EXHIBIT 99.9

COMPLETE APPRAISAL OF
REAL PROPERTY

Valley View Lodge
1228 Rossmoor Parkway
Walnut Creek, Contra Costa County,
California 94595

IN A SELF-CONTAINED
APPRAISAL REPORT

As of 10/7/03

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 22, 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
	Valley View Lodge
	1228 Rossmoor Parkway
	Walnut Creek, Contra Costa County, California 94595
	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 22, 2003
Page 2

This Appraisal report 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 125-unit, 125-bed assisted living facility known as Valley View Lodge. The facility contains 97,818 ± square feet of gross floor area and is situated on a 4.55 acre site. The facility occupancy was 98 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 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 7, 2003 was:

SEVENTEEN MILLION DOLLARS

$17,000,000

The above value estimate is inclusive of $100,000 in personal property and $8,300,000 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 22, 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:	Valley View Lodge
Location:	1228 Rossmoor Parkway
	Walnut Creek, Contra Costa County, California 94595
	The site is situated at the east terminus of a private easement road off of Rossmoor Parkway.
Property Description:	The property consists of a one-building, two-story assisted living facility containing 125 units and 125 beds on a 4.55-acre parcel of land.
Assessor’s Parcel Number:	189-040-045
Interest Appraised:	Fee Simple Estate
Date of Value:	October 7, 2003
Date of Inspection:	October 7, 2003
Ownership:	ARV Valley View, L.P.
Occupancy:	Current physical occupancy is 98 percent
Current Property Taxes
Total Assessment:	$7,749,456
2002-2003 Property Taxes:	$102,465
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:	PD 656
Land Area:	4.55 acres or 198,260 ± square feet
Number of Units:	125
Number of Beds:	125
Number of Stories:	Two
Number of Buildings:	One
Year Built:	1976
Type of Construction:	Wood frame
Gross Building Area:	97,818 square feet
Parking:	79 spaces (0.63 Unit).

VALUATION SERVICES	ADVISORY GROUP

SUMMARY OF SALIENT FACTS

VALUE INDICATORS
Cost Approach:
		Indicated Value:	$	8,600,000
Sales Comparison Approach:
		Indicated Value:	$	16,900,000
Income Capitalization Approach
Direct Capitalization
		Net Operating Income:	$	1,939,693
		Capitalization Rate:		11.25	%
		Indicated Value:	$	17,200,000
Reconciled Value:			$	17,200,000
FINAL VALUE CONCLUSION
	Going Concern Market Value As-Is		$	17,000,000
	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 view of property

Rear view of property

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Rear view of property

Northwest elevation of property

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Common area

Typical hallway

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Typical resident unit

Typical resident unit

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

Exterior courtyard

Parking area

VALUATION SERVICES	ADVISORY GROUP

SUBJECT PHOTOGRAPHS

View north from subject

VALUATION SERVICES	ADVISORY GROUP

TABLE OF CONTENTS

INTRODUCTION	1
OAKLAND REGIONAL ANALYSIS	6
LOCAL AREA ANALYSIS	23
SENIOR LIVING INDUSTRY OVERVIEW	25
MANAGEMENT AND OPERATIONS OVERVIEW	33
COMPETITIVE MARKET ANALYSIS	35
SITE DESCRIPTION	54
IMPROVEMENTS DESCRIPTION	56
REAL PROPERTY TAXES AND ASSESSMENTS	61
ZONING	62
HIGHEST AND BEST USE	63
VALUATION PROCESS	65
LAND VALUATION	67
COST APPROACH	73
SALES COMPARISON APPROACH	77
INCOME CAPITALIZATION APPROACH	86
RECONCILIATION AND FINAL VALUE OPINION	107
ASSUMPTIONS AND LIMITING CONDITIONS	109
CERTIFICATION OF APPRAISAL	112
ADDENDA	113

VALUATION SERVICES	ADVISORY GROUP

INTRODUCTION

Identification of Property
Common Property Name:	Valley View Lodge
Location:	1228 Rossmoor Parkway Walnut Creek, Contra Costa County, California 94595
	The site is situated at the east terminus of a private easement road off of Rossmoor Parkway.
Property Description:	The property consists of a one-building, two-story assisted living facility containing 125 units and 125 beds situated on a 4.55 acre site.
Assessor’s Parcel Number:	189-040-045

Property Ownership and Recent History

Current Ownership:	ARV Valley View, 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 7, 2003. The property was inspected on October 7, 2003 by Mark E. Bryant. John M. Vissotzky, MAI has reviewed the report, but 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 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.

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.

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.

VALUATION SERVICES	3	ADVISORY GROUP

INTRODUCTION

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 Contra Costa County assessor as Assessor’s Parcel Number 189-040-045. The legal description for the subject is located in the Addenda.

VALUATION SERVICES	4	ADVISORY GROUP

REGIONAL MAP

VALUATION SERVICES	5	ADVISORY GROUP

OAKLAND 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 Walnut Creek, California within Contra Costa County, which is part of the Oakland Primary Metropolitan Statistical Area (PMSA) and the greater San Francisco-Oakland-San Jose Consolidated Metropolitan Statistical Area (CMSA).

Regional Economic and Demographic Analysis

Regional Area Overview

The Oakland Primary Metropolitan Statistical Area (PMSA) consists of the counties of Alameda and Contra Costa and is located on the east shore of San Francisco Bay. The PMSA encompasses nearly 1,457 square miles. The Oakland PMSA (Oakland) is part of the greater San Francisco-Oakland-San Jose Consolidated Metropolitan Statistical Area (CMSA) which includes the 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).

LOCATION OF OAKLAND PMSA COUNTIES WITHIN THE SAN FRANCISCO CMSA

Source: Cushman & Wakefield Analytics

VALUATION SERVICES	6	ADVISORY GROUP

OAKLAND REGIONAL ANALYSIS

Oakland’s Northern California location along the San Francisco Bay provides for a fairly mild climate year-round. The topography of the area varies from bay waterfront to mountains, and provides for a myriad of microclimates and recreational venues. More importantly, as the geographic center of the Bay Area, Oakland is the hub of the Bay Area’s transportation system, boasting superior access to Interstate 80 heading east and Interstate 5 going north/south. Oakland is also a major west coast shipping port. Oakland’s cargo volume makes it the fourth busiest container port in the United States.

Demographic Profile

The Oakland PMSA is a highly sought-after and yet expensive place to live, and the average age of its population closely mirrors that of the U.S. Oakland’s labor pool is highly skilled and highly compensated with per capita incomes well above national averages. The PMSA’s median household income of $71,700 is 31 percent above that of the nation’s top 100 largest metropolitan areas (Top 100) and 51 percent above that of the U.S.

Oakland has a vastly higher percentage of households in the $100,000-plus annual income cohort – a 32 percent share versus 20 percent for the Top 100 and 16 percent for the U.S. At the lower end of the income strata, Oakland has a substantially smaller percentage of annual incomes under $50,000 – 34 versus 46 percent for the Top 100 and 53 percent for the U.S. overall.

The population breakdown by education follows a similar pattern to incomes. The San Francisco Bay Area has many of the nation’s most prestigious universities, including Stanford and University of California (UC) Berkeley and UC San Francisco. Over 29 percent of Oakland’s population has a Bachelor degree or better, compared to only 24 percent for the Top 100 and 21 percent for the U.S. Only 23 percent of the Oakland PMSA population has just a high school diploma, compared to 28 percent for the Top 100 and 30 percent for the U.S.

VALUATION SERVICES	7	ADVISORY GROUP

OAKLAND REGIONAL ANALYSIS

DEMOGRAPHIC CHARACTERISTICS
Oakland PMSA vs. Top 100 and U.S.
2002 Estimates

		Oakland			Top 100
Characteristic		PMSA			Metro Areas*			U.S.
Median Age (years)			35.5			35.1			35.6
Average Annual Household Income		$	91,400		$	72,700		$	64,300
Median Annual Household Income		$	71,700		$	54,700		$	47,500
Households by Annual Income Level:
<	$25,000		14.8	%		21.0	%		25.3	%
	$25,000 to $49,999		18.8	%		25.1	%		27.3	%
	$50,000 to $74,999		18.9	%		20.8	%		20.2	%
	$75,000 to $99,999		15.8	%		13.4	%		11.8	%
	$100,000 plus		31.7	%		19.7	%		15.5	%
Education Breakdown:
	< High School		16.8	%		21.8	%		24.1	%
	High School Graduate		22.8	%		27.8	%		29.8	%
	College < Bachelor Degree		31.0	%		26.5	%		25.4	%
	Bachelor Degree		18.9	%		15.5	%		13.5	%
	Advanced Degree		10.5	%		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.

Population

Between 1992 and 2002, the 1.3 percent average annual growth in the Oakland PMSA’s population, which now totals close to 2.5 million, matched that of the Top 100. The preponderance of the PMSA’s growth was in Contra Costa County, which grew at an average annual pace of 1.7 percent as its population has pushed eastward. Alameda County, the more densely developed of the two counties, grew at a slower 1.0 percent average annual pace between 1992 and 2002.

Notably, Oakland’s migration abruptly turned negative last year as laid-off workers and their families left the area. Given that this is the first year since 1995 to experience a net outflow of migrants, it signals how difficult the current economic environment is. International migration has held steady, but domestic migrants have fled for stronger labor markets.

Contra Costa County is anticipated to grow faster than national averages between 2002 and 2007 – 1.4 versus 1.0 percent for the Top 100. Again, population growth in Contra Costa County is expected to outpace that in Alameda County (at only 0.4 percent per year) due to the greater availability of developable land and lower land costs. As traffic congestion continues to lengthen drive times throughout the region, both counties will experience increasing sentiment to limit additional suburban development, to preserve open space, as well as to promote “smart growth” and development oriented towards mass-transit.

VALUATION SERVICES	8	ADVISORY GROUP

OAKLAND REGIONAL ANALYSIS

POPULATION GROWTH BY YEAR
Oakland PMSA 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.

ANNUALIZED POPULATION GROWTH BY COUNTY
Oakland PMSA vs. San Francisco CMSA Counties
1992 – 2007

										Annual			Annual
								2007		Growth			Growth
Population (000s)				1992		2002		Forecast		92-02			02-07
United States					256,943.8		288,659.5		301,310.2		1.2	%		0.9	%
	Top 100 MSAs				160,017.2		181,966.8		191,688.3		1.3	%		1.0	%
		San Francisco CMSA			6,449.8		7,126.5		7,393.7		1.0	%		0.7	%
			Santa Clara County		1,531.9		1,683.5		1,723.3		0.9	%		0.5	%
			San Mateo County		662.9		703.2		727.5		0.6	%		0.7	%
			San Francisco County		734.9		764.0		761.3		0.4	%		-0.1	%
			Sonoma County		405.2		468.4		506.1		1.5	%		1.6	%
			Solano County		359.9		411.1		450.1		1.3	%		1.8	%
			Santa Cruz County		232.9		253.8		258.0		0.9	%		0.3	%
			Marin County		235.8		247.6		255.5		0.5	%		0.6	%
			Napa County		114.3		130.3		145.3		1.3	%		2.2	%
		Oakland PMSA			2,172.0		2,464.7		2,559.9		1.3	%		0.8	%
			Alameda County		1,332.2		1,472.3		1,498.4		1.0	%		0.4	%
			Contra Costa County		839.8		992.4		1,062.7		1.7	%		1.4	%

Source: Economy.com, Cushman & Wakefield Analytics

VALUATION SERVICES	9	ADVISORY GROUP

OAKLAND REGIONAL ANALYSIS

Oakland’s highest population density is located west of the East Bay Hills, which run between and parallel to both Interstate 80 and Interstate 680. Cities within this area include (north to south) San Pablo, Richmond, El Cerrito, Albany, Berkeley, Emeryville, Oakland, Alameda, San Leandro, San Lorenzo, Hayward and Union City. The less dense concentrations of population are in the hilly and mountainous regions of Contra Costa County and Southern Alameda County. Within the metro area, the general direction of growth is pushing towards the northeast into Contra Costa County.

