10,769			10,286
60005 Office Supplies		1,645			151			892			1,328			461			592
61005 Repairs and Maint - Building		—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—
61015 Repairs - Electrical		—			—			—			—			—			—
61020 Repairs - Plumbing		—			75			244			130			336			75
61025 Repairs - Fire Systems		91			(91	)		—			—			—			—
61030 Repairs - HVAC		460			1,775			—			—			277			—
61035 Repairs - Gen. Supplies		874			347			266			428			298			290
61040 Repairs - Equipment		75			939			497			127			160			251
61045 Repairs - Other Interior		—			296			(139	)		174			172			120
61055 Repairs - Other Exterior		—			—			166			—			—			—
61100 Loss on Early Retirement Asset		—			—			—			—			—			—
Total Repair & Maintenance		1,500			3,341			1,034			859			1,244			736
61505 Contracts - Elevator		361			581			361			870			211			361
61510 Contracts - Floor Maint		590			—			—			—			—			—
61515 Contracts - Alarm/Fire		69			91			136			—			136			(136	)
61520 Contracts-HVAC		460			—			—			—			—			—
61525 Contracts - Pest Control		151			327			151			176			176			175
61535 Contracts - Other		—			51			139			45			216			—
Total Service Contracts		1,630			1,049			786			1,091			739			399
62005 Land Maintenance		300			300			300			300			460			300
Total Land Maintenance		300			300			300			300			460			300
62505 Rental/Lease - Cable		365			365			365			365			365			365
62510 Rental/Lease - Security		340			204			204			—			204			204
62525 Rental/Lease - Furniture		—			—			—			—			—			—
62535 Rental Lease - Equipment		255			419			302			250			327			238
62540 Rental/Lease - Auto		—			—			—			—			—			—
62555 Rental/Lease - Other		353			533			443			443			443			443
Total Rental and Leases		1,312			1,521			1,313			1,057			1,339			1,249
63010 Utilities -Electricity		2,416			2,242			2,562			3,476			2,790			2,281
63015 Utilities -Water		2,001			1,925			1,842			1,955			2,162			2,002
63020 Utilities - Gas		2,902			5,105			4,125			1,145			1,562			932
63025 Utilities - Telephone		920			909			1,772			752			546			796

[Additional columns below]

[Continued from above table, first column(s) repeated]

	JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
Total Payroll Related % Total Revenue		46	%		48	%		45	%		37	%		43	%		45	%		45	%
56505 Food		7,361			7,005			8,979			8,765			7,740			7,205			90,621
57005 Housekeeping		1,023			796			2,054			1,119			1,545			1,902			15,969
57505 Kitchen Supplies		881			1,030			770			1,202			874			601			9,604
58005 Assisted Living Supplies		219			411			161			733			169			239			3,146
59005 Laundry & Linen/Uniforms		523			312			398			298			270			466			4,863
59010 Laun/Lin/Unif Kitchen		—			—			—			—			—			—			—
59015 Laund/Lin/Unif Housekeeping		—			—			—			—			—			—			—
59505 Activities-Asst Living		430			750			549			1,383			480			1,247			7,957
59510 Banquet Expense		300			300			300			300			336			(1,204	)		2,131
59555 NMS-Foodservices		—			—			—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—			—			—
Total Variable Expense		10,736			10,603			13,211			13,800			11,412			10,457			134,291
60005 Office Supplies		1,557			1,100			789			1,022			465			828			10,831
61005 Repairs and Maint - Building		—			—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—			—
61015 Repairs - Electrical		—			—			—			—			—			—			—
61020 Repairs - Plumbing		774			268			21			278			(138	)		75			2,138
61025 Repairs - Fire Systems		69			—			32			—			425			—			526
61030 Repairs - HVAC		240			986			—			—			—			579			4,317
61035 Repairs - Gen. Supplies		369			587			473			174			—			636			4,741
61040 Repairs - Equipment		—			18			6			398			223			284			2,979
61045 Repairs - Other Interior		425			3,128			282			852			1,592			(54	)		6,847
61055 Repairs - Other Exterior		—			—			71			—			185			—			422
61100 Loss on Early Retirement Asset		—			—			—			—			—			—			—
Total Repair & Maintenance		1,876			4,986			884			1,702			2,288			1,521			21,969
61505 Contracts - Elevator		361			361			361			361			361			878			5,424
61510 Contracts - Floor Maint		—			—			—			—			—			—			590
61515 Contracts - Alarm/Fire		232			170			—			—			—			69			767
61520 Contracts-HVAC		—			—			—			—			—			—			460
61525 Contracts - Pest Control		177			176			176			176			176			(51	)		1,983
61535 Contracts - Other		70			316			110			633			488			60			2,128
Total Service Contracts		839			1,022			646			1,169			1,024			956			11,352
62005 Land Maintenance		300			300			300			(900	)		—			—			1,960
Total Land Maintenance		300			300			300			(900	)		—			—			1,960
62505 Rental/Lease - Cable		365			437			520			513			631			401			5,056
62510 Rental/Lease - Security		1,115			204			171			—			—			—			2,646
62525 Rental/Lease - Furniture		—			—			—			—			—			—			—
62535 Rental Lease - Equipment		288			388			646			300			224			269			3,905
62540 Rental/Lease - Auto		—			—			—			—			—			—			—
62555 Rental/Lease - Other		443			—			562			443			1,007			1,158			6,267
Total Rental and Leases		2,211			1,029			1,899			1,255			1,861			1,828			17,874
63010 Utilities -Electricity		9,076			5,475			5,618			5,181			5,149			2,450			48,716
63015 Utilities -Water		2,650			2,275			3,063			2,590			1,972			2,393			26,829
63020 Utilities - Gas		683			1,299			604			507			431			1,761			21,057
63025 Utilities - Telephone		774			639			1,015			810			920			887			10,740

