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Major Operators

9 Months Ended

Sep. 30, 2011

8. Major Operators

We have three operators, based on properties subject to lease agreements and secured by mortgage loans that represent between approximately 10% and 20% of our total assets and three operators from each of which we derive over 10% of our rental revenue and interest income from mortgage loans.

In 2006, Extendicare Services, Inc. (or EHSI), one of our major operators, effected a reorganization whereby it completed a spin-off of Assisted Living Concepts, Inc. (or ALC). ALC is now a NYSE traded public company operating assisted living centers. The remaining EHSI assets and operations were converted into a Canadian REIT (Extendicare REIT) listed on the Toronto Stock Exchange (or TSX). Both Extendicare REIT and ALC continue to be parties to the leases with us.

Brookdale Senior Living Communities, Inc. (or Brookdale Communities) is a wholly owned subsidiary of a publicly traded company, Brookdale Senior Living, Inc. (or Brookdale).

The following table summarizes Extendicare REIT’s, ALC’s and Brookdale’s financial information as of and for the six months ended June 30, 2011 per the operators’ public filings (in thousands, unaudited). Our other operator is privately owned and thus no public financial information is available.

	Extendicare REIT(1)			ALC			Brookdale

Current assets	$	553,550		$	21,336		$	253,819
Non-current assets	1,416,574			446,639			4,151,945
Current liabilities	881,071			34,579			575,362
Non-current liabilities	993,005			134,921			2,761,773
Stockholders’ equity	96,048			298,475			1,068,629

Gross revenue	1,039,559			117,036			1,170,219
Operating expenses	914,600			96,477			1,129,356
Income (loss) from continuing operations	21,884			11,287			(46,264		)
Net income (loss)	21,884			11,287			(46,264		)

Cash provided by operations	113,159			26,228			157,352
Cash used in investing activities	(28,524		)	(3,866		)	(66,737		)
Cash provided by (used in) financing activities	23,745			(32,893		)	(132,316		)

(1) The numbers shown for Extendicare REIT are in Canadian dollars and are prepared in accordance with Canadian GAAP.

* The financial information contained in the foregoing table for Extendicare REIT, ALC and Brookdale is based on information we obtained from such companies’ available public filings and, therefore, we have not independently verified the accuracy of such information.

Extendicare REIT and ALC collectively lease 37 assisted living properties with a total of 1,427 units owned by us representing approximately 9.0%, or $56,033,000, of our total assets at September 30, 2011 and 13.3% of rental revenue and interest income from mortgage loans recognized as of September 30, 2011.

Brookdale Communities leases 35 assisted living properties with a total of 1,416 units owned by us representing approximately 9.0%, or $55,965,000, of our total assets at September 30, 2011 and 12.7% of rental revenue and interest income from mortgage loans recognized as of September 30, 2011.

Preferred Care, Inc. (or Preferred Care), through various wholly owned subsidiaries, operates 30 skilled nursing properties and two other senior housing properties that we own or on which we hold mortgages secured by first trust deeds. These properties consist of a total of 3,861 skilled nursing beds and 49 assisted living units. This represents approximately 9.3%, or $57,769,000, of our total assets at September 30, 2011 and 13.0% of rental revenue and interest income from mortgage loans recognized as of September 30, 2011. They also operate one skilled nursing property under a sub-lease with another lessee we have which is not included in the Preferred Care rental revenue and interest income from mortgage loans.

Our financial position and ability to make distributions may be adversely affected by financial difficulties experienced by Brookdale Communities, Extendicare REIT, ALC, Preferred Care, or any of our lessees and borrowers, including any bankruptcies, inability to emerge from bankruptcy, insolvency or general downturn in business of any such operator, or in the event any such operator does not renew and/or extend its relationship with us or our borrowers when it expires.