POPULATION PER SQUARE MILE BY ZIP CODE
Oakland PMSA
2002

Source: Claritas, Inc., Cushman & Wakefield Analytics

Households

Unlike its relatively strong population growth, the Oakland PMSA’s rate of household formation lagged that of the Top 100 over the past ten years. Between 1992 and 2002, led by average annual growth of 1.4 percent in Contra Costa County (compared to 0.7 percent for Alameda County), Oakland’s number of households increased by an average of 1.0 percent annually, below the 1.3 percent rate posted by the Top 100. Household formation growth for Oakland between 2002 and 2007 is forecast to increase to an average annual pace of 1.1 percent –

VALUATION SERVICES	10	ADVISORY GROUP

OAKLAND REGIONAL ANALYSIS

again led by Contra Costa County at 1.6 percent – but still lag that of the Top 100 at 1.3 percent.

HOUSEHOLD GROWTH BY YEAR
Oakland PMSA vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

Income

The median household income in the Oakland PMSA is $71,700, over 31 percent higher than the Top 100 median of $54,700 and nearly 51 percent higher than the U.S. median of $47,500. Over the past ten years, the PMSA’s 4.6 percent average annual growth in median household income solidly surpassed the Top 100 average pace of 3.7 percent. Given its highly educated workforce, which supports higher paying jobs, the Oakland PMSA, is better able to sustain higher growth rates in household incomes.

A current low and level rate of bankruptcy filing indicates that household balance sheets are in very good condition. Oakland’s relatively moderate economic downturn has combined with strong house price appreciation to support household finances. Rising home equity and low interest rates have been critical in allowing Oakland’s households to tap substantial equity balances during this period of slow economic growth. However, by the end of this year, the tap will be closed as interest rates rise and house prices level off. This will dampen the pace of consumer spending.

Through 2007, Oakland’s median household income growth is expected to slow markedly to an average of 3.1 percent annually, but still exceed the 2.7 percent pace that is forecast for the Top 100. Between 2002 and 2007, Alameda County, with average annual growth in median household income of 3.9 percent, is expected to strongly outpace Contra Costa County’s average of 1.9 percent growth in median household income.

Oakland’s most affluent areas are located primarily in Contra Costa County in the cities of Orinda, Moraga, Lafayette east of the Oakland Hills, and Alamo, Danville and San Ramon along the section of Interstate 680 north of Interstate 580. Within Southern Alameda County, the households within the cities of Pleasanton, Castro Valley, Fremont and Newark have the highest median income. Finally, in Western Alameda County, Bay Farm Island in Alameda and the northern parts of Berkeley, have the highest median household incomes. The less affluent sections of the Oakland PMSA are located in the cities of Oakland, Berkeley and Richmond.

VALUATION SERVICES	11	ADVISORY GROUP

OAKLAND REGIONAL ANALYSIS

MEDIAN HOUSEHOLD INCOME DISTRIBUTION BY ZIP CODE
Oakland PMSA
2002

Source: Claritas, Inc., Cushman & Wakefield Analytics

Regional Economic Overview

Oakland’s economy is stable and is the best performing among the Bay Area’s three core metro areas. Its employment base fell by less than 3 percent peak to trough, well below the doubledigit declines across the bay. Moreover, employment has edged up in Oakland from its trough of one year ago, although these gains are tenuous. Its jobless rate is flirting with highs last seen in 1992, and personal bankruptcy filings began to rise late last year.

Signs of recovery are evident. Construction payrolls are rising this year following an 18-month slump. While population growth has slowed considerably, it remains positive. Employment in retailing and business and professional services remains very steady, indicating some underlying stability in both consumer and business confidence in the area. Oakland also benefits from sizable employment in the education and health service industries. Both continue to expand robustly as they each face rising demand and a moderate ability to control prices.

While Oakland’s economy is quite diverse, the source of its current stability is narrowly based and so the near-term outlook remains fraught with risk. For example, financial services has been an important component of Oakland’s growth as back-office and service center operations for commercial banks and consumer lenders have grown along the I-680 corridor. Yet finance

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OAKLAND REGIONAL ANALYSIS

employment has fallen from its peak, as cost containment has closed some facilities. Similarly, Oakland’s exposure to state government employment is the highest among California’s major metro areas. A portion of this base is related to U.C. Berkeley and the university system, which does have the power to raise tuition and thus offset diminished state support. However, the state’s budget shortfall poses considerable risk to the downtown office markets should state payroll cuts go further than current modest plans.

Oakland’s vibrant international trade sector is also a source of risk. The weakening of the global economy is hindering exports and a moderate fall in the dollar is slowing imports. Similarly, wholesale trade and trucking has also faltered. Given the weak global outlook, Oakland’s economy is not likely to get any near-term boost from international trade.

Finally, Oakland’s diverse manufacturing economy presents a mixed outlook for the coming years. A total of 10,600 jobs were cut in 2002, a 9.4 percent decrease from 2001. Specifically, producers of data storage equipment, chips and semiconductor manufacturing equipment have cut 5,000 jobs over the past two years, and the outlook for a turnaround in 2003 is limited. The smaller computer equipment industry, however, has been stable over the past year and has some upside potential in the near term. Biotechnology continues to expand, supporting the economy in the environs of the university. Each of these industries continues to garner venture capital funding. Light manufacturing, related more to consumer products, is expanding and should continue to do so as long as current consumer spending trends persist.

Gross Product

In the latter half of the 1990s, the Oakland economy benefited from spillover effects of the unprecedented (and largely technology-driven) economic growth in the San Francisco and San Jose metro areas. Over the ten-year period from 1992 to 2002, Oakland’s Gross Metro Product (GMP) exhibited relatively strong growth – increasing at an average annual rate of 3.6 percent – trailing slightly the Top 100 rate of 3.8 percent.

REAL GROSS PRODUCT GROWTH BY YEAR
Oakland PMSA vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

Oakland’s economic growth decreased markedly during 2000 and 2001, but unlike many U.S markets, did not turn negative. In 2002, Oakland’s gross metro product (GMP) growth jumped to 4.9 percent and is forecast to remain consistent, with a 3.2 percent average annual growth

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OAKLAND REGIONAL ANALYSIS

rate between 2002 and 2007. Oakland is expected to slightly outpace the 3.0 percent that is forecast for the Top 100.

Employment Trends

Oakland is regarded as a highly diversified economy, which acts to limit the metro area’s economic volatility. Its employment distribution across the industry sectors is quite similar to that of the Top 100 and the U.S. overall. Compared to the Top 100, Oakland is more heavily weighted in the Government and Construction sectors and somewhat less weighted in the Financial Activities, Education/Health Services and Leisure/Hospitality sectors. Oakland’s office-using employment is also slightly below the Top 100 average.

EMPLOYMENT BY SECTOR
Oakland PMSA vs. Top 100
2002

Source: Economy.com, Cushman & Wakefield Analytics

The Oakland PMSA accounts for 31 percent of the San Francisco CMSA employment and is now the largest metro area in terms of employment within the CMSA. Between the Oakland PMSA’s two counties, Alameda County has the largest share of total employment – twice that of Contra Costa County. Within Alameda County, total employment is expected to grow by 1.5 percent annually between 2002 and 2007 and Contra Costa County is expected to grow by roughly 1.4 percent – both at rates greater than the 1.1 percent forecast for the San Francisco CMSA.

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OAKLAND REGIONAL ANALYSIS

TOTAL EMPLOYMENT BY COUNTY
San Francisco CMSA
2002

Source: Economy.com, Cushman & Wakefield Analytics

Between 1992 and 2002, Oakland’s total employment averaged 1.8 percent annual growth – just below the 1.9 percent of the Top 100. Given current economic conditions, Oakland’s short-term employment outlook is tempered. After its enviable employment gains between 1997 and 2000, Oakland’s total employment growth is projected to slow to a 1.5 percent average annual rate from 2003 through 2007 – slightly lagging the average 1.6 percent rate forecast for the Top 100.

TOTAL EMPLOYMENT GROWTH AND UNEMPLOYMENT RATE BY YEAR
Oakland PMSA vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

Given Oakland’s highly skilled and diversified labor force, its unemployment rate has generally trended with that of the Top 100. The unemployment rate for Oakland as of year-end 2002 was 5.9 percent, compared to the Top 100’s unemployment rate of 5.6 percent. Oakland’s unemployment rate is expected to peak at 6.4 percent in 2003, and then trend downward through 2007 to 5.4 percent, remaining roughly 0.4 percentage points higher than the Top 100 rate through 2007.

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OAKLAND REGIONAL ANALYSIS

Oakland is now home to six of the nation’s 2002 Fortune 500 corporations – ChevronTexaco (ranked as number 7), Safeway (41), Longs Drugs (367), Clorox (394), Golden West Financial (425) and Ross Stores (444). Below is a table of Oakland’s largest non-government employers with Fortune 500 companies indicated by boldface type.

Oakland’s industrial diversity is evident when examining its largest employers. Among the sectors represented by the PMSAs top employers are Medical, Telecommunications, Education, Research & Testing, Retail, Oil & Gas, Heavy Manufacturing, Banking, Software, Financial Services and Transportation.

TOP NON-GOVERNMENT EMPLOYERS
Oakland PMSA
2002

	Number of PMSA
Employer	Employees
University of California, Berkeley Kaiser		24,000
Kaiser Permanente		22,500
SBC Communications, Inc.		11,800
Lawrence Livermore National Laboratory		8,900
Safeway, Inc.		7,700
ChevronTexaco Corp.		6,300
New United Motor Manufacturing Inc.		5,300
Albertson’s Inc.		4,600
John Muir/Mt. Diablo Health System		4,600
Wells Fargo & Company		4,000
Lawrence Berkeley National Laboratory		4,000
Alta Bates Health Systems		3,800
Bay Area Rapid Transit		3,500
Longs Drug Stores, Inc.		3,200
Providian Financial Corporation		3,000
PeopleSoft, Inc.		3,000

Source: East Bay Business Times, December 2002, Economy.com 2003, Cushman & Wakefield Analytics

Oakland’s office-using employment growth lagged that of the Top 100 between 1992 and 1996 before surpassing the Top 100 in 1997 during the Bay Area’s high-tech boom. Comparing the trough to peak trends, from 1994 to 2001, office-using employment in Oakland grew at an annual rate of 2.8 percent, while the Top 100, from 1991 to 2001 grew on average at 2.9 percent per year.

While the Oakland PMSA has a smaller share of technology employment than the San Jose PMSA, the impact of high tech’s recent growth was felt throughout the Bay Area. The Oakland PMSA benefited from its proximity to the San Jose PMSA, the global capital of the high-tech industry. Oakland, especially southern Alameda County, generally served as a more affordable venue for back-office operations of many Silicon Valley firms.

Current economic conditions have had a similar effect on Oakland’s office-using employment as on that of the Top 100 overall. During the five-year forecast period between 2002 and 2007,

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OAKLAND REGIONAL ANALYSIS

growth in Oakland’s office-using employment is projected to average 2.3 percent annually, just above the Top 100 and the nation’s expected average growth of 2.1 percent.

TOTAL OFFICE-USING EMPLOYMENT GROWTH BY YEAR
Oakland PMSA vs. Top 100
1990 – 2007

Source: Economy.com, Cushman & Wakefield Analytics

Oakland’s most significant concentrations of office-using employment are located in several areas throughout the PMSA. Within Alameda County, the highest densities of office employment are in southern Richmond, Berkeley, Emeryville, Oakland, Alameda and San Leandro. Within Contra Costa County, the City of Walnut Creek at the intersection of Interstate 680 and Highway 24 has the highest office employment density. The intersection of Interstate 580 and 680 in Dublin/Pleasanton, characterized by campus-style office development, also has a high concentration of office workers.

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OAKLAND REGIONAL ANALYSIS

OFFICE-USING EMPLOYMENT PER SQUARE MILE BY ZIP CODE
Oakland PMSA
2002

Source: Cushman & Wakefield Analytics

Transportation Network

The Port of Oakland is the third busiest port on the west coast, behind of the Port of Los Angeles, the Port of Long Beach and just ahead of the Port of Seattle. Located on the mainland shore of San Francisco Bay, one of the great natural harbors of the world, Oakland was among the first ports globally to specialize in the intermodal container operations, which have revolutionized international trade and assisted with the emergence of the global economy.

The Oakland PMSA has a number of major freeways that have fostered development around them, and with that, seemingly inevitable traffic jams. Among them: Interstate 880, a major thoroughfare for both trucks and commuters traveling from southern Alameda County; Interstate 580, serving the communities east of the Oakland Hills in the Tri-Valley area (Dublin, Pleasanton, San Ramon) and further east (Livermore and the Central Valley); Interstate 680, which runs almost 70 miles from San Jose to Fairfield in Solano County through back-office and residential areas; Interstate 80, along the east shore of the San Francisco Bay through the communities of west Contra Costa County; and Highway 24, which passes under the east bay hills through the Caldecott Tunnel, and heavily traveled by commuters from Contra Costa County into San Francisco.