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2001
	Version	AA
	Community	R.I. of Burlingame
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN
63030 Utilities - Trash		639			612			561			561			616			561
Total Utilities		8,878			10,793			10,862			7,888			7,676			6,572
63505 Marketing and Advertising		723			448			429			469			1,400			1,001
63510 Printed Materials		60			(45	)		15			—			1,896			141
63515 Special Events		6			117			411			208			392			63
63520 Yellow Pages		786			786			786			100			786			(0	)
63525 Newspaper and Magazine		85			125			165			153			32			347
63530 Advertising		—			—			—			180			—			—
64005 Referral Fees - Residents		—			875			—			—			835			925
Total Marketing and Advertising		1,660			2,306			1,806			1,110			5,341			2,477
60510 Delivery		—			—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			—			—
65005 Gas		93			—			50			100			45			136
65010 Auto Service And Repair		—			337			—			—			—			—
65015 Other Automobile		—			—			—			—			—			126
65505 Travel & Lodging		30			615			764			—			178			(178	)
66005 Mileage		34			—			117			—			58			—
66505 Meals & Entertainment		111			268			95			90			—			84
67005 Licence and Fingerprints		491			312			701			396			444			663
68005 Dues and Subscriptions		21			73			—			263			285			210
68505 Seminars and Training		603			167			722			114			154			98
69005 Employee Recruiting		—			636			22			(275	)		—			—
69505 Other		39			126			48			59			342			481
69605 Discounts Lost		16			12			23			45			48			33
69610 Discounts Taken		(67	)		(30	)		(46	)		(81	)		(72	)		(52	)
69525 Sales & Use Tax Due		—			—			—			—			—			—
Total Misc. Expenses		1,370			2,515			2,497			711			1,482			1,601
Total Operating Expense		84,415			88,322			88,565			80,399			85,532			75,902
Gross Margin		36,402			30,315			38,489			44,587			19,206			54,758
Gross Margin Percent		30	%		26	%		30	%		36	%		18	%		42	%
69705 Casualty Loss		—			—			—			—			—			—
69605 Bad Debt Expense		57			528			(436	)		5,758			(10,519	)		36
70005 Corporate Allocation		—			—			—			—			—			—
72305 Property Taxes		4,362			4,362			4,362			4,362			4,189			607
72405 Insurance-Liability & Hazard		1,107			1,107			1,106			1,868			1,868			1,790
Total Other Fees		5,526			5,997			5,032			11,988			(4,462	)		2,433
72505 Accounting		596			320			458			458			486			486
73005 Legal		395			997			5,772			(4,574	)		471			530
73510 Donations & Contributions		—			—			—			—			—			—
74005 Consulting Fees		—			—			157			—			—			—
74015 Professional Fees - Other		—			—			—			—			—			—
75005 Property Management Fees		6,070			5,903			6,353			6,249			5,237			6,533
75105 Partnership Admin Fees		—			—			—			1,763			(552	)		(1,211	)
75510 Other Penalties/Fin. Fee		—			—			—			—			—			—
75515 Licenses & Fees Legal		—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—
75520 Franchise Tax Filling Fee		—			—			—			—			—			—
75525 Collection Fees		—			—			—			—			—			—
Total Professional Fees		7,060			7,220			12,740			3,896			5,642			6,338
EBITDAR		23,815			17,097			20,717			28,702			18,026			45,987
EBITDAR Percent		20	%		14	%		16	%		23	%		17	%		35	%
77005 Operating Lease		—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—
Total Leases		—			—			—			—			—			—
80005 Interest Income		—			(15	)		(15	)		(210	)		(200	)		(219	)
80505 Other Non-Operating Income		—			—			—			—			—			—
87010 Extraordinary Items -Net Tax		—			—			18,529			—			—			—
Total Non-Operating Income/Expense		—			(15	)		18,514			(210	)		(200	)		(219	)
83005 Interest Expense		24,025			24,000			23,976			—			41,507			21,049
83025 Int Exp MIP		—			—			1,352			1,352			1,352			1,352
Total Interest Expense		24,025			24,000			25,328			1,352			42,858			22,401
EBTDA		(209	)		(6,889	)		(23,125	)		27,560			(24,631	)		23,805
EBTDA Percent		0	%		-6	%		-18	%		22	%		-24	%		18	%
77505 Depreciation		8,684			8,684			4,918			4,918			4,918			4,931
78005 Amortization		6,176			6,176			6,337			158			206			206
78015 Amortization - Start Up		—			—			—			—			—			—
Total Depreciation & Amortization		14,860			14,860			11,256			5,077			5,124			5,136
Net Income (Loss)		(15,069	)		(21,749	)		(34,381	)		22,484			(29,755	)		18,668

[Additional columns below]

[Continued from above table, first column(s) repeated]

	JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
63030 Utilities - Trash		733			886			561			620			561			561			7,470
Total Utilities		13,915			10,574			10,861			9,708			9,033			8,052			114,812
63505 Marketing and Advertising		185			263			275			436			202			208			6,040
63510 Printed Materials		638			351			346			66			360			677			4,506
63515 Special Events		131			585			395			743			553			1,473			5,077
63520 Yellow Pages		375			375			375			375			(1,743	)		2,413			5,412
63525 Newspaper and Magazine		96			200			—			64			314			615			2,193
63530 Advertising		—			—			—			63			32			27			302
64005 Referral Fees - Residents		925			2,030			—			—			—			—			5,589
Total Marketing and Advertising		2,349			3,803			1,390			1,747			(282	)		5,412			29,118
60510 Delivery		—			—			—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			—			—			—
65005 Gas		—			132			145			156			50			197			1,102
65010 Auto Service And Repair		506			609			—			—			—			—			1,452
65015 Other Automobile		20			—			46			—			—			4			196
65505 Travel & Lodging		178			0			(178	)		175			196			2			1,782
66005 Mileage		99			—			—			356			101			130			895
66505 Meals & Entertainment		215			382			230			596			140			458			2,669
67005 Licence and Fingerprints		253			763			68			404			314			63			4,869
68005 Dues and Subscriptions		76			111			211			12			12			211			1,485
68505 Seminars and Training		345			—			982			223			—			257			3,665
69005 Employee Recruiting		—			—			—			—			1,402			(733	)		1,052
69505 Other		311			155			1,050			1,624			83			181			4,497
69605 Discounts Lost		16			5			—			—			—			—			196
69610 Discounts Taken		(16	)		(5	)		—			—			—			—			(370	)
69525 Sales & Use Tax Due		—			—			—			—			—			—			—
Total Misc. Expenses		2,002			2,151			2,553			3,544			2,298			767			23,492
Total Operating Expense		92,843			99,698			90,976			81,016			81,054			84,527			1,033,249
Gross Margin		31,090			32,579			38,182			50,345			42,215			37,827			455,996
Gross Margin Percent		25	%		25	%		30	%		38	%		34	%		31	%		31	%
69705 Casualty Loss		—			—			—			—			—			—			—
69605 Bad Debt Expense		(53	)		(29	)		—			54			(53	)		—			(4,657	)
70005 Corporate Allocation		—			—			—			—			—			—			—
72305 Property Taxes		7,502			4,295			4,295			4,295			4,295			4,621			51,546
72405 Insurance-Liability & Hazard		1,766			1,970			1,868			2,003			1,868			1,868			20,187
Total Other Fees		9,215			6,235			6,162			6,351			6,109			6,488			67,076
72505 Accounting		549			549			549			1,049			3,249			2,984			11,735
73005 Legal		451			643			389			483			378			548			6,484
73510 Donations & Contributions		—			—			—			—			—			—			—
74005 Consulting Fees		—			—			750			(250	)		—			—			657
74015 Professional Fees - Other		28			—			—			—			—			—			28
75005 Property Management Fees		6,197			6,614			6,458			6,568			6,163			6,121			74,466
75105 Partnership Admin Fees		—			—			—			—			—			—			(0	)
75510 Other Penalties/Fin. Fee		—			—			—			—			55			—			55
75515 Licenses & Fees Legal		—			—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—			—
75520 Franchise Tax Filling Fee		—			—			—			—			—			—			—
75525 Collection Fees		—			—			—			—			—			—			—
Total Professional Fees		7,225			7,806			8,146			7,850			9,845			9,654			93,425
EBITDAR		14,650			18,538			23,874			36,143			26,261			21,684			295,495
EBITDAR Percent		12	%		14	%		18	%		28	%		21	%		18	%		20	%
77005 Operating Lease		—			—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—			—
Total Leases		—			—			—			—			—			—			—
80005 Interest Income		(227	)		(227	)		(266	)		(218	)		(258	)		(274	)		(2,128	)
80505 Other Non-Operating Income		—			—			—			—			—			—			—
87010 Extraordinary Items -Net Tax		—			—			—			—			—			—			18,529
Total Non-Operating Income/Expense		(227	)		(227	)		(266	)		(218	)		(258	)		(274	)		16,400
83005 Interest Expense		21,040			21,030			21,020			21,010			21,000			20,990			260,646
83025 Int Exp MIP		1,352			2,364			1,352			1,858			1,858			1,858			16,049
Total Interest Expense		22,391			23,394			22,372			22,868			22,858			22,848			276,695
EBTDA		(7,514	)		(4,629	)		1,768			13,493			3,661			(889	)		2,400
EBTDA Percent		-6	%		-3	%		1	%		10	%		3	%		-1	%		0	%
77505 Depreciation		4,957			5,018			5,043			5,230			5,279			5,298			67,877
78005 Amortization		206			206			229			219			219			219			20,556
78015 Amortization - Start Up		—			—			—			—			—			—			—
Total Depreciation & Amortization		5,163			5,223			5,272			5,449			5,497			5,516			88,433
Net Income (Loss)		(12,676	)		(9,852	)		(3,504	)		8,044			(1,837	)		(6,406	)		(86,033	)

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2000
	Version	AA
	Community	R.I. Burlingame
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN			JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
40005 Revenue-Rental		110,351			103,032			104,987			102,066			107,069			100,634			101,197			91,852			90,798			90,919			113,624			100,607			1,217,135
40010 revenue-Rent Refunds/Proration		—			—			—			—			—			(1,187	)		—			(1,058	)		(3,674	)		—			—			(128	)		(6,047	)
Total Rental Revenue		110,351			103,032			104,987			102,066			107,069			99,447			101,197			90,793			87,124			90,919			113,624			100,479			1,211,089
40110 Revenue-AL Level 1		3,775			4,029			5,372			5,203			5,360			5,743			4,668			4,300			3,375			3,707			3,775			3,967			53,283
40115 Revenue-AL Level 2		4,625			2,456			2,857			3,450			4,567			3,812			5,325			5,127			4,061			4,025			4,025			5,525			49,874
40120 Revenue-AL Level 3		2,700			2,925			4,512			2,325			1,033			1,550			1,550			775			1,323			3,100			1,550			2,932			26,276
40125 Revenue-AL Level 4		2,925			2,873			3,040			2,525			2,925			2,925			2,925			1,950			1,950			1,950			1,950			1,950			28,913
40130 Revenue-AL Level 5		1,175			4,214			4,725			3,525			3,760			3,582			3,525			1,175			1,175			1,175			1,175			2,350			31,556
40135 Revenue-AL Level 6		—			—			—			1,117			309			—			—			—			—			—			—			—			1,426
40140 Revenue-AL Level 7		—			—			—			—			—			—			400			—			—			—			—			200			600
40170 Revenue-Alzh Lev 1		—			—			—			—			—			—			—			—			—			—			—			—			—
Total AL Services Revenue		15,200			16,497			20,524			18,145			17,955			17,612			17,418			13,327			11,884			13,957			12,475			16,933			191,927
40515 Revenue-Other		325			945			702			701			676			644			557			662			730			513			—			192			6,647
40525 Revenue-Processing/App Fees		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Other Revenue		325			945			702			701			676			644			557			662			730			513			—			192			6,647
40575 Rev-Process Fee Concessions		—			—			—			—			—			—			—			—			—			—			—			—			—
40015 Rev-Rent Concessions		—			(560	)		(4,550	)		(479	)		—			—			(25	)		—			—			—			—			—			(5,614	)
40215 Rev-A/L Concessions		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Concessions		—			(560	)		(4,550	)		(479	)		—			—			(25	)		—			—			—			—			—			(5,614	)
Total Revenue		125,876			119,915			121,662			120,433			125,700			117,703			119,147			104,783			99,738			105,389			126,099			117,604			1,404,049
50005 Payroll Expense-Regular		34,915			32,457			40,602			39,269			34,502			29,532			31,241			33,067			34,188			39,072			39,037			35,768			423,651
50405 Payroll Expense-Overtime		6,152			3,337			1,933			2,734			3,121			4,060			5,160			4,146			2,254			1,766			2,284			3,586			40,533
50705 Payroll Expense-Doubletime		972			307			223			539			510			687			622			1,784			578			519			1,038			856			8,634
51005 Bonuses		1,652			800			714			731			984			1,221			1,107			1,025			1,772			50			2,350			1,700			14,106
51505 Vacation, Sick, Holiday		5,836			3,016			1,503			3,573			3,171			2,072			1,301			2,269			9,148			3,291			2,563			2,074			39,816
51805 Employee Recognition		—			—			—			—			—			—			—			—			—			—			—			—			—
52005 Payroll Taxes		5,912			3,958			4,546			4,453			3,752			3,160			3,598			2,158			2,909			3,487			4,037			3,784			45,754
52505 401K/401A		70			70			63			75			68			90			84			88			103			96			158			202			1,168
52805 Group Insurance		2,091			1,796			3,048			2,402			2,937			2,709			2,810			731			4,073			3,050			3,710			2,331			31,688
53005 Worker’s Comp Insurance		1,436			1,436			1,774			2,936			2,736			2,672			2,751			2,729			2,607			2,759			3,254			3,021			30,113
Total Payroll Expenses		59,037			47,176			54,406			56,712			51,783			46,201			48,675			47,996			57,632			54,090			58,432			53,323			635,463
53305 Outside Service-Medical		—			—			534			(222	)		—			—			—			—			—			—			—			—			312
53506 Temporary Services		—			703			843			(250	)		1,474			3,763			3,763			—			—			—			—			—			10,294
53510 Temporary Services-AL		—			—			—			—			—			—			—			—			—			—			—			—			—
54005 Payroll Service		—			366			187			94			94			93			88			79			86			94			94			86			1,362
55005 Outside Service Other		—			14			781			(528	)		—			—			—			122			—			—			—			33			422
Total Purchase Services		—			1,084			2,344			(906	)		1,568			3,855			3,851			201			86			94			94			119			12,391
Total Payroll Related		59,037			48,260			56,751			55,806			53,351			50,057			52,526			48,197			57,718			54,184			58,526			53,442			647,854
Total Payroll Related % Total Revenue		47	%		40	%		47	%		46	%		42	%		43	%		44	%		46	%		58	%		51	%		46	%		45	%		46	%

[Table continued from previous page]