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OAKLAND REGIONAL ANALYSIS

These routes are all generally characterized by heavy traffic congestion during each morning and evening commute. Carpool lanes have been added to all of these routes except for Highway 24 and the stretch of Interstate 580 from Hayward to Emeryville, which bisects the residential neighborhoods of San Leandro and Oakland and is prohibited to trucks.

The Bay Area Rapid Transit system (BART) serves most of the East Bay and provides service to San Francisco and south of the city into the Peninsula market, where service to the San Francisco International Airport opened in June 2003. BART’s service extends to Richmond in the North, Pittsburg in east Contra Costa County, Pleasanton in east Alameda County, and Fremont in southern Alameda County. The hub of the system is in Downtown Oakland where all of the lines converge before heading into San Francisco. Furthermore, the Metropolitan Transportation Commission (MTC) has approved a $4.3 billion BART extension from Fremont to San Jose. In addition, a rail connection to the Oakland Airport is also planned to replace the existing bus shuttles, which would enhance its accessibility and long-term growth.

Bus service is provided by AC Transit in Alameda County (west of the hills) and West Contra Costa County, while County Connection serves East Contra Costa and “Wheels” serves Dublin/Pleasanton/Livermore in east Alameda County.

Quality of Life/Amenities

Major Attractions and Amenities

Oakland is located on the San Francisco Bay, and from atop its mountainous areas offers spectacular views of the bay, bridges, islands and downtowns. The East Bay has a generally warmer climate than San Francisco, and beyond the East Bay hills, it is warmer in the summer and cooler in the winter as the Pacific Ocean and San Francisco Bay has less climatic influence.

The East Bay Regional Parks has over 40,000 acres of accessible parklands that support hiking and riding trails, lakes and swimming beaches, fishing and boating and campgrounds. Mount Diablo State Park invites hiking, mountain biking and picnicking, as well as a sweeping view of Contra Costa County and the entire Bay Area from its 3,849-foot peak.

In general, the East Bay’s development is more residential and less commercial in nature than that of San Francisco, with venues for ice skating, sailing, rowing, and horseback riding to name a few. For the young, the Oakland Zoo and Children’s Fairyland are favored destinations. For older children, it is an hour drive to Great America Amusement Park in Santa Clara, Six Flags Marine World in Vallejo and Raging Waters in San Jose. For a more educational outing, there is the new Chabot Observatory in the Oakland Hills, the Lawrence Hall of Science in the Berkeley Hills and the Oakland Museum in Downtown Oakland.

Oakland is also home to three professional sports teams – the Oakland Raiders football team, the Golden State Warriors basketball team and the Oakland Athletics (A’s) baseball team. Both the Raiders and A’s play at Network Associates Coliseum, and the Warriors play at the Oakland Coliseum Arena. Both facilities were renovated when the Raiders moved back to Oakland from Los Angeles.

The Wine Country in Napa and Sonoma Counties are about an hour or so drive from the East Bay. Monterey, Carmel and Big Sur are less than two hours drive, and Lake Tahoe and Yosemite National Park are roughly three hours away.

Education

The San Francisco CMSA is home to numerous institutions of higher learning. The large number of world-class educational and research facilities – more than 35 colleges and

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OAKLAND REGIONAL ANALYSIS

universities – positively impacts the Bay Area economy. Total college enrollment within the Oakland PMSA was 188,900 in 2000, or 7.9 percent of the population.

Alameda County offers a highly developed system of higher education and research facilities including the University of California (UC) at Berkeley. Besides UC, Alameda County boasts a state university, two large private universities, seven community colleges, California College of the Arts and Crafts, and many other specialty schools. Contra Costa County offers seven major colleges including Diablo Valley College, Pleasant Hill; the Center for Higher Education, Walnut Creek; and St. Mary’s College, Moraga.

MAJOR COLLEGES/UNIVERSITIES
Oakland PMSA
Fall 2001

	Full/Part Time
College/University	Enrollment
University of California Berkeley		31,400
Diablo Valley College		21,700
Chabot College		14,500
California State University Hayward		13,240
Laney College		12,500
Ohlone College		11,800
Los Medanos College		10,300

Source: San Francisco Business Times, August 23, 2002; Cushman & Wakefield Analytics

Medical Facilities

The Oakland PMSA has a comprehensive healthcare network. Ranked by total patient days in 2001 they are: Alta Bates Medical Center (Berkeley), Alameda County Medical Center (Oakland), Summit Medical Center (Oakland), John Muir Medical Center (Walnut Creek), Kaiser Foundation Hospital (Oakland), Washington Hospital (Fremont), Kaiser Foundation Hospital (Hayward), Children’s Hospital (Oakland), Eden Medical Center (Castro Valley), Mt. Diablo Medical Center (Concord), Contra Costa Regional Med Center (Martinez) and Doctors Medical Center (San Pablo).

Regional Summary

Oakland’s economy is stable and performing better than the San Francisco and San Jose PMSAs, making it the best economy among the Bay Area’s three core metro regions. Due to its diversity, relatively smaller reliance on high tech and lower business costs, Oakland has been better able to weather the recent economic downturn. In addition, Oakland is less dependent than the rest of the Bay Area on rebounding business investment, particularly IT-related investment. Consequently, Oakland’s employment base fell by just over 1.2 percent peak to trough, well below the significant decline in the South Bay. While its total employment has increased from one year ago, Oakland’s jobless rate is flirting with highs last seen in 1992 and personal bankruptcy filings began to rise late in 2002.

Looking to the longer term, Oakland has the advantages of being an affordable alternative to both San Francisco and Silicon Valley, with the most affordable housing in the Bay Area (though the gap has narrowed), and having the best transportation linkages for its workforce. Oakland’s

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OAKLAND REGIONAL ANALYSIS

expanding biotech industry remains an engine of economic growth, fueled by rising R&D activity. Although Oakland’s international trade has declined in recent months, the significance of its ports on the local economy will cause Oakland to be the first among the Bay Area economies to once again expand as economic demand from the U.S. and international markets improves. Oakland’s near-term outlook is positive but is subject to numerous risks related to global trade, state fiscal conditions, business confidence and related travel and spending.

Oakland’s diverse economy is expected to generate average performance in both the near term and long term. The mix of traditional and high-tech industries helps balance the metro area’s growth, limiting the volatility usually seen elsewhere in the Bay Area. Moreover, its generally lower business and living costs compared to the region and availability of developable sites sustain the metro area’s regional competitive advantage.

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LOCAL AREA MAP

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LOCAL AREA ANALYSIS

Location

The subject is located in the southwest part of Walnut Creek in the Tice Creek Valley in what is referred to as the Rossmoor area. This specific area is approximately 2½ miles south of the downtown core area of Walnut Creek. Rossmoor is a master planned senior community that centers on the Rossmoor Leisure World Golf Club (private). The boundaries of the local area are considered to be the entire Rossmoor area that extends south of Tice Valley Road and is bordered by the city limits to the west, east and south.

Access

The primary access routes serving the area include Rossmoor Parkway and Tice Valley Boulevard. Rossmoor Parkway extends south from Tice Valley Boulevard and terminates in the southeast portion of the development at the golf club. All other streets in the Rossmoor area serve as neighborhood feeder streets radiating off of Rossmoor Parkway.

Highway 24 and I-680 are within two miles of the local area and are accessed via either Olympic Boulevard or Tice Valley Boulevard. As explained previously, Highway 24 is the primary freeway between San Francisco, while I-680 is the primary north-south freeway through the East Bay area. Overall, access to the local area is considered very good, including that to medical facilities for the elderly residents in the local area.

Nearby and Adjacent Uses

West:	Convalescent care center and medical office building
North:	Undeveloped land followed by single-family homes
East:	Undeveloped land followed by single-family homes
South:	Undeveloped land followed by an apartment complex

It is noted that the sites to the north, east, and south of the subject exhibit steep topography and are relatively undevelopable because of this situation.

Local Area Characteristics

The local area is characterized by residential and supporting commercial uses. The Rossmoor area is characterized largely as an affluent elderly residential area. There is a complete spectrum of residential offerings in the Rossmoor area, including single-family, condominiums, retirement, assisted living and nursing facilities. Residential prices for single-family/condominiums in the local area generally start at around $400,000. Commercial uses include a mix of office and retail and are primarily located along the Rossmoor Parkway. There is a neighborhood shopping center located a short distance northeast of the subject that is anchored by Safeway. A new Rite-Aid drug store was recently completed across from the shopping center. Other retail uses include bank branches, restaurants, service stations, etc.

The local area is considered to be in a mature stage of its life. Although there is undeveloped land in the local area, most of it is considered undevelopable due to topography restraints. At present, the local area is considered to be approximately 80 percent developed.

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LOCAL AREA ANALYSIS

Proximity to Health Care

The primary medical facilities in Walnut Creek are the Kaiser Foundation Hospital (two miles north) and the John Muir Memorial Hospital (3 miles north). The travel time to these facilities is between 5 and 10 minutes. As explained, there is large medical office building (Rossmoor Medical Center) located just west of 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

There are three other senior facilities in the Rossmoor development, Guardian of Rossmoor nursing home, Manor Care of Walnut Creek nursing home and Byron Park. The nursing homes do not compete with the subject since they are believed to complement the facility. Byron Park is a retirement home that offers a small portion of assisted living units. The owner’s of Byron Park are planning on developing a purpose built 50-unit assisted living facility directly south of the existing facility. Construction is anticipated to begin in 2004 on this facility. We are not aware of, at this time, of any other planned improvements or demolitions in the local area that would impact the subject.

Conclusion

The subject is located in an established residential area of Walnut Creek. The primary influence of the local area is senior oriented residential living completed by a large private golf club. The local area is in its mature stage of its life and there is limited developable land available for future construction. Services requisite to support a senior living complex such as the subject are within close proximity. After reviewing the local area, a positive effect on real estate values in the area is anticipated for the foreseeable future. This positive effect also extends to the subject property.

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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.

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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

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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.

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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.

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.

VALUATION SERVICES	28	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

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:

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.

VALUATION SERVICES	29	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

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.

• 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.

VALUATION SERVICES	30	ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

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.

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

VALUATION SERVICES 31 ADVISORY GROUP

SENIOR LIVING INDUSTRY OVERVIEW

• 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.

• 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 32 ADVISORY GROUP

MANAGEMENT AND OPERATIONS OVERVIEW

Management Overview

The subject is managed by ARV Assisted Living, Inc. (ARV). Valley View Lodge was constructed in 1976. The facility underwent a major renovation in 2000 that primarily involved upgraded interior components, including paint, carpeting, wall coverings, etc. Revenues have been stable over the last three years, while expenses have been increasing. The facility’s occupancy has also been stable over this same period. Overall, based on the historical performance of the facility, it appears that ARV is competent to manage the subject property.

Operations Overview

Services

Valley View Lodge 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;

• Base level of personal care for assisted living residents

• 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 199 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 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.

Admission Policies

Valley View Lodge 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

VALUATION SERVICES 33 ADVISORY GROUP

MANAGEMENT AND OPERATIONS OVERVIEW

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.

Valley View Lodge 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

Valley View Lodge 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 marketing efforts are adequate. The subject’s reputation and marketing campaign are considered to be part of the reason behind the current performance at the subject facility.

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 being operated in a competent manner. The facility has been adequately maintained and the residents appear to be content.

VALUATION SERVICES 34 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 Walnut Creek area. This encompasses an area of approximately three miles. The remaining 25 percent emanate from the greater eastside area. Residents relocate to Walnut Creek to either retire or be near their adult children that work in the 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
Byron Park	3.0 - 5.0 Miles		75	%
Montego Heights	3.0 - 5.0 Miles		75	%
Chateau Lodge I & III	3.0 - 5.0 Miles		70	%
Diablo Lodge	3.0 - 5.0 Miles		75	%
Concord Royale	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 Walnut Creek.

VALUATION SERVICES 35 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

MARKET AREA SUPPLY

Name	Total AL Units		PMA/SMA*
Byron Park		19	PMA
Montego Heights		163	SMA
Chateau Lodge I & III		131	SMA
Diablo Lodge		118	PMA
Concord Royale		53	SMA
SUBJECT		125
Totals		609

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

Proposed Units

Regarding planned or pending projects in the subject’s primary market area, we note that the ownership of Byron Park along Tice Valley Boulevard is planning on constructing a 50-unit assisted living facility on the ownership’s vacant site that sits to the south of the existing facility. Construction of this facility is anticipated to begin sometime in 2004 with completion and opening in late 2004 or early 2005.