	JAN			FEB		MAR		APR		MAY			JUN		JUL		AUG			SEP		OCT		NOV			DEC			DEC YTD
56505 Food		12,938			4,546		5,577		8,116		8,121			7,100		7,336		8,045			6,862		6,164		7,152			6,777			88,734
57005 Housekeeping		—			1,995		1,644		771		546			528		546		1,251			494		297		1,669			662			10,401
57505 Kitchen Supplies		1,202			238		140		1,181		536			519		536		733			626		288		787			617			7,403
58005 Assisted Living Supplies		—			667		410		314		214			191		83		135			82		150		274			244			2,763
59005 Laundry & Linen/Uniforms		—			891		398		278		118			171		157		823			246		314		270			276			3,942
59010 Laun/Lin/Unif Kitchen		—			—		—		—		—			—		—		—			—		—		—			—			—
59015 Luand/Lin/Unif Housekeeping		—			—		—		—		—			—		—		—			—		—		—			—			—
59505 Activities-Asst Living		—			751		741		377		79			1,672		1,395		(156	)		161		300		663			858			6,841
59510 Banquet Expense		(279	)		300		300		—		5,436			—		—		300			300		300		300			(818	)		6,139
59555 NMS-Foodservices		—			—		—		14,037		(4,589	)		5,664		2,880		—			—		—		5,727			—			23,719
59560 NMS-Housekeeping		—			—		—		2,043		3,917			1,371		1,748		—			—		—		(1,017	)		—			8,062
Total Variable Expense		13,861			9,389		9,210		27,118		14,379			17,217		14,680		11,130			8,770		7,812		15,823			8,615			158,003
60005 Office Supplies		903			3,269		1,310		725		825			430		759		632			603		588		1,724			1,677			13,444
61005 Repairs and Maint-Building		—			—		—		—		—			—		—		—			—		—		—			—			—
61010 Repairs-Phone System		—			—		—		—		—			—		—		—			—		—		—			—			—
61015 Repairs-Electrical		—			797		250		399		261			1,058		350		529			—		660		283			—			4,585
61020 Repairs-Plumbing		—			—		2,207		983		964			338		1,407		—			—		253		—			140			6,292
61025 Repairs-Fire Systems		—			87		—		1,275		1,016			—		—		—			—		—		—			—			2,378
61030 Repairs-HVAC		—			4,076		138		—		675			—		797		—			—		—		154			2,774			8,614
61035 Repairs-Gen. Supplies		380			854		1,225		144		680			264		235		909			597		449		910			360			7,007
61040 Repairs-Equipment		—			—		1,358		418		—			326		235		1,105			344		388		(388	)		885			4,672
61045 Repairs-Other Interior		377			667		670		1,241		679			254		35		473			118		—		401			—			4,914
61055 Repairs-Other Exterior		—			—		221		—		—			—		—		—			—		—		25			—			246
61100 Loss on Early Retirement Asset		—			—		—		—		—			—		—		—			—		—		—			—			—
Total Repair & Maintenance		756			6,481		6,069		4,459		4,275			2,240		3,059		3,016			1,059		1,749		1,385			4,159			38,707
61505 Contracts-Elevator		361			110		831		—		721			361		361		361			361		361		361			361			4,546
61510 Contracts-Floor Maint		156			156		312		254		—			156		—		264			—		—		—			—			1,297
61515 Contracts-Alarm/Fire		182			—		—		69		(44	)		221		225		—			—		69		69			958			1,749
61520 Contracts-HVAC		—			—		235		—		—			—		388		235			—		—		388			—			1,247
61525 Contracts-Pest Control		—			126		151		176		176			176		176		176			176		176		—			151			1,658
61535 Contracts-Other		135			278		176		473		45			64		45		—			45		356		—			45			1,663
Total Service Contracts		833			670		1,704		971		898			977		1,195		1,036			581		962		818			1,514			12,159
62005 Land Maintenance		300			565		300		300		300			300		300		300			300		300		300			300			3,865
Total Land Maintenance		300			565		300		300		300			300		300		300			300		300		300			300			3,865
62505 Rental/Lease-Cable		5			370		370		365		730			365		365		365			365		365		365			365			4,393
62510 Rental/Lease-Security		—			272		—		748		408			204		340		204			204		340		204			—			2,924
62525 Rental/Lease-Furniture		—			—		—		—		—			—		—		—			—		—		—			—			—
62535 Rental/Lease-Equipment		219			213		185		286		416			277		275		364			385		274		362			396			3,652
62540 Rental/Lease-Auto		—			—		—		—		—			—		—		—			—		—		—			—			—
62555 Rental/Lease-Other		—			842		613		404		324			908		884		487			487		313		443			642			6,344
Total Rental and Leases		224			1,696		1,167		1,803		1,878			1,754		1,864		1,419			1,440		1,292		1,373			1,403			17,313
63010 Utilities-Electricity		2,666			2,362		2,525		2,525		2,525			2,525		2,525		3,117			6,863		3,503		3,513			1,552			36,200
63015 Utilities-Water		2,104			1,816		1,561		1,739		2,159			1,865		2,304		2,064			2,015		2,071		2,365			2,210			24,273
63020 Utilities-Gas		2,112			1,406		1,593		920		(1,358	)		887		875		719			1,170		828		1,689			3,145			13,987
63025 Utilities-Telephone		586			259		599		705		371			516		373		441			1,004		931		850			806			7,440

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2000
	Version	AA
	Community	R.I. BURLINGAME
	Department	Total Departments
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable
	JAN			FEB			MAR			APR			MAY			JUN			JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
63030 Utilities — Trash		43			1,115			627			658			561			665			561			561			561			561			567			561			7,039
Total Utilities		7,510			6,958			6,905			6,547			4,257			6,458			6,638			6,901			11,614			7,894			8,984			8,274			88,939
63505 Marketing and Advertising		1,303			2,260			1,169			1,555			6,584			3,334			2,383			4,876			1,718			1,520			677			2,201			29,581
63510 Printed Materials		200			355			3,922			328			246			11			122			—			85			303			169			28			5,769
63515 Special Events		377			1,166			413			441			254			262			209			149			133			95			89			269			3,857
63520 Yellow Pages		—			—			—			—			—			—			—			—			3,571			—			—			—			3,571
63525 Newspaper and Magazine		—			—			—			—			—			—			—			—			449			242			32			226			948
63530 Advertising		—			—			—			—			—			—			—			—			—			—			—			—			—
64005 Referral Fees — Residents		—			—			—			778			—			—			—			—			—			1,861			—			—			2,639
Total Marketing and Advertising		1,880			3,781			5,503			3,102			7,084			3,606			2,715			5,025			5,956			4,021			967			2,724			46,365
60510 Delivery		—			—			—			—			—			—			—			—			—			—			—			—			—
64505 Computers/Peripherals/ Software		—			—			—			—			—			—			—			—			—			—			—			—			—
65005 Gas		39			41			78			155			100			226			100			156			121			591			143			100			1,852
65010 Auto Service And Repair		—			1,247			—			—			234			—			—			615			—			—			—			—			2,096
65015 Other Automobile		—			—			—			—			—			—			—			—			—			—			—			—			—
65505 Travel & Lodging		117			—			395			605			—			—			—			193			15			292			454			—			2,070
66005 Mileage		(38	)		467			—			122			76			127			—			388			1			—			90			—			1,233
66505 Meals & Entertainment		—			121			—			28			66			—			47			—			40			27			115			90			533
67005 License and Fingerprints		121			1,548			63			428			75			405			605			197			787			95			258			87			4,667
68005 Dues and Subscriptions		175			25			713			34			110			473			427			188			—			222			—			—			2,367
68505 Seminars and Training		35			426			73			—			—			84			—			206			—			455			30			—			1,308
69005 Employee Recruiting		—			361			—			—			—			—			—			—			—			—			—			—			361
69505 Other		—			—			80			21			44			62			477			78			6			36			215			661			1,682
69605 Discounts Lost		—			—			—			—			—			—			—			—			—			—			—			—			—
69610 Discounts Taken		(16	)		(16	)		(20	)		(6	)		(3	)		—			(17	)		(3	)		(6	)		(11	)		(13	)		(3	)		(114	)
69525 Sales & Use Tax Due		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Misc. Expenses		432			4,220			1,381			1,387			703			1,378			1,638			2,018			964			1,707			1,292			935			18,055
Total Operating Expense		85,735			85,288			90,301			102,217			87,949			84,416			85,374			79,673			89,007			80,510			91,193			83,042			1,044,705
Gross Margin		40,141			34,626			31,361			18,216			37,751			33,288			33,773			25,109			10,731			24,879			34,906			34,562			359,345
Gross Margin Percent		32	%		29	%		26	%		15	%		30	%		28	%		28	%		24	%		11	%		24	%		28	%		29	%		26	%
69705 Casualty Loss		—			—			—			—			—			—			—			—			—			—			—			—			—
69805 Bad Debt Expense		(374	)		(775	)		(1,775	)		115			(485	)		207			1,072			—			—			—			—			445			(1,570	)
70005 Corporate Allocation		—			—			—			—			—			—			—			—			—			—			—			—			—
72305 Property Taxes		4,644			5,118			4,584			4,099			(78	)		3,674			4,099			4,099			4,082			4,257			7,821			7,821			54,221
72405 Insurance-Liability & Hazard		855			855			852			1,099			1,099			1,107			1,107			1,107			1,107			1,107			1,107			1,107			12,507
72410 Mortgage Insurance Premium		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Other Fees		5,125			5,198			3,661			5,313			536			4,987			6,278			5,206			5,189			5,364			8,928			9,373			65,158

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OLAPTable
	JAN			FEB			MAR			APR			MAY			JUN			JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
72505 Accounting		417			417			417			417			417			346			346			346			472			346			346			1,664			5,949
73005 Legal		1,577			1,624			864			1,775			1,514			1,441			2,402			5,670			1,960			2,719			1,640			819			24,004
73510 Donations & Contributions		—			—			—			—			—			—			—			—			—			—			—			—			—
74005 Consulting Fees		—			278			—			—			—			—			—			—			—			—			—			—			278
74015 Professional Fees — Other		—			—			—			—			—			—			—			—			—			—			—			—			—
75005 Property Management Fees		6,099			5,996			6,278			6,022			6,285			5,885			5,957			5,239			4,987			5,168			6,621			5,665			70,202
75105 Partnership Admin Fees		—			—			—			—			—			—			—			—			—			—			—			—			—
75510 Other Penalties/Fin. Fee		—			—			—			—			—			—			—			—			—			—			—			—			—
75515 Licenses & Fees Legal		—			—			—			—			—			—			—			—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			250			—			—			—			—			—			—			250
75520 Franchise Tax Filing Fee		—			—			—			—			—			—			—			—			—			—			—			—			—
75525 Collection Fees		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Professional Fees		8,092			8,314			7,559			8,213			8,215			7,922			8,705			11,255			7,419			8,233			8,608			8,148			100,683
EBITDAR		26,924			21,114			20,141			4,690			29,000			20,378			18,790			8,649			(1,877	)		11,282			11,370			17,041			193,503
EBITDAR Percent		21%			18%			17%			4%			23%			17%			16%			8%			-2%			11%			14%			14%			14%
77005 Operating Lease		—			—			—			—			—			—			—			—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Leases		—			—			—			—			—			—			—			—			—			—			—			—			—
80005 Interest Income		—			—			—			—			—			—			(71	)		—			(17	)		(7	)		(9	)		(11	)		(114	)
80505 Other Non-Operating Income		—			—			—			—			—			—			—			—			—			—			—			—			—
87010 Extraordinary Items		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Non-Operating Income/Expense		—			—			—			—			—			—			(71	)		—			(17	)		(7	)		(9	)		(11	)		(114	)
83005 Interest Expense		24,343			24,321			24,299			24,171			24,211			24,189			12,356			24,143			24,119			24,096			24,072			24,049			278,368
83025 Int Exp MIP		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Interest Expense		24,343			24,321			24,299			24,171			24,211			24,189			12,356			24,143			24,119			24,096			24,072			24,049			278,368
EBTDA		2,581			(3,207	)		(4,157	)		(19,481	)		4,788			(3,810	)		6,505			(15,494	)		(25,979	)		(12,807	)		(6,693	)		(6,997	)		(84,751	)
EBTDA Percent		2%			-3%			-3%			-16%			4%			-3%			5%			-15%			-26%			-12%			-5%			-6%			-6%
77505 Depreciation		7,959			8,105			8,172			8,218			8,218			8,428			8,318			8,338			8,338			8,489			8,489			11,062			102,132
78005 Amortization		6,419			6,176			6,284			6,069			6,176			6,176			6,176			6,176			6,176			6,176			6,176			6,176			74,357
78015 Amortization — Start Up		—			—			—			—			—			—			—			—			—			—			—			—			—
Total Depreciation & Amortization		14,378			14,281			14,456			14,287			14,394			14,604			14,494			14,514			14,514			14,665			14,665			17,238			176,489
Net Income (Loss)		(11,797	)		(17,488	)		(18,614	)		(33,767	)		(9,606	)		(18,414	)		(7,989	)		(30,008	)		(40,493	)		(27,472	)		(21,358	)		(24,235	)		(261,240	)

ADDENDA

ADDENDUM F: Comparable Land Sale Data Sheets

Land Comparable 1

	NWC El Camino and Chadbourne
Property Subtype: Vacant building site
	Millbrae, CA 94030 County: San Mateo
Zoning: HDR	Parcels and/or Legal:
	024-333-10

POTENTIAL LAND USES

Potential Land Uses:
Apartment:	Yes		Utilities Available:
			All to site
		Proposed Use
		Hold for investment
			Sold As Land Value: Yes

TRANSACTION INFORMATION

Sale Status:	Recorded Sale
Interest:	Fee Simple
Sale Date:	4/2/2001

Sale Price

Reported:	4,000,000
Cash Equivalent:	4,000,000
	0
Adjusted:	4,000,000
$ Per Sq Ft:	$54.02

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		74,052.00			1.70
Net Usable Area:		74,052.00			1.70
Percent Usable:		100.00	%
Ground Leased:		No

VERIFICATION

Recording Reference:     043589
Grantor:       Mandalay Holdings

Grantee:      Millbrae of Chadbourne Associates

Verification Contact:
     Public records

REMARKS

Sale of a site in Millbrae. Site is zoned for high density residential. Was a parking lot at time of sale. Sale Price was reportedly negotiated in 1999.