Discussions with local providers and planning departments indicated that there are no other facilities planned at this time. However, because of the large retirement draw of the market area, it would be reasonable to assume that the primary market area could possibly see some new development through the mid-term. The limited availability of developable land, however, has proven difficult for new development and this is expected to continue.

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 482 units and/or beds (excluding the subject) and the current available occupancy of those properties was from 70 to 98 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. Only one of the competitive properties surveyed was exhibiting a non- stabilized occupancy, that being Montego Heights that was at 70 percent occupancy. This is an older property (sister property to the subject) has been struggling as of recent and its lower occupancy rate is not considered reflective of market conditions, but rather property related.

Valley View Lodge is noted as having been at 98 percent occupancy at the time of inspection. The subject appears to have a good reputation in the market and this should continue based on its location and living options. 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

VALUATION SERVICES 36 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

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.

Name		Total AL Units		Occupancy Level
Byron Park	*		187		98	%
Montego Heights			163		70	%
Chateau Lodge I & III			131		94	%
Diablo Lodge	*		118		96	%
Concord Royale	*		53		89	%
SUBJECT			125		98	%

* 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 Walnut Creek area begin at around $1,900 per month for a studio unit and go up to around $5,300 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 Byron Park that includes all personal care services in the monthly rent.

Rent Increases

Most assisted living facilities in the Walnut Creek 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 facility’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 Walnut Creek market area, no specific concessions were noted. Similar to the market, Valley View Lodge reported that they are not offering concessions for leasing vacant units. Concession will not likely be part of the market and used only to stimulate any unforeseen vacancies. They should, however, not be of any major significance to a property like the subject.

VALUATION SERVICES 37 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

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.

Valley View Lodge opened in 1976 and has been successful from an occupancy basis. Occupancy at the facility was 87 percent in 2000, 98 percent in 2001, 96 percent in 2002 and year-to-date 2003 annualizes out to 98 percent. We note that the facility was at an occupancy of 98 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 38 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Population Statistics

PMA						SMA
3 miles						5 miles
	Population		%				Population		%
2000
Total *		72,381						163,333
65+		17,047		23.6	%			30,595		18.7	%
75+		10,695		14.8	%			17,108		10.5	%
85+		3,342		4.6	%			5,022		3.1	%
2002	Estimate
Total *		73,525						165,802
65+		17,026		23.2	%			30,636		18.5	%
75+		10,843		14.7	%			17,430		10.5	%
85+		3,535		4.8	%			5,360		3.2	%
2007	Projection
Total *		76,684						172,672
65+		17,404		22.7	%			31,549		18.3	%
75+		11,059		14.4	%			17,873		10.4	%
85+		3,895		5.1	%			5,944		3.4	%

* Total population unadjusted for age

Source: Claritas, Inc.

Growth Rates

PMA							SMA
3 miles							5 miles
	Total			Annual			Total			Annual
2000-2007
Total *		5.9	%		0.8	%		5.7	%		0.8	%
65+		2.1	%		0.3	%		3.1	%		0.4	%
75+		3.4	%		0.5	%		4.5	%		0.6	%
85+		16.5	%		2.2	%		18.4	%		2.4	%
2000-2002
Total *		1.6	%		0.8	%		1.5	%		0.8	%
65+		-0.1	%		0.1	%		0.1	%		0.1	%
75+		1.4	%		0.7	%		1.9	%		0.9	%
85+		5.8	%		2.8	%		6.7	%		3.3	%
2002-2007
Total *		4.3	%		0.8	%		4.1	%		0.8	%
65+		2.2	%		0.4	%		3.0	%		0.6	%
75+		2.0	%		0.4	%		2.5	%		0.5	%
85+		10.2	%		2.0	%		10.9	%		2.1	%

* 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 39 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Population Statistics - Adult Children

	PMA					SMA
	Population		%				Population		%
2000
Total *		72,381						163,333
45 - 54		11,250		15.5	%			26,694		16.3	%
55 - 59		4,122		5.7	%			9,885		6.1	%
60 - 64		3,104		4.3	%			7,519		4.6	%
2002		2002
Total *		73,525						165,802
45 - 54		11,824		16.1	%			28,021		16.9	%
55 - 59		4,558		6.2	%			10,912		6.6	%
60 - 64		3,286		4.5	%			7,942		4.8	%
2007		2007
Total *		76,684						172,672
45 - 54		13,029		17.0	%			30,692		17.8	%
55 - 59		5,428		7.1	%			12,987		7.5	%
60 - 64		4,071		5.3	%			9,862		5.7	%

* Total population unadjusted for age

Source: Claritas, Inc.

Growth Rates - Adult Children

	PMA						SMA
	Total			Annual			Total			Annual
2000-2007
Total *		5.9	%		0.8	%		5.7	%		0.8	%
45 - 54		15.8	%		2.1	%		15.0	%		2.0	%
55 - 59		31.7	%		4.0	%		31.4	%		4.0	%
60 - 64		31.2	%		4.0	%		31.2	%		4.0	%
2000-2002
Total *		1.6	%		0.8	%		1.5	%		0.8	%
45 - 54		5.1	%		2.5	%		5.0	%		2.5	%
55 - 59		10.6	%		5.2	%		10.4	%		5.1	%
60 - 64		5.9	%		2.9	%		5.6	%		2.8	%
2002-2007
Total *		4.3	%		0.8	%		4.1	%		0.8	%
45 - 54		10.2	%		2.0	%		9.5	%		1.8	%
55 - 59		19.1	%		3.6	%		19.0	%		3.5	%
60 - 64		23.9	%		4.4	%		24.2	%		4.4	%

* 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 $44,500 would be necessary. We have utilized the average projected revenue per resident of approximately $37,830 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 $37,830 by 85 percent we arrive at an average income of $44,500, rounded.

Assuming no child subsidy, it is estimated that most residents would require an annual income of $44,500 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 40 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 $454,371 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 $27,262 annually or a safe rate of return of 6.0 percent of the investment (6.0 percent x $454,371).

After accounting for this ($44,500 - $27,262 = $17,200), 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 $ 25,000

	PMA					SMA
	3 miles					5 miles
	Total		%			Total		%
2002
* Total 65+		11,297		—			19,265		—
65+		9,089		80.5	%		15,533		80.6	%
75+		5,711		50.6	%		8,477		44.0	%
85+		1,760		15.6	%		2,312		12.0	%
2007
* Total 65+		11,464		—			19,634		—
65+		9,789		85.4	%		16,820		85.7	%
75+		6,231		54.4	%		9,314		47.4	%
85+		2,093		18.3	%		2,803		14.3	%

* Unadjusted for Income

Source: Claritas, Inc.

Income Statistics - Growth Rates

Households With Incomes Greater Than $ 25,000

	PMA						SMA
	3 miles						5 miles
2002-2007	Total			Annual			Total			Annual
* Total 65+		1.5	%		0.3	%		1.9	%		0.4	%
65+		7.7	%		1.5	%		8.3	%		1.6	%
75+		9.1	%		1.8	%		9.9	%		1.9	%
85+		18.9	%		3.5	%		21.2	%		3.9	%

* 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 9,089 for the 65+ age group, 5,711 for the 75+ age group and 1,760 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 1.49 percent for age 65+ households, 1.76 percent per year for age 75+ and 3.53 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 41 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 42 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

MARKET OCCUPANCY CHARACTERISTICS
Primary Market Area

Name	No. Units		Occupancy			Occupied Units
Byron Park		187		98	%		183
Montego Heights		163		70	%		114
Chateau Lodge I & III		131		94	%		123
Diablo Lodge		118		96	%		113
Concord Royale		53		89	%		47
SUBJECT		125		98	%		123
Totals		777		91	%		703

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		9,089			9,789
Average Household Size*		1.51			1.52
Available Persons		13,698			14,861
Total Supply**		777			971
Required Resident % From PMA		75	%		75	%
Required Residents		583			728
Available Persons		13,698			14,861
Indicated Penetration Rate***		4.25	%		4.90	%

* 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 43 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Based on the data, the indicated penetration rate for the subject in 2002 is 4.25 percent. The projected growth of 25 percent in the unit supply in the next five years indicates a penetration rate of 4.90 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 subject facility 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 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 4.25 percent for the general population, there appears to be an adequate marketplace for the subject facility.

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 44 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 1

Byron Park
1700 Tice Valley Boulevard
Walnut Creek, CA

Property Type:	IL/AL
Verification:	Administrator 925-937-1700 07-Oct-03

No. Units	Unit Types	Occupancy
168	Independent Living		98	%
19	Assisted Living		98	%
187	Total Units		98	%

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	$	3,765	to	$	3,765		431	to	431		—	to	—		—	to	—
Studio Alcove		—	to		—		—	to	—		—	to	—		—	to	—
One-Bedroom	$	4,265	to	$	4,265		614	to	614		—	to	—		—	to	—
Two-Bedroom	$	5,265	to	$	5,265		962	to	962		—	to	—		—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to	—		—	to	—
2nd Occupant Rent		—	to		—		—	to	—		—	to	—
Community Fee	$	2,000	to	$	2,000						—	to	—
Additional Personal Care		—	to		—

Basic Service Care Package:			Additional Care:
Meals:	1 & 3		Care Hours Included in Base Rate:	All inclusive
Utilities:	Water/Sewer	x	Additional Personal Care Charges	All inclusive
	Electricity	x
	Cable TV	x
	Telephone	x	Incontinence Care:	None
Housekeeping:	Weekly		Dressing Assistance:	Yes
Activities:	Daily		Bathing Assistance:	Yes
Transportation:	Bus		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	None

Improvement Description

Year Opened	1990	Common Area	Lobby	x	Dining Room	x
Construction Type	Wood Frame		Activity	x	Salon	x
Floors Site Suitability	5 Good		Library	x	Laundry	x
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.)	189,894
Condition	Good		HVAC System Through-Wall Units Covered Parki Yes
Site Area (AC)	5.18

Remarks: Facility is owned and operated by EF Evans. Facility is located in highly desirable Rossmoor area of Walnut Creek. Has good visibility. Is primarily oriented to independent, but offers 19 assisted living units. Independent living rent includes one meal. Assisted living rent includes three meals, as well as all personal care (all-inclusive). 38 independent living units required to be rented to lower income residents as part of bond financing.

VALUATION SERVICES 45 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 2

Montego Heights Lodge
1400 Montego Drive
Walnut Creek, CA

Property Type:	ALF
Verification:	Executive Director
	925-938-6611
	07-Oct-03

No. Units	Unit Types	Occupancy
163	Assisted Living Units		70	%
163	Total Units/Beds		70	%

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	$	1,924	to	$	1,924		192	to	192		—	to	—		—	to	—
Studio Alcove	$	2,416	to	$	2,416		224	to	224		—	to	—		—	to	—
One-Bedroom	$	2,808	to	$	2,808		384	to	448		—	to	—		—	to	—
Two-Bedroom		—	to		—		—	to	—		—	to	—		—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to	—		—	to	—
2nd Occupant Rent	$	780	to	$	780						—	to	—
Community Fee	$	2,000	to	$	2,000						—	to	—
Additional Personal Care	$	425	to	$	1,425

Basic Service Care Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:	0.0
Utilities:	Water/Sewer	x	Additional Personal Care Charges	Points
	Electricity	x
	Cable TV	x
Housekeeping:	Telephone Weekly	x	Incontinence Care: Dressing Assistance:	No Yes
Activities:	Daily		Bathing Assistance:	Yes
Transportation:	Bus/Van/Limo		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	N/A
Nursing Staff:	RN

Improvement Description

Year Opened	1976	Common Area	Lobby	x	Dining Room	x
Construction Type	Wood Frame		Activity	x	Salon	x
Floors Site Suitability	2 Good		Library	x	Laundry	x
Construction Quality	Average	Unit Amenities	Call System	x	Fire Detectors	x
Exterior Siding	Wood		Pvt Bath	x	Shared Bath	x
Roofing	Shingles		Kitchenettes		One-Bed Only
Building Area (Sq.Ft.)	97,818
Condition	Average	HVAC System	Through-Wall Units
Effective Age (Yrs):	0	Covered Parki	Yes
Site Area (AC)	4.55

Remarks: Facility is located in eastern part of Walnut Creek. Facility is in average condition. Has struggled over the last year with occupancy.