Land Comparable 2

Property Name: Multi Family Apartment Site	800 E 3rd Ave
	San Mateo, CA 94401
749-A/1	County: San Mateo
Zoning: CLC2, San Mateo	Parcels and/or Legal:
	033-162-160

POTENTIAL LAND USES

Potential Land Uses:
Apartment:	Yes	Industrial:	No		Utilities Available:
Free Standing Retail:	No	Office:	No
Golf:	No	Shopping Center:	No
				Proposed Use
Health Care:	No	Single Family:	No
				part of assemblage to build 20
Hospitality:	No	Special Purpose:	No

TRANSACTION INFORMATION

Sale Status:	Recorded Sale
Financing:	Cash To Seller
Sale Date:	1/2001

Sale Price

Reported:	4,625,000
Cash Equivalent:	4,625,000
	0
Adjusted:	4,625,000
$ Per Sq Ft:	$119.30

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		38,768.00			0.89
Net Usable Area:		38,768.00			0.89
Percent Usable:		100.00	%
Ground Leased:		No

VERIFICATION

Recording Reference:      005022
Grantor:      800 East 3rd Avenue Associates (LLC)

Grantee:      Campbell Development Property Assoc (LLC)

Verification Contact:
      Public records

REMARKS

Land Comparable 3

Property Name: Apartment Project Site (Por)	728 E 3rd Ave
749-A/1	San Mateo, CA 94401
	County: San Mateo
Zoning: C10C21, San Mateo	Parcels and/or Legal:
	033-164-020,040,060,070; ; 03

POTENTIAL LAND USES

Potential Land Uses:
Apartment:	Yes	Industrial:	No		Utilities Available:
Free Standing Retail:	No	Office:	No
Golf:	No	Shopping Center:	No
				Proposed Use
Health Care:	No	Single Family:	No
				Use Multi Family — Units
Hospitality:	No	Special Purpose:	No

TRANSACTION INFORMATION

Sale Status:	Recorded Sale
Financing:	Cash To Seller
Sale Date:	12/2000

Sale Price

Reported:	5,000,000
Cash Equivalent:	5,000,000
	0
Adjusted:	5,000,000
$ Per SqFt:	$72.03

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		69,417.00			1.59
Net Usable Area:		69,417.00			1.59
Percent Usable:		100.00	%
Ground Leased:		No

VERIFICATION

Recording Reference:      162039
Grantor:      Kera Properties (G.P.)

Grantee:      Cupertino City Land Center (LP)

Verification Contact:
     Public Records

REMARKS

Land Comparable 4

		3446 Rolison Rd
		Redwood City, CA 94063
770-F/6		County: San Mateo
Zoning:	R3, Redwood City	Parcels and/or Legal:
		055-041-210 thru 270

POTENTIAL LAND USES

Potential Land Uses:
Apartment:	Yes	Industrial:	No		Utilities Available:
Free Standing Retail:	No	Office:	No
Golf:	No	Shopping Center:	No
				Proposed Use
Health Care:	No	Single Family:	No
				36 Townhome construction
Hospitality:	No	Special Purpose:	No

TRANSACTION INFORMATION

Sale Status:	Recorded Sale
Financing:	Cash To Seller
Sale Date:	5/2000

Sale Price

Reported:	2,284,500
Cash Equivalent:	2,284,500
	0
Adjusted:	2,284,500
$ Per SqFt:	$32.64

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		70,001.00			1.61
Net Usable Area:		70,001.00			1.61
Percent Usable:		100.00	%
Ground Leased:		No

VERIFICATION

Recording Reference:     063539
Grantor:     Redevelopment Agency Redwood City

Grantee:     Peninsula Habitat for Humanity Inc

Verification Contact:
     Public Records

REMARKS

Buyer is allowed to construct development under the following density guidelines: Three units are allowed for the first 10,000 SF of land area. The next 60,000 SF of land area allow 2 units per 10,000 SF, or 30 additional units. In addition, buyer was granted a 25% density bonus for low and moderate income housing development. Buyer reported the sale price shown represents the sum of costs incurred by the seller in the redevelopment process, including acquisition, remediation, and relocation.

ADDENDA

ADDENDUM G: Comparable Improved Sale Data Sheets

Improved Comparable 1

Property Name: Carmel Village

Property Type: Senior Housing

Property Subtype: Assisted Living 17077 San Mateo Street


Fountain Valley, CA 92708
County: Orange

IMPROVEMENTS

Class:	B
Est. Gross Building Area:	117,666
Est. Net Building Area:	117,666
Year Built:	1986
Quality:	Good
Condition:	Average
Buildings:	3
Stories:	3
Fire Sprinklers:	Yes

TRANSACTION INFO

Sale Status:	Recorded Sale
Interest:	Fee Simple
Sale Date:	01/15/2003

Sale Price

Reported Price:		$	23,125,000
Cash Equivalent:		$	23,125,000
Adj. Sale Price:		$	23,125,000
	$ Per SqFt:	$	196.53
	$ Per Unit:	$	122,354
	Cap Rate:		11.14	%
	EGIM:		4.24

OCCUPANCY

Occupancy at Sale:	97.00	%
Seniors

FINANCIAL ANALYSIS

	Amount		Percent
Potential Gross Income:	$	5,450,000
Effective Gross	$	5,450,000
Operating Expenses:	$	2,875,000		0.53	%
Net Operating Income:	$	2,575,000

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		139,828			3.21
Net Usable Area:		139,828			3.21
Percent Usable:		100	%
Ground Leased:		No

SENIOR HOUSING INFO

Number of AL Units:	94
Number of IL Units:	95
Number of Cottage Units:	0
Number of ALZ Units:	0
Total Number of Units:	189
Average Unit Size:	623
No. of Licensed Beds:	200
Subsidized:	No

VERIFICATION

Grantor: Carmel Village Retirement Residence, Inc.
Grantee: 625 Management Company LLC
Verification Contact:
   Michelle Butts, 714.962.6667

REMARKS

This facility is licensed for 200 beds, but is operated at 189 units. Approximately one-half of the units are for independent living with the other half for assisted living. Assisted living residents pay from $350 to $1,400 per month in additional care fees. It was reported that over 70 percent of the residents are paying first level charges ($350 per month). It was reported that several of the buyer’s parties were stockholders of the selling entity, however, this was reported to be an arm’s length sale.

Improved Comparable 2

Property Name: Emerald Hills

Property Type: Senior Housing

Property Subtype: Assisted Living 11550 Education Street


Auburn, CA
County: Placer

IMPROVEMENTS

Class:	B
Est. Gross Building Area:	61,677
Est. Net Building Area:	61,677
Exterior Walls:	Wood siding
Year Built:	1999
Quality:	Average
Condition:	Average
Buildings:	1
Stories:	3

TRANSACTION INFO

Sale Status:	Recorded Sale
Interest:	Fee Simple
Financing:	Cash To Seller
Sale Date:	09/06/2002

Sale Price

Reported Price:		$	8,800,000
Cash Equivalent:		$	8,800,000
Adj. Sale Price:		$	8,800,000
	$Per SqFt:	$	142.68
	$ Per Unit:	$	98,876
	$Per Eff Bed:	$	94,624
	Cap Rate:		11.00	%
	EGIM:		4.00

OCCUPANCY

Occupancy at Sale:	100.00	%
Seniors

FINANCIAL ANALYSIS

	Amount		Percent
Potential Gross Income:	$	2,475,000
Effective Gross	$	2,475,000
Operating Expenses:	$	1,490,000		0.60	%
Net Operating Income:	$	985,000

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		108,900			2.50
Net Usable Area:		108,900			2.50
Percent Usable:		100	%
Ground Leased:		No

SENIOR HOUSING INFO

Number of AL Units:		53
Number of IL Units:		20
Number of Cottage Units:		0
Number of ALZ Units:		16
Total Number of Units:		89
Average Unit Size:		693
No. of Licensed Beds:		97
No. of Effective Beds:		93
Subsidized:		No
Amenities:
	Common areas, dining room

VERIFICATION

Grantor: ALCO IV, LLC
Grantee: Healthcare Property Investors, Inc.
Verification Contact:
   Seller

REMARKS

This property is located 60 miles east of Sacramento in Auburn. Facility offers studio alcove units (346 — 568 SF), one-bedroom units (483 SF) and two-bedroom units (728 SF). This was a sale lease-back transaction where the buyer will lease the facility to Emeritus for 15 years with a 10-year option. Emeritus has managed the facility since it was completed. The lease rate is based on 11.50 percent of the purchase price with 3.0 percent annual escalations. Expense amount shown includes a 5.0 percent management fee and reserves allowance.

Improved Comparable 3

Property Name: Mapleridge of Laguna

Property Type: Senior Housing

Property Subtype: Assisted Living 6727 Laguna Park Drive


Elk Grove, CA
County: Sacramento

IMPROVEMENTS

Class:	B
Est. Gross Building Area:	50,476
Est. Net Building Area:	50,476
Exterior Walls:	Wood siding
Year Built:	1999
Quality:	Good
Condition:	Good
Buildings:	1
Stories:	2
Fire Sprinklers:	Yes

TRANSACTION INFO

Sale Status:	Recorded Sale
Interest:	Fee Simple
Financing:	Cash To Seller
Sale Date:	01/24/2002

Sale Price

Reported Price:		$	8,055,600
Cash Equivalent:		$	8,055,600
Adj. Sale Price:		$	8,055,600
	$ Per SqFt:	$	159.59
	$ Per Unit:	$	95,900
	Cap Rate:		10.55	%
	EGIM:		3.16

OCCUPANCY

Occupancy at Sale:	76.00	%
Seniors

FINANCIAL ANALYSIS

	Amount		Percent
Potential Gross Income:	$	2,550,000
Effective Gross	$	2,550,000
Operating Expenses:	$	1,700,000		0.67	%
Net Operating Income:	$	850,000

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		186,437			4.28
Net Usable Area:		186,437			4.28
Percent Usable:		100	%
Ground Leased:		No

SENIOR HOUSING INFO

Number of AL Units:	84
Number of IL Units:	0
Number of Cottage Units:	0
Number of ALZ Units:	0
Total Number of Units:	84
Average Unit Size:	601
Subsidized:	No

VERIFICATION

Grantor: Marriott Senior Living Services
Grantee: CNL Retirement Properties
Verification Contact:
    Buyer, CNL

REMARKS

This is a newer assisted living facility located in the south part of the Sacramento MSA in Elk Grove. Property was part of a five-facility joint venture transaction between CNL and Marriott. Marriott was to continue operating the property. Facility was in lease-up at time of sale. Income and expense data based on stabilized operating conditions.

Improved Comparable 4

Property Name: Woodmark at Summit

Property Type: Senior Housing

Property Subtype: Assisted Living 5165 Summit Ridge Court


Reno NV 89523
County: Washoe

Parcels and/or Legal:

66563

IMPROVEMENTS

Class:	B
Est. Gross Building Area:	77,445
Est. Net Building Area:	77,445
Exterior Walls:	Stucco
Year Built:	1998
Quality:	Good
Condition:	Good
Buildings:	1
Stories:	3
Fire Sprinklers:	Yes

TRANSACTION INFO

Sale Status:	Recorded Sale
Interest:	Fee Simple
Financing:	Cash To Seller
Sale Date:	02/21/2002

Sale Price

Reported Price:		$	9,500,000
Cash Equivalent:		$	8,500,000
Capital Costs:		$	1,000,000
Adj. Sale Price:		$	9,500,000
	$ Per SqFt:	$	122.67
	$ Per Unit:	$	103,261
	Cap Rate		12.63	%
	EGIM:		3.00

OCCUPANCY

Occupancy at Sale:	60.00	%
Seniors

FINANCIAL ANALYSIS

	Amount		Percent
Potential Gross Income:	$	3,300,000
Effective Gross	$	3,300,000
Operating Expenses:	$	2,100,000		0.64	%
Net Operating Income:	$	1,200,000

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		182,299			4.19
Net Usable Area:		182,299			4.19
Percent Usable:		100	%
Ground Leased:		No

SENIOR HOUSING INFO

Number of AL Units:	92
Number of IL Units:	0
Number of Cottage Units:	0
Number of ALZ Units:	0
Total Number of Units:	92
Average Unit Size:	842
Subsidized:	No

VERIFICATION

Recording Reference: 11662-0240
Grantor: Woodmark At Summit Ridge LLC
Grantee: Emeritus
Verification Contact:
   Buyer

REMARKS

Sale is an assisted living facility located in the northwest part of Reno, Nevada. The improvements are of good quality construction. Original developer was unable to attain stabilized operation. Buyer is an experienced operator.

Improved Comparable 5

Property Name: Manor at Lakeside

Property Type: Senior Housing

Property Subtype: Independent Living 855 Brinkby Avenue


Reno NV 89509
County: Washoe

Parcels and/or Legal:

019-380-09

IMPROVEMENTS

Est. Gross Building Area:	56,411
Est. Net Building Area:	56,411
Exterior Walls:	Wood siding
Year Built:	1981
Quality:	Average
Condition:	Average
Buildings:	1
Stories:	3
Fire Sprinklers:	Yes

TRANSACTION INFO

Sale Status:	Recorded Sale
Interest:	Fee Simple
Financing:	Cash To Seller
Sale Date:	08/15/2001

Sale Price

Reported Price:		$	3,200,000
Cash Equivalent:		$	3,200,000
Adj. Sale Price:		$	3,200,000
	$ Per SqFt:	$	56.73
	$ Per Unit:	$	35,165
	$Per Eff Bed:	$	35,165
	Cap Rate:		11.56	%
	EGIM:		2.67

OCCUPANCY

Occupancy at Sale:	90.00	%
Seniors

FINANCIAL ANALYSIS

	Amount		Percent
Effective Gross	$	1,200,000
Operating Expenses:	$	830,000		0.69	%
Net Operating Income:	$	370,000

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		57,064			1.31
Net Usable Area:		57,064			1.31
Percent Usable:		100	%
Ground Leased:		No

SENIOR HOUSING INFO

Number of AL Units:	0
Number of IL Units:	91
Number of Cottage Units:	0
Number of ALZ Units:	0
Total Number of Units:	91
Average Unit Size:	620
No. of Effective Beds:	91
Subsidized:	No

VERIFICATION

Recording Reference: 2596536
Grantor: WMFMT Real Estate LP (Archon)
Grantee: Quilted Care Reno LLC
Verification Contact:
   Seller’s broker

REMARKS

Sale of a independent living facility located in Reno. Improvements are of average quality construction. Income and expense information based on buyer’s proforma.

Improved Comparable 6

Property Name: Atria Redding

Property Type: Senior Housing

Property Subtype: Assisted Living 101 Quartz Hill Road


Redding, CA 96003
County: Shasta

Parcels and/or Legal:

112-090-18-00

IMPROVEMENTS

Est. Gross Building Area:	44,328
Est. Net Building Area:	44,328
Year Built:	1997
Quality:	Poor
Condition:	Good
Stories:	2

TRANSACTION INFO

Sale Status:	Recorded Sale
Interest:	Fee Simple
Financing:	Cash To Seller
Sale Date:	07/01/2001

Sale Price

Reported Price:		$	5,000,000
Cash Equivalent:		$	5,000,000
Adj. Sale Price:		$	5,000,000
	$Per SqFt:	$	112.80
	$ Per Unit:	$	83,333
	Cap Rate:		12.50	%
	EGIM:		3.00

OCCUPANCY

Occupancy at Sale: 95.00 %

FINANCIAL ANALYSIS

	Amount		Percent
Potential Gross Income:	$	1,950,000
Effective Gross	$	1,950,000
Operating Expenses:	$	1,325,000		0.68	%
Net Operating Income:	$	625,000

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		133,294			3.06
Net Usable Area:		133,294			3.06
Percent Usable:		100	%

SENIOR HOUSING INFO

Number of AL Units:	60
Total Number of Units:	60
Average Unit Size:	739

VERIFICATION

Recording Reference: N/A
Grantor: Atria Communities
Grantee: AMI Senior Living

REMARKS

This is the sale of a smaller assisted living facility located in northern California in Redding. The improvements are of above average quality construction. There are a total of 60 living units, consisting of 36 studio units, 20 one-bedroom units and four two-bedroom units. The property was not actively marketed and was purchased by a local senior housing provider. The income and expense data based on actuals at time of sale. The seller was motivated to sell and the price paid is considered below actual market value.