VALUATION SERVICES 46 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 3

Chateau Lodge I & III
2770 Pleasant Hill Road
Pleasant Hill, CA

Property Type:	IL/AL
Verification:	Josi Joyce
	925-935-1001
	07-Oct-03

No. Units	Unit Types	Occupancy
112	Independent Living		94	%
131	Assisted Living		94	%
243	Total Units		94	%

Rent Schedule

	Independent Living					Unit Size				Assisted Living					Unit
Unit Description	Monthly Rent Range					Range				Monthly Rent Range					Range
Semi-Private		—	to		—		—	to	—		—	to		—	—	to	—
Studio	$	2,695	to	$	2,695		380	to	380	$	2,795	to	$	3,000	375	to	375
Studio Alcove		—	to		—		—	to	—		—	to		—	—	to	—
One-Bedroom	$	3,145	to	$	3,145		500	to	500	$	3,295	to	$	3,595	480	to	480
Two-Bedroom		—	to		—		—	to	—		—	to		—	—	to	—
Cottage/Villa		—	to		—		—	to	—		—	to		—	—	to	—
2nd Occupant Rent		—	to		—					$	595	to	$	595
Community Fee		—	to		—					$	2,500	to	$	2,500
Personal Care										$	300	to	$	1,200

Basic Service 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:	Van		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	None

Improvement Description

Year Opened	1997	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
Effective Age (Yrs):	N/A	Covered Parki	No

Remarks: Part of a locally owned congregate care facility. Has separate buildings for independent, assisted and dementia residents.

VALUATION SERVICES 47 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 4

Diablo Lodge
950 Diablo Road
Danville, CA

Property Type:	ALF
Verification:	Kathlinda Bettise, Mktng Dir.
	925-838-8300
	07/30/03

No. Units	Unit Types	Occupancy
0	Independent Living		0	%
118	Assisted Living		96	%
118	Total Units		96	%

Rent Schedule

	Independent Living				Unit Size				Assisted Living					Unit Size
Unit Description	Monthly Rent Range				Range				Monthly Rent Range					Range
Semi-Private		—	to	—		—	to	—		—	to		—		—	to	—
Studio		—	to	—		—	to	—	$	2,705	to	$	3,325		360	to	360
Studio Alcove		—	to	—		—	to	—		—	to		—		—	to	—
One-Bedroom		—	to	—		—	to	—	$	3,359	to	$	3,955		490	to	490
Two-Bedroom		—	to	—		—	to	—	$	4,230	to	$	4,370		652	to	652
Cottage/Villa		—	to	—		—	to	—		—	to		—		—	to	—
2nd Occupant Rent		—	to	—				—	$	700	to	$	700
Community Fee		—	to	—				—	$	1,500	to	$	1,500
Additional Personal Care									$	430	to	$	3,300

Basic Service Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:	N/A
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:	Van		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	None
Nursing Staff	N/A

Improvement Description

Year Opened	1990	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 Exterior Siding	Good Stucco	Unit Amenities	Call System Pvt Bath	x x	Fire Detectors Shared Bath	x
Roofing	Shingles		Kitchenettes	Yes
Building Area (Sq.Ft.)	N/A
Condition	Good	HVAC System	Central
Effective Age (Yrs):	10	Covered Parki	No
	N/A

Remarks:
Privately owned and operated. They do not provide dementia care, but have hospice care. Report a waiting list. Shared units are only offered to couples. Unit mix includes 37 studio, 78 one-bedroom and three, two-bedroom units. Highest level of additional personal care is for post-op or rehab services.

VALUATION SERVICES 48 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

Senior Housing Rent No. 5

Concord Royale
4230 Clayton Road
Concord, CA

Property Type:	IL/AL
Verification:	Marking Director
	925-676-3410
	08-Oct-03

No. Units	Unit Types	Occupancy
70	Independent Living		96	%
53	Assisted Living		89	%
123	Total Units		93	%

Rent Schedule

	Independent Living					Unit Size				Assisted Living					Unit Size
Unit Description	Monthly Rent Range					Range				Monthly Rent Range					Range
Semi-Private	$	1,100	to	$	1,100		338	to	338		—	to		—		—	to	—
Studio	$	1,600	to	$	2,400		282	to	338	$	2,675	to	$	2,675		282	to	282
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		—
Community Fee		—	to		—					$	950	to	$	950
Personal Care		—	to		—					$	500	to	$	1,250

Basic Service Package:			Additional Care:
Meals:	3		Care Hours Included in Base Rate:
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:	Van		Medication Assistance:	Yes
Security (Hrs):	24		Alzheimer Dementia Area:	None

Improvement Description

Year Opened	1985	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	Average	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	Average	HVAC System	Central
Effective Age (Yrs):	N/A	Covered Parki	No

Remarks: Independent/assisted living facility located along arterial in Concord. Additional personal care based on levels beginning at $500 per month.

VALUATION SERVICES	49	ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

RENT COMPARABLE MAP

VALUATION SERVICES 50 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	Inferior
3	Similar
4	Similar
5	Similar

Rental Rate Analysis

The assisted living rates at Valley View Lodge 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
Byron Park		431	-	431	$	3,765	-	$	3,765
Montego Heights		192	-	192	$	1,924	-	$	1,924
Chateau Lodge I & III		375	-	375	$	2,795	-	$	3,000
Diablo Lodge		360	-	360	$	2,705	-	$	3,325
Concord Royale		282	-	338	$	2,675	-	$	2,675
SUBJECT		362	-	362	$	2,750	-	$	2,750
Range (Excluding Subject)		192	-	431	$	1,924	-	$	3,765

VALUATION SERVICES 51 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

The comparables indicate a range of asking rates from $1,924 to $3,765 per month based on unit sizes from 192 to 431 square feet. The subject’ asking rates of $2,750 per month is seen as falling within the lower middle portion of the range from an absolute rent basis, while towards the middle to upper portion on a unit size basis. Byron Park’s asking rate of $3,765 per month is inclusive of all personal care services, while the subject’s rate includes no personal care. Chateau Lodge and Diablo Lodge rates include a base level of personal care. Due to the subject’s favorable location in Rossmoor, it is able to command higher rental rates than those comparables outside of the area. We note that the average in-place rent for the subject is $2,503 per month. Based on the data, we believe that a rent of $2,600 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
Byron Park		431	-	431	$	3,765	-	$	3,765
Montego Heights		224	-	224	$	2,416	-	$	2,416
Chateau Lodge I & III		375	-	375	$	2,795	-	$	3,000
Diablo Lodge		360	-	360	$	2,705	-	$	3,325
Concord Royale		—	-	—		—	-		—
SUBJECT		500	-	500	$	3,300	-	$	3,300
Range (Excluding Subject)		224	-	431	$	2,416	-	$	3,765

The comparables indicate a range of asking rates from $2,416 to $3,765 per month based on unit sizes from 224 to 431 square feet. The subject’ asking rates of $3,300 per month is seen as falling within the middle portion of the range from an absolute rent basis, while slightly above the comparables on a unit size basis. Again, Byron Park’s asking rate of $3,765 per month is inclusive of all personal care services, while the subject’s rate includes no personal care. Montego Heights and Chateau Lodge’s base rates include no personal care. Due to the subject’s favorable location in Rossmoor, it is able to command higher rental rates than those comparables outside of the area. We note that the average in-place rent for the subject is $3,040 per month. Based on the data, we believe that a rent of $3,100 per month is warranted for the subject’s alcove 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 52 ADVISORY GROUP

COMPETITIVE MARKET ANALYSIS

One-Bedroom Units - AL

Facility Name	Unit Size (SF)				Rental Range
Byron Park		614	-	614	$	4,265	-	$	4,265
Montego Heights		384	-	448	$	2,808	-	$	2,808
Chateau Lodge I & III		500	-	500	$	3,145	-	$	3,145
Diablo Lodge		490	-	490	$	3,359	-	$	3,955
Concord Royale		—	-	—		—	-		—
SUBJECT		550	-	550	$	3,875	-	$	3,875
Range (Excluding Subject)		384	-	614	$	2,808	-	$	4,265

The comparables indicate a range of asking rates from $2,808 to $4,265 per month based on unit sizes from 384 to 614 square feet. The subject’ asking rates of $3,875 per month is seen as falling within the middle to upper portion of the range from an absolute rent basis, while slightly above the comparables on a unit size basis. Again, Byron Park’s asking rate of $4,265 per month is inclusive of all personal care services, while the subject’s rate includes no personal care. Montego Heights and Chateau Lodge’s rates include no personal care. Due to the subject’s favorable location in Rossmoor, it is able to command higher rental rates than those comparables outside of the area. We note that the average in-place rent for the subject is $3,579 per month. Based on the data, we believe that a rent of $3,650 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 subject has maintained positive occupancy levels over the last several years. The subject rates are generally at the middle portion of the competition and appear to be reflective of market rates. Concessions are not prevalent in the marketplace. The subject’s ability to continue to attract, as well as retain residents suggests that there is a good marketplace for this type of facility, which should continue into the foreseeable future.

VALUATION SERVICES 53 ADVISORY GROUP

SITE DESCRIPTION

Location:	1228 Rossmoor Parkway Walnut Creek, Contra Costa County, California 94595 The site is situated at the east terminus of a private easement road off of Rossmoor Parkway.
Shape:	The site is irregular, yet is considered to have adequate functional utility.
Topography:	The developed portion of the site is essentially level. The far northern portions of the site slopes steeply upward, and the far southern elevation slopes steeply downward.
Land Area:	4.5500 gross acres (4.5514 net acres) 198,260 gross square feet (198,260 net square feet)
Frontage, Access, Visibility:	The site has no actual street frontage as it is located at the terminus of a right-of-way.
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 Walnut Creek
Sewer:	City of Walnut Creek
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 is a right-of-way easement from Rossmoor Parkway to the site. This easement appears to have been granted also to the adjoining health care properties. In addition, 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 065070 0003C.
Flood Zone:	Zone X

VALUATION SERVICES 54 ADVISORY GROUP

SITE DESCRIPTION

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’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.

VALUATION SERVICES 55 ADVISORY GROUP

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 1976 and contains 97,818 square feet of gross building area within one, two-story building. The facility has 125 units and a capacity of 125 beds. The unit mix for the development is as follows.

Valley View Lodge

	No.		No.		Unit		Total
Description	Units		Beds		Sq.Ft.		Sq.Ft.
Assisted Living
Studio (Standard)		25		25		362		9,050
Studio (Alcove)		88		88		500		44,000
One Bedroom		12		12		550		6,600
Totals		125		125				59,650

General Description
Year Built:	1976
Number of Buildings:	One
Number of Stories:	Two
Gross Building Area:	97,818 ± square feet
Number of Units:	125
Number of Beds:	125
Design and Functionality:	The building is an assisted living property of wood frame construction. The improvements have good appeal to prospective assisted living residents.
Amenities:	556696

Construction Detail
Basic Construction:	Wood frame
Foundation:	Poured reinforced concrete
Framing:	Wood frame (Class D) construction. Interior partitions are wood studs.
Floors:	Concrete slab on main floor, wood truss joists on the second floor.
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 a gas fired hot water boiler system.
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 three, 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 building is designed with two “L” shaped wings radiating out from the central common area. The main floor common areas include a lobby/lounge, administrative offices, main dining room, guest dining room, auditorium, card room billiards room, activity room, beauty /barber shop, small store, four lounge areas and a rear courtyard area. There is also two resident laundry rooms on the main floor. Common areas on the second floor include four lounge areas. The units on the main floor have patios, while those on the second floor have balconies.
	There are two different sizes for the studio units (standard and alcove). The standard units contain 362 square feet, the alcove units 500 square feet and the one-bedroom units 550 square feet. All of the resident living units are rectangular in shape and have small kitchenettes (refrigerator, sink and hot plate), bathrooms with a toilet, sink and roll-in shower stalls, as well as several storage/closet areas. All units have either a patio or balcony. All the units have emergency call systems in the bedroom and bathrooms.
	Overall, the unit sizes and layouts are typical 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 79 open surface parking spaces located along the front and northwest portion of the facility, which equates to a ratio of 0.63 per unit. Overall, the parking appears to be adequate for the facility given that most residents do not have a vehicle.

VALUATION SERVICES	58	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 is a common area at the rear of the facility which contains a fishpond and enclosed aviary. 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 above average condition. The improvements received a major renovation in 2000 which primarily involved upgraded interior components, including paint, carpeting, wall coverings, etc.
	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 61 percent of the total area. This equates to around 39 percent of the facility being designated common area, similar to today’s design of around 40 percent to 60 percent common area.
Year Built:	1976
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 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.

VALUATION SERVICES	59	ADVISORY GROUP

IMPROVEMENTS DESCRIPTION

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	60	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 Contra Costa County. The assessors’ parcel identification number is 189-040-045.

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	$	1,667,847
Improvements		5,524,913
Personal Property		556,696
Assessor’s Market Value:	$	7,749,456
Equalization/Assessment Ratio		100.00	%
Assessed Value	$	7,749,456
Tax Rate ($/$1,000 AV)		13.2222
Total Property Taxes	$	102,464.88
Building Area		97,818
Property Taxes per Square Foot	$	1.05
No. of Units		125
Property Taxes per Unit	$	819.72

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 Walnut Creek 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 $7,749,456 is considered low based on our market value estimates determined herein.

Assuming that the real estate has a value of around $13,500,000 (after deducting for any going concern value but accounting for personal property), the indicated base taxes for the facility would be approximately of $178,500 or $180,000. The increased taxes will be reflected in our proforma model in the Income Capitalization Approach.

VALUATION SERVICES	61	ADVISORY GROUP

ZONING

The property is zoned PD 656, Planned Development by the City of Walnut Creek. According to the zoning regulation, the PD zone is a somewhat broad development classification that allows residential and commercial development as long as it conforms to the general intent of the area. The subject site is classified as a limited care complex for ambulatory senior citizens and these are an outright allowable use and do not require any conditional use approvals.

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	62	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 resident and commercial uses, as well as medical and convalescent care 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	63	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 good and there is no functional obsolescence in the improvements. 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	64	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 non-typical 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 non-typical 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 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
No.	Location	Date		Site Acres	Utility*
1	4756 Clayton Road	$	4,400,000	210,438 SF	PD
	Concord, CA		7/02	4.8310 Ac	Good
2	2611 Contra Costa Boulevard	$	2,200,000	125,801 SF	PUD
	Pleasant Hill, CA		9/01	2.8880 Ac	Good
3	4640 Pacheco Boulevard	$	3,500,000	427,759 SF	PD
	Martinez, CA		3/99	9.8200 Ac	Good
4	100 Chilpancingo Parkway	$	1,574,000	174,936 SF	PUD
	Pleasant Hill, CA		7/98	4.0160 Ac	Good
5	NWC Crow Canyon Road and Porter	$	4,600,000	435,600 SF		R-M
	San Ramon, CA		4/98	10.0000 Ac	Good

[Additional columns below]

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

			$/SqFt
	Public Utilities
No.	Units		$/Unit		COMMENTS
1	Yes		$	20.91	Purchased for multi-family development.
		146	$	30,137
2	Yes		$	17.49	Purchased for hotel development.
		132	$	16,667
3	Yes		$	8.18	Purchased for multi-family development.
		120	$	29,167
4	Yes		$	9.00	Purchased for low-income multi-family development.
		71	$	22,169
5	Yes		$	10.56	Purchased for multi-family development.
		85	$	54,118

	Price		Site SqFt		Zoning		Utilities		$/SqFt
	Date		Site Acres		Utility*		Units		$/Unit
Survey Low	$	1,574,000		125,801 SF		N/A		N/A	$	8.18
Survey High	$	4,600,000		435,600 SF		N/A		N/A	$	20.91
Average	$	3,254,800		274,907 SF		N/A		N/A	$	13.23
Survey Low		4/98		2.8880 Ac		N/A		71	$	16,667
Survey High		7/02		10.0000 Ac		N/A		146	$	54,118
Average		1/00		6.3110 Ac		N/A		111	$	30,451
Subject Property				198,260		PD 656		Yes		N/A
				4.5514	Good			125		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 April 1, 1998 and July 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	70	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 July 2002 sale of a multi-family site located in Concord, California. The parcel contains 4.831 acres. At the time of sale, this comparable was considered slightly inferior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have changed in the period since the sale. The comparable is of a similar size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments were not warranted. Positive adjustments were warranted for market conditions and location.

Comparable Sale No. 2

This is the September 2001 sale of a commercial site located in Pleasant Hill, California. The parcel contains 2.888 acres. At the time of sale, this comparable was considered slightly inferior to the subject. No adjustments for property rights conveyed, financing or conditions of sale were necessary. Market conditions have changed in the period since the sale. The comparable is of a similar size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments were not warranted. Positive adjustments were warranted for market conditions and location.

Comparable Sale No. 3

This is the April 1999 sale of a multi-family site located in Martinez, California. The parcel contains 9.82 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 changed in the period since the sale. The comparable is of a similar size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments were not warranted. Positive adjustments were warranted for market conditions, location and size.

Comparable Sale No. 4

This is the July 1998 sale of a multi-family site located in Pleasant Hill, California. The parcel contains 4.016 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 changed in the period since the sale. The comparable is of a similar size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments were not warranted. Positive adjustments were warranted for market conditions and location.

Comparable Sale No. 5

This is the April 1998 sale of a multi-family site located in Pleasant Hill, California. The parcel contains 10.00 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 changed in the period since the sale. The comparable is of

VALUATION SERVICES	71	ADVISORY GROUP

LAND VALUATION

a similar size to the subject. The comparable has similar utility in relation to the subject. Negative adjustments were not warranted. Positive adjustments were warranted for market conditions, location and size.

A summary of our land sale adjustments is presented below.

LAND SALE ADJUSTMENT GRID

			Economic Adjustments (Cumulative)
	$/SqFt		Property			Financing &
			Rights			Conditions			Exp. After			Market*
No.	Date		Conveyed			of Sale			Purchase			Conditions			Subtotal
1	$	20.91	Fee Simple/Mkt.			Arms-Length			None			Inferior			$	21.95
		7/02		0.0	%		0.0	%		0.0	%		5.0	%		5.0	%
2	$	17.49	Fee Simple/Mkt.			Arms-Length			None			Inferior			$	19.24
		9/01		0.0	%		0.0	%		0.0	%		10.0	%		10.0	%
3	$	8.18	Fee Simple/Mkt.			Arms-Length			None			Inferior			$	9.82
		3/99		0.0	%		0.0	%		0.0	%		20.0	%		20.0	%
4	$	9.00	Fee Simple/Mkt.			Arms-Length			None			Inferior			$	11.25
		7/98		0.0	%		0.0	%		0.0	%		25.0	%		25.0	%
5	$	10.56	Fee Simple/Mkt.			Arms-Length			None			Inferior			$	13.20
		4/98		0.0	%		0.0	%		0.0	%		25.0	%		25.0	%

[Additional Columns Below]

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

	Property Characteristic Adjustments (Additive)
							Public									Adj.
No.	Location			Size			Utilities			Utility**			Other			$/SqFt			Overall
1	Inferior			Similar			Similar			Similar			Similar			$	24.15		Inferior
		10.0	%		0.0	%		0.0	%		0.0	%		0.0	%		10.0	%
2	Inferior			Similar			Similar			Similar			Similar			$	21.16		Inferior
		10.0	%		0.0	%		0.0	%		0.0	%		0.0	%		10.0	%
3	Inferior			Larger			Similar			Similar			Similar			$	12.76		Inferior
		10.0	%		20.0	%		0.0	%		0.0	%		0.0	%		30.0	%
4	Inferior			Similar			Similar			Similar			Similar			$	12.37		Inferior
		10.0	%		0.0	%		0.0	%		0.0	%		0.0	%		10.0	%
5	Inferior			Larger			Similar			Similar			Similar			$	17.16		Inferior
		10.0	%		20.0	%		0.0	%		0.0	%		0.0	%		30.0	%

	Unadjusted						Adjusted
SUMMARY		$/SF Land			$/AC Land			$/SF Land		$/AC Land
Price Range
Low		$	8.18		$	356,416		$	12.37	$	538,911
High		$	20.91		$	910,786		$	24.15	$	1,051,957
Average		$	13.23		$	576,182		$	17.52	$	763,225
Net Adjustment Range (Additive Property Characteristics)
Low			10.0	%
High			30.0	%
Average			18.0	%

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

Summary of Sales and Opinion of Site Value

After considering the differences between each comparable and the subject, the adjusted sales price range is $12.37 to $24.15 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.:		198,260
Opinion of Value:		X $17.00
Indicated Land Value:	$	3,370,418
Rounded Land Value:	$	3,350,000

VALUATION SERVICES	72	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 $3,350,000.

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 $437,500 for the 125 units.

VALUATION SERVICES	73	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 $396,520.

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 $687,500 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	74	ADVISORY GROUP

COST APPROACH

Accrued Depreciation

There are three sources of accrued depreciation:

Physical Deterioration:	The subject improvements were built in 1976. 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 the improvements are older and the unit sizes are smaller than the newer competitive properties in the marketplace.
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		$	8,614,257
Rounded		$	8,600,000
	Per Unit	$	68,800

VALUATION SERVICES	75	ADVISORY GROUP

COST APPROACH

COST APPROACH SUMMARY

															Total
REPLACEMENT COST NEW (RCN)					SqFt					$/SqFt			Total		Cost
Building Base Cost						97,818				$	56.84		$	5,559,975
				Sprinklers		97,818				$	2.00			195,636
				hide row		97,818				$	0.00			0
				Subtotal (GBA)		97,818				$	58.84		$	5,755,611
Subtotal of Building Costs													$	5,755,611
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													$	7,102,553
Furnishings, Fixtures & Equipment
				FF&E	$	3,500				$ /Unit			$	437,500
Total Furnishings, Fixtures & Equipment													$	437,500
Site Improvements					$	2.00				$ /SqFt			$	396,520
Total Direct Costs													$	7,936,573
			Plus: Indirect Costs (% of Direct Costs)			10.0	%						$	793,657
Subtotal Replacement Cost New ( RCN )															$	8,730,230
Pre-Marketing/Stabilization Costs					$	5,500				$/Unit			$	687,500
Subtotal															$	9,417,730
			Plus: Entrepreneurial Profit (% of RCN)			15.0	%									1,412,660
Total Replacement Cost New ( RCN )															$	10,830,390
			Per Square Foot												$	97,818.00
			Per Unit												$	86,643
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	%	$	5,163,632		80.0	%	$	402,500
	Functional Obsolescence					0.0	%		0
	External Obsolescence					0.0	%		0
Total						50.0	%	$	5,163,632		80.0	%	$	402,500	$	5,566,132
Depreciated Value of the Improvements															$	5,264,257
			Per Square Foot GBA												$	91.16
			Per Unit												$	108,746
Plus Land Value															$	3,350,000
Indicated Value															$	8,614,257
			Rounded to nearest $100,000												$	8,600,000
			Per Unit												$	68,800
			Per Square Foot												$	87.92

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

VALUATION SERVICES	76	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	77	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
	2	Emerald Hills	AL	Investors LLC	$	8,800,000		693		95.0	%	Good		$	142.68	$	2,475,000	$	27,809		60.2	%		8.93
		11550 Education Street		ALCO IV LLC		9/02		61,677	89 units				1999	$	98,876	$	985,000	$	11,067		3.56			11.19	%
		Auburn, CA
				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		Woodmart at Summit Ridge
		Reno, NV		LLC		2/02		77,445	92 units				1998	$	92,391	$	1,100,000	$	11,957		2.58			12.94	%
				Francis Connelly
	5	Aegis of Napa	AL/ALZ		$	7,200,000		791		95.0	%	Good		$	211.58	$	2,100,000	$	48,837		63.1	%		9.29
		2100 Redwood Road		Aegis Assisted Living
		Napa, CA		Properties LLC		6/01		34,030	43 units				1999	$	167,442	$	775,000	$	18,023		3.43			10.76	%
				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		7/01		44,328	60 units				2000	$	83,333	$	625,000	$	10,417		2.56			12.50	%
		Redding, CA

			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	$	5,000,000		601		95.0	%		N/A	$	109.76	$	1,950,000	$	27,809		53	%		7.73
Survey Maximum	$	23,125,000		842		97.0	%		N/A	$	211.58	$	5,450,000	$	48,837		68	%		9.48
Survey Average	$	10,113,433		715		95.3	%		N/A	$	155.49	$	2,970,833	$	34,035		63	%		8.73
Survey Minimum		6/01		34,030	43 units				1986	$	83,333	$	625,000	$	10,119		2.56			10.55	%
Survey Maximum		1/03		117,666	189 units				2000	$	167,442	$	2,575,000	$	18,023		4.24			12.94	%
Survey Average		2/02		64,270	93 units				1997	$	110,050	$	1,151,667	$	12,535		3.25			11.51	%
Subject Property		N/A		783		93	%	Average			N/A	$	5,021,256	$	40,170		61	%		N/A
		N/A		97,818		125			1976		N/A	$	1,939,693	$	15,518		N/A			N/A

VALUATION SERVICES	78	ADVISORY GROUP

SALES COMPARISON APPROACH

IMPROVED SALES COMPARABLE MAP

VALUATION SERVICES	79	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 8.73x. 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 61.37 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 portion of the range of 8.75x, 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	$	1,939,693	$	14,988,538	$	119,908
High		9.48	$	1,939,693	$	18,382,815	$	147,063
Median		8.96	$	1,939,693	$	17,374,407	$	138,995
Average		8.73	$	1,939,693	$	16,943,015	$	135,544
Sample Si		6

     CONCLUSIONS

Indicated CFM			8.75
Net Operating Income		x $	1,939,693
Indicated Stabilized Value		$	16,972,316
Rounded to nearest $100,000		$	17,000,000
	Per Unit	$	136,000
	Per Square Foot	$	173.79

Therefore, the indicated value for the subject the CFM analysis is $17,000,000.