ADDENDA

ADDENDUM H: Qualifications of the Appraisers

PROFESSIONAL QUALIFICATIONS

Mark E. Bryant
Managing Director, Senior Housing/Healthcare Industry Group

Mr. Bryant has been involved in the real estate appraisal industry since 1980. Was employed from 1980 to 1986 by Western Appraisals & Survey in Lewiston, Idaho.

Mr. Bryant joined Cushman & Wakefield, Inc. in 1986 in the Valuation Advisory Services Group in Portland, Oregon. Mr. Bryant was named an Associate Director in 1990, given Directorship in 1995 and was named a Managing Director in 2002.

Experience

Appraisal and consulting assignments have included vacant land, office buildings, shopping centers, industrial complexes, commercial properties, single- and multi-family residential properties, motels, senior housing, aviation properties, ad valorem mass appraisals, and other investment properties throughout the United States. Valuations have been made of proposed, partially completed, renovated and existing structures. Has been qualified as an expert witness in bankruptcy litigation in the State of Oregon.

From 1980 to 1985, Mr. Bryant was general real estate appraiser focusing on all property types, including residential, commercial, agriculture and special use properties throughout the country. Western Appraisal also conducted mass appraisals for various assessor offices and Mr. Bryant assisted in ad valorem valuation and board hearings for several county assessor offices.

From 1991 through 1998, Mr. Bryant’s primary focus was on the valuation and consultation on multi-family housing properties, with a special focus on affordable housing properties. He was a senior appraiser for the company’s Affordable Housing Group. Mr. Bryant has personally appraised and/or consulted on in excess of 200 affordable housing properties nationwide.

From 1998 to 2001, Mr. Bryant was a senior appraiser in the Senior Housing/Healthcare Industry Group and prepared appraisals, market surveys and feasibility studies on all facets of senior housing and healthcare properties for corporate and institutional clients. Mr. Bryant has personally appraised and consulted on in excess of 400 senior housing and healthcare facilities nationwide.

Mr. Bryant was named National Co-Director of the Senior Housing/Healthcare Industry Group in 2001. As National Co-Director, his responsibilities include coordination of the firm’s national Senior Housing/Healthcare Industry Group consisting of appraisers who specialize in the valuation of independent living retirement communities, assisted living facilities, continuing care retirement facilities, skilled, intermediate and subacute care nursing homes, hospitals and other healthcare oriented property types.

ADVISORY GROUP

PROFESSIONAL QUALIFICATIONS Mark E. Bryant

Mr. Bryant is also a commercial pilot and doubled as a corporate pilot during his employment in 1980 to 1986 with Western Appraisals and Surveys. Mr. Bryant has appraised numerous aviation properties, including general aviation and corporate hangars, air cargo facilities, terminals, etc. and continues to provide valuation and consultation services nationwide on aviation real estate.

Education

University of Idaho, Moscow, Idaho, Graduated 1981
Degree: Bachelor of Science, Geography

Appraisal Education

Required curriculum for Membership, Appraisal Institute. Has completed continuing education courses and seminars sponsored by the Appraisal Institute and other real estate factions on an annual basis to maintain state licensing requirements.

Memberships and Professional Affiliations

• Associated Member, Appraisal Institute

Licenses

• State of Oregon — Certified General Appraiser — license No. C000186

• State of Montana — Certified General Appraiser — License No. 281

• State of Washington — Certified General Appraiser — License No.

• State of Idaho — Certified General Appraiser — license No. E442OK

• State of Utah — Certified General Appraiser — License No. CG00043062

• State of California — Certified General Appraiser — License No. AG027192

ADVISORY GROUP

PROFESSIONAL QUALIFICATIONS

John M. Vissotzky
Managing Director, Valuation Services, Advisory Group.

Mr. Vissotzky entered the real estate business in 1979. Employed from 1979 to 1982 as a real estate appraiser by T. J. Meenach Company in Spokane, Washington. Owner of Vissotzky Appraisal Services, Spokane, Washington from 1982 to 1983. Employed from 1983 to 1986 as a real estate appraiser by Western Appraisals in Lewiston, Idaho.

Joined Cushman & Wakefield, Inc. in March 1986, as Senior Associate, Portland Oregon — Appraisal Division. In April 1989 Mr. Vissotzky was promoted to Manager, Portland Appraisal Division and elected an Assistant Vice President. In 1990 he was elected Vice President. Effective 1999 title was changed to Dkector and Mr. Vissotzky became a stockholder in Cushman & Wakefield, Inc. In 2000 he was elected Managing Director, Portland Valuation Advisory Services, now Valuation Services. Current responsibilities include management of the Portland office, and a professional staff of 12, with appraisal and consulting coverage throughout the states of Washington, Oregon, Idaho, Utah, Montana, Nebraska, Wyoming, North Dakota, South Dakota and Alaska.

Experience

Appraisal and consulting assignments have included vacant land, office buildings, shopping centers, industrial complexes, commercial properties, residential properties, gravel pits, scenic easements, condemnation and right of way, special use properties and investment properties throughout the Western United States. Valuations have been made of proposed, partially completed, renovated and existing structures. Qualified as an expert witness in condemnation matters in the States of Washington, Idaho and Oregon and testified in divorce litigation in the state of Washington and bankruptcy litigation in the State of Oregon.

Education

Washington State University, Pullman, Washington, Graduated 1979
Degree: Bachelor of Arts, Sociology / Business Administration

Appraisal Education

Successfully completed all courses and experience requirements to qualify for the MAI designation. Also, he has completed the requirements of the continuing education program of the Appraisal Institute.

Memberships, Licenses and Professional Affiliations

• Member, Appraisal Institute – MAI

PROFESSIONAL QUALIFICATIONS John M. Vissotzky, MAI    

Mr. Vissotzky is a duly Certified General Real Estate Appraiser in the following states:

Alaska, #168, expiring 06/30/05

Georgia, license number 261786

Idaho, license number CGA-162

Montana, license number 279RAG

Nebraska, license number CG230108R

Oregon, license number C000200

Utah, license number CG00043063

Washington, license number 1100382

Wyoming, license number 14284

Special Awards

Qualified for Attendance to Cushman & Wakefield, Inc. Achievement Conference 1987, 1988,1995,1999 and 2001.

Mr. Vissotzky was recipient of the 2002 Francis Corcoran Award offered by Cushman & Wakefield, Inc. signifying Valuation Advisory Services Manager of the Year.