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 3.25x. 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	80	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 3.50x for the subject, which falls at the middle to upper portion of 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	$	5,021,256	$	12,875,015	$	103,000
High		4.24	$	5,021,256	$	21,305,788	$	170,446
Median		3.29	$	5,021,256	$	16,539,089	$	132,313
Average		3.25	$	5,021,256	$	16,340,979	$	130,728
Sample Size		6

     CONCLUSIONS

Indicated EGIM			3.50	EMPTY
Effective Gross Income		x $	5,021,256
Indicated Stabilized Value		$	17,574,396
Rounded to nearest $250,000		$	17,500,000
	Per Unit	$	140,000
	Per Square Foot	$	178.90

Therefore, the indicated value for the subject by the EGIM analysis is $17,500,000.

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.

VALUATION SERVICES	81	ADVISORY GROUP

SALES COMPARISON APPROACH

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. 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 June 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	82	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 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 is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were inferior. Negative adjustments were warranted for age. Positive adjustments were warranted for revenue characteristics.

Comparable Sale No. 2

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 is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were inferior. Negative adjustments were warranted for age. Positive adjustments were warranted for location and revenue characteristics.

Comparable Sale No. 3

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 is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were inferior. Negative adjustments were warranted for age. Positive adjustments were warranted for revenue characteristics.

Comparable Sale No. 4

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 is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were inferior. Negative adjustments were warranted for age. Positive adjustments were warranted for location and revenue characteristics.

Comparable Sale No. 5

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 inferior. Negative adjustments were warranted for age. Positive adjustments were not warranted.

VALUATION SERVICES	83	ADVISORY GROUP

SALES COMPARISON APPROACH

Comparable Sale No. 6

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 is of a superior age and condition to the subject. The comparable has a similar payor mix as the subject. Revenue characteristics were inferior. Negative adjustments were warranted for age. Positive adjustments were warranted for location and revenue characteristics.

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	$	167,442	Fee Simple/Mkt.			Arms-Length			None			Similar			$	167,442
		6/01		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	%

[Additional columns below]

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

			PROPERTY CHARACTERISTIC ADJUSTMENTS (ADDITIVE)
	$/Unit					Age,
						Quality						Revenue			Payor						Adj.
No.	Date		Location			Condition			Unit Mix			Characteristics			Mix			Other			$/Unit			Overall
1	$	122,354	Similar			Superior			Similar			Inferior			Similar			Similar			$	140,708		Inferior
		1/03		0.0	%		-5.0	%		0.0	%		20.0	%		0.0	%		0.0	%		15.0	%
2	$	98,876	Inferior			Superior			Similar			Inferior			Similar			Similar			$	123,596		Inferior
		9/02		10.0	%		-5.0	%		0.0	%		20.0	%		0.0	%		0.0	%		25.0	%
3	$	95,900	Similar			Superior			Similar			Inferior			Similar			Similar			$	110,285		Inferior
		1/02		0.0	%		-5.0	%		0.0	%		20.0	%		0.0	%		0.0	%		15.0	%
4	$	92,391	Inferior			Superior			Similar			Inferior			Similar			Similar			$	115,489		Inferior
		2/02		10.0	%		-5.0	%		0.0	%		20.0	%		0.0	%		0.0	%		25.0	%
5	$	167,442	Similar			Superior			Similar			Similar			Similar			Similar			$	159,070		Superior
		6/01		0.0	%		-5.0	%		0.0	%		0.0	%		0.0	%		0.0	%		-5.0	%
6	$	83,333	Inferior			Superior			Similar			Inferior			Similar			Similar			$	104,167		Inferior
		7/01		10.0	%		-5.0	%		0.0	%		20.0	%		0.0	%		0.0	%		25.0	%

SUMMARY

		Unadj. $/Unit			Adj. $/Unit
Price Range
	Low	$	83,333		$	104,167
	High	$	167,442		$	200,930
	Average	$	117,564		$	135,589
Net Adjustment
	Low		15.0	%
	High		25.0	%
	Average		20.0	%

CONCLUSION

Indicated Value per Unit		$	135,000
Number of Units			x 125
Indicated Value		$	16,875,000
	Rounded to nearest $250,000	$	17,000,000
	Per Unit	$	136,000

*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 $104,167 to $159,070 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 $135,000 per unit.

Price Per Unit Conclusion

Number of Units		Price Per Unit			Indicated Value
125	X	$	135,000	=	$	16,875,000
		Rounded To:			$	16,900,000

VALUATION SERVICES	84	ADVISORY GROUP

SALES COMPARISON APPROACH

The Sales Comparison Approach results in a range of values for the subject property of $16,900,000 to $17,500,000. This value range equates to a price per square foot of building area of $172.77 to $178.90, which falls within the middle 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 7, 2003 was:

Units	Indicated Value
125	$	16,900,000

VALUATION SERVICES	85	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	86	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Valley View Lodge
INCOME AND OPERATING SUMMARY

		2000
		(January - December)
		Amount			$/Resident			PRD			% of EGI
REVENUES
Rental Income		$	2,974,665		$	27,341		$	74.91			87.40	%
Rent Concessions		$	(27,061	)	$	(249	)	$	(0.68	)		-0.80	%
Additional Personal Care		$	425,050		$	3,907		$	10.70			12.49	%
Second Occupant		$	—		$	—		$	—			0.00	%
New Resident Fees		$	21,450		$	197		$	0.54			0.63	%
Other Income		$	9,462		$	87		$	0.24			0.28	%
GROSS POTENTIAL REV.		$	3,403,566		$	31,283		$	85.71			100.00	%
Vacancy/Collection Loss		Inc. Above
TOTAL NET REVENUE		$	3,403,566		$	31,283		$	85.71			100.00	%
OPERATING EXPENSES
Departmental
	General/Administrative	$	60,767		$	559		$	1.53			1.79	%
	Payroll (Wages)	$	887,467		$	8,157		$	22.35			26.07	%
	Payroll Taxes & Benefits	$	235,443		$	2,164		$	5.93			6.92	%
	Resident Care	$	3,914		$	36		$	0.10			0.11	%
	Food Services	$	259,960		$	2,389		$	6.55			7.64	%
	Activities	$	21,697		$	199		$	0.55			0.64	%
	Housekeeping/Laundry	$	27,425		$	252		$	0.69			0.81	%
	Plant Operations	$	134,306		$	1,234		$	3.38			3.95	%
	Utilities	$	163,298		$	1,501		$	4.11			4.80	%
	Marketing/Promotions	$	55,931		$	514		$	1.41			1.64	%
Non-Departmental
	Real Estate Taxes	$	91,063		$	837		$	2.29			2.68	%
	Insurance	$	24,182		$	222		$	0.61			0.71	%
	Management Fees (5% of EGI)	$	170,178		$	1,564		$	4.29			5.00	%
	Replacement Reserves ($/Unit)	$	37,500		$	345		$	0.94			1.10	%
TOTAL ALL EXPENSES		$	2,173,131		$	19,974		$	54.72			63.85	%
EXPENSE RATIO			63.8	%
NET OPERATING INCOME		$	1,230,435		$	11,309		$	30.98			36.15	%
OCCUPANCY			87.0	%

[Additional columns below]

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

		2001
		(January - December)
		Amount			$/Resident			PRD			% of EGI
REVENUES
Rental Income		$	3,686,945		$	30,218		$	82.79			86.60	%
Rent Concessions		$	(6,000	)	$	(49	)	$	(0.13	)		-0.14	%
Additional Personal Care		$	534,772		$	4,383		$	12.01			12.56	%
Second Occupant		$	—		$	—		$	—			0.00	%
New Resident Fees		$	28,000		$	229		$	0.63			0.66	%
Other Income		$	13,742		$	113		$	0.31			0.32	%
GROSS POTENTIAL REV.		$	4,257,459		$	34,894		$	95.60			100.00	%
Vacancy/Collection Loss		Inc. Above
TOTAL NET REVENUE		$	4,257,459		$	34,894		$	95.60			100.00	%
OPERATING EXPENSES
Departmental
	General/Administrative	$	48,649		$	399		$	1.09			1.14	%
	Payroll (Wages)	$	986,061		$	8,082		$	22.14			23.16	%
	Payroll Taxes & Benefits	$	358,283		$	2,937		$	8.05			8.42	%
	Resident Care	$	4,277		$	35		$	0.10			0.10	%
	Food Services	$	249,872		$	2,048		$	5.61			5.87	%
	Activities	$	19,486		$	160		$	0.44			0.46	%
	Housekeeping/Laundry	$	25,293		$	207		$	0.57			0.59	%
	Plant Operations	$	118,592		$	972		$	2.66			2.79	%
	Utilities	$	213,837		$	1,753		$	4.80			5.02	%
	Marketing/Promotions	$	20,753		$	170		$	0.47			0.49	%
Non-Departmental
	Real Estate Taxes	$	88,310		$	724		$	1.98			2.07	%
	Insurance	$	43,372		$	355		$	0.97			1.02	%
	Management Fees (5% of EGI)	$	212,873		$	1,745		$	4.78			5.00	%
	Replacement Reserves ($/Unit)	$	37,500		$	307		$	0.84			0.88	%
TOTAL ALL EXPENSES		$	2,427,158		$	19,893		$	54.50			57.01	%
EXPENSE RATIO			57.0	%
NET OPERATING INCOME		$	1,830,301		$	15,001		$	41.10			42.99	%
OCCUPANCY			97.6	%

[Additional columns below]

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

		2002
		(January - December)
		Amount			$/Resident		PRD		% of EGI
REVENUES
Rental Income		$	3,994,699		$	33,151	$	90.82		85.44	%
Rent Concessions		$	3,000		$	25	$	0.07		0.06	%
Additional Personal Care		$	600,567		$	4,984	$	13.65		12.85	%
Second Occupant		$	—		$	—	$	—		0.00	%
New Resident Fees		$	57,000		$	473	$	1.30		1.22	%
Other Income		$	19,982		$	166	$	0.45		0.43	%
GROSS POTENTIAL REV.		$	4,675,248		$	38,799	$	106.30		100.00	%
Vacancy/Collection Loss		Inc. Above
TOTAL NET REVENUE		$	4,675,248		$	38,799	$	106.30		100.00	%
OPERATING EXPENSES
Departmental
	General/Administrative	$	49,075		$	407	$	1.12		1.05	%
	Payroll (Wages)	$	995,324		$	8,260	$	22.63		21.29	%
	Payroll Taxes & Benefits	$	435,474		$	3,614	$	9.90		9.31	%
	Resident Care	$	2,623		$	22	$	0.06		0.06	%
	Food Services	$	261,732		$	2,172	$	5.95		5.60	%
	Activities	$	27,327		$	227	$	0.62		0.58	%
	Housekeeping/Laundry	$	22,392		$	186	$	0.51		0.48	%
	Plant Operations	$	117,734		$	977	$	2.68		2.52	%
	Utilities	$	204,358		$	1,696	$	4.65		4.37	%
	Marketing/Promotions	$	38,488		$	319	$	0.88		0.82	%
Non-Departmental
	Real Estate Taxes	$	96,542		$	801	$	2.20		2.06	%
	Insurance	$	81,621		$	677	$	1.86		1.75	%
	Management Fees (5% of EGI)	$	233,762		$	1,940	$	5.31		5.00	%
	Replacement Reserves ($/Unit)	$	37,500		$	311	$	0.85		0.80	%
TOTAL ALL EXPENSES		$	2,603,952		$	21,610	$	59.20		55.70	%
EXPENSE RATIO			55.7	%
NET OPERATING INCOME		$	2,071,296		$	17,189	$	47.09		44.30	%
OCCUPANCY			96.4	%

[Additional columns below]

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

		2003 Annualized
		(January - August)
		Amount			$/Resident			PRD			% of EGI
REVENUES
Rental Income		$	4,340,147		$	35,524		$	97.33			84.46	%
Rent Concessions		$	(7,875	)	$	(64	)	$	(0.18	)		-0.15	%
Additional Personal Care		$	696,602		$	5,702		$	15.62			13.56	%
Second Occupant		$	—		$	—		$	—			0.00	%
New Resident Fees		$	90,000		$	737		$	2.02			1.75	%
Other Income		$	19,751		$	162		$	0.44			0.38	%
GROSS POTENTIAL REV.		$	5,138,624		$	42,060		$	115.23			100.00	%
Vacancy/Collection Loss		Inc. Above
TOTAL NET REVENUE		$	5,138,624		$	42,060		$	115.23			100.00	%
OPERATING EXPENSES
Departmental
	General/Administrative	$	42,524		$	348		$	0.95			0.83	%
	Payroll (Wages)	$	1,038,974		$	8,504		$	23.30			20.22	%
	Payroll Taxes & Benefits	$	427,329		$	3,498		$	9.58			8.32	%
	Resident Care	$	2,357		$	19		$	0.05			0.05	%
	Food Services	$	280,961		$	2,300		$	6.30			5.47	%
	Activities	$	24,233		$	198		$	0.54			0.47	%
	Housekeeping/Laundry	$	25,448		$	208		$	0.57			0.50	%
	Plant Operations	$	112,085		$	917		$	2.51			2.18	%
	Utilities	$	223,238		$	1,827		$	5.01			4.34	%
	Marketing/Promotions	$	26,139		$	214		$	0.59			0.51	%
Non-Departmental
	Real Estate Taxes	$	103,490		$	847		$	2.32			2.01	%
	Insurance	$	80,442		$	658		$	1.80			1.57	%
	Management Fees (5% of EGI)	$	256,931		$	2,103		$	5.76			5.00	%
	Replacement Reserves ($/Unit)	$	37,500		$	307		$	0.84			0.73	%
TOTAL ALL EXPENSES		$	2,681,647		$	21,949		$	60.13			52.19	%
EXPENSE RATIO			52.2	%
NET OPERATING INCOME		$	2,456,977		$	20,110		$	55.10			47.81	%
OCCUPANCY			97.7	%

[Additional columns below]

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

		C&W Forecast
		Stabilized Year
		Amount			$/Resident		PRD		% of EGI
REVENUES
Rental Income		$	4,729,200		$	37,834	$	111.46
Rent Concessions		$	—		$	—	$	—
Additional Personal Care		$	600,000		$	4,800	$	14.14
Second Occupant		$	—		$	—	$	—
New Resident Fees		$	50,000		$	400	$	1.18
Other Income		$	20,000		$	160	$	0.47
GROSS POTENTIAL REV.		$	5,399,200		$	43,194	$	121.07
Vacancy/Collection Loss		$	(377,944	)
TOTAL NET REVENUE		$	5,021,256		$	43,194	$	118.34
OPERATING EXPENSES
Departmental
	General/Administrative	$	100,000		$	860	$	2.36		1.99	%
	Payroll (Wages)	$	1,200,000		$	10,323	$	28.28		23.90	%
	Payroll Taxes & Benefits	$	450,000		$	3,871	$	10.61		8.96	%
	Resident Care	$	30,000		$	258	$	0.71		0.60	%
	Food Services	$	300,000		$	2,581	$	7.07		5.97	%
	Activities	$	30,000		$	258	$	0.71		0.60	%
	Housekeeping/Laundry	$	30,000		$	258	$	0.71		0.60	%
	Plant Operations	$	120,000		$	1,032	$	2.83		2.39	%
	Utilities	$	230,000		$	1,978	$	5.42		4.58	%
	Marketing/Promotions	$	40,000		$	344	$	0.94		0.80	%
Non-Departmental
	Real Estate Taxes	$	180,000		$	1,548	$	4.24		3.58	%
	Insurance	$	83,000		$	714	$	1.96		1.65	%
	Management Fees (5% of EGI)	$	251,063		$	2,160	$	5.92		5.00	%
	Replacement Reserves ($/Unit)	$	37,500		$	323	$	0.88		0.75	%
TOTAL ALL EXPENSES		$	3,081,563		$	26,508	$	72.62		61.37	%
EXPENSE RATIO			61.4	%
NET OPERATING INCOME		$	1,939,693		$	16,686	$	45.71		38.63	%
OCCUPANCY			93.0	%

VALUATION SERVICES	87	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Assisted Living Rate Analysis

The subject has an effective capacity of 125 residents and/or beds. The facility is of average quality construction with a layout and design typical to its age. Although dated, the property is able to market itself well due to its location in a strong senior demographic area. 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.

Valley View Lodge

						In House Rents				Asking Rents
		No.		Occ.		Monthly		$/Unit		Monthly		$/Unit
Unit		Units		Units		Revenue		Per Mo.		Revenue		Per Mo.
Assisted Living
Studio (Standard)			25		25	$	62,582	$	2,503	$	68,750	$	2,750
Studio (Alcove)			88		87	$	264,485	$	3,040	$	290,400	$	3,300
	Total - Studio		113		112	$	327,067	$	2,920	$	359,150	$	3,178
One Bedroom			12		10	$	35,785	$	3,579	$	46,620	$	3,885
	Total - Two-Room		12		10	$	35,785	$	3,579	$	46,620	$	3,885
Assisted Totals			125		122	$	362,852	$	2,974	$	405,770	$	3,246
Totals			125		122	$	362,852	$	2,974	$	405,770	$	3,246

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 $2,974 per month, which is 9.14 percent below the average asking rate of $3,246 per month. We feel a 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.

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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.

Valley View Lodge
Reconciled Market Rental Rates

	Resident	No.		No.		Market
Unit Type	Type	Units		Beds		Rent
Studio	AL		25		25	$	2,600
Studio Alcove	AL		88		88	$	3,100
One-Bedroom	AL		12		12	$	3,650
Totals			125		125

Other Revenues

In addition to room revenues, the subject receives additional income from additional personal 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	$	425,050	$	3,907	$	10.70
	2001	$	534,772	$	4,383	$	12.01
	2002	$	600,567	$	4,984	$	13.65
2003 Annualized		$	696,602	$	5,702	$	15.62
C&W Forecast		$	600,000	$	4,800	$	14.14

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, 69 residents (57 percent of existing total) were paying for personal care services. The average charge equated to $920.36 per

VALUATION SERVICES	89	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

month, which would indicate an average Level 3 care level. Based on the data, we have forecast that 50 percent of the resident mix will pay an average of $800 per month for personal care services. This equates to Year 1 revenue of $600,000, 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 lower middle 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	$	21,450	$	197
2001	$	28,000	$	229
2002	$	57,000	$	473
2003 Annualized	$	90,000	$	737
C&W Forecast	$	50,000	$	400

Based on the data, we have forecast Year 1 new resident fees at $50,000.

Second Person Fees

The subject charges a fee of $780 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, 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	90	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Year		Total		$/Resident		PRD
	2000	$	9,462	$	87	$	0.24
	2001	$	13,742	$	113	$	0.31
	2002	$	19,982	$	166	$	0.45
	2003 Annualized	$	19,751	$	162	$	0.44
	C&W Forecast	$	20,000	$	160	$	1.18

Based on the data, we have forecast Year 1 revenue from this source at $20,000. 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 any rent concessions. Concessions are believed to be a negligible part of the market used only to stimulate lease-up of any unforeseen vacancies and should not have be of any major significance to a property like the subject. Therefore, no allowance for rent concessions will be applied to the subject.

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 98 percent occupied. This is similar to higher than current average occupancy levels for the market area overall.

Rent comparable occupancies range from 70 to 98 percent with a general tendency around 90 to 95 percent. Occupancy at the subject was 87 percent in 2000, 98 percent in 2001, 96 percent in 2002 and year-to-date 2003 annualizes out to 98 percent.

In consideration of the above, we have forecasted a stabilized vacancy and collection loss of 7.00 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.

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Valley View Lodge
STABILIZED OPERATING INCOME

												PER
	RESIDENT	NO.		NO.			MONTHLY					ACTUAL
UNIT TYPE	TYPE	UNITS		BEDS			RATE		INCOME			RESIDENT
Studio (Standard)	AL		25		25		$	2,700	$	810,000
One Bedroom	AL		88		88		$	3,200	$	3,379,200
One Bedroom	AL		12		12		$	3,750	$	540,000
Total			125		125				$	4,729,200		$	37,834
Additional Personal Care					50	%	$	800	$	600,000		$	4,800
Second Person					0	%	$	800	$	—		$	—
New Resident Fees					40	%	$	1,000	$	50,000		$	400
Other									$	20,000		$	160
TOTAL POTENTIAL GROSS INCOME									$	5,399,200		$	43,194
LESS: VACANCY @					7.0	%			$	(377,944	)
EFFECTIVE GROSS INCOME									$	5,021,256		$	43,194

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.

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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			Per					% of
		Resident			$/RD		EGI			Resident			$/RD		EGI			Resident			$/RD		EGI
TOTAL NET REVENUES		$	37,505		$	102.75				$	25,443		$	69.71				$	34,768		$	95.26				$	29,046		$	34,264		$	38,878
EXPENSES
	General & Administrative	$	756		$	2.07		2.02	%	$	1,110		$	3.04		3.25	%	$	1,129		$	3.09		3.25	%	$	1,115		$	1,433		$	1,889
	Payroll (Wages/Salaries)	$	11,593		$	31.76		30.91	%	$	8,553		$	23.43		23.52	%	$	8,179		$	22.41		23.52	%		N/A			N/A			N/A
	Payroll Taxes & Benefits	$	3,815		$	10.45		10.17	%	$	2,144		$	5.88		8.62	%	$	2,996		$	8.21		8.62	%	$	1,575		$	2,068		$	3,003
	Resident Care	$	219		$	0.60		0.59	%	$	609		$	1.67		0.82	%	$	286		$	0.78		0.82	%	$	4,253		$	6,123		$	7,259
	Food Services	$	1,786		$	4.89		4.76	%	$	1,207		$	3.31		6.32	%	$	2,196		$	6.02		6.32	%	$	2,704		$	3,529		$	4,892
	Activities	$	58		$	0.16		0.16	%	$	58		$	0.16		0.53	%	$	184		$	0.50		0.53	%		N/A			N/A			N/A
	Housekeeping	$	119		$	0.32		0.32	%	$	101		$	0.28		0.86	%	$	299		$	0.82		0.86	%	$	532		$	815		$	1,130
	Plant Operations	$	644		$	1.77		1.72	%	$	510		$	1.40		4.05	%	$	1,409		$	3.86		4.05	%	$	580		$	916		$	1,356
	Utilities	$	1,536		$	4.21		4.09	%	$	1,180		$	3.23		5.19	%	$	1,805		$	4.94		5.19	%	$	1,086		$	1,306		$	1,526
	Marketing/Promotions	$	527		$	1.44		1.41	%	$	439		$	1.20		1.57	%	$	546		$	1.49		1.57	%	$	858		$	1,349		$	2,008
	Real Estate Taxes	$	705		$	1.93		1.88	%	$	520		$	1.43		3.62	%	$	1,257		$	3.45		3.62	%	$	648		$	1,011		$	1,597
	Insurance	$	611		$	1.67		1.63	%	$	400		$	1.10		3.32	%	$	1,154		$	3.16		3.32	%	$	278		$	463		$	726
ADJUSTED OPERATING EXPENSES		$	22,369		$	73.84		59.64	%	$	16,832		$	55.56		61.66	%	$	21,439		$	70.77		61.66	%	$	20,959		$	24,058		$	29,438
Management Fee		$	1,875		$	5.14		5.00	%	$	1,272		$	3.49		5.00	%	$	1,738		$	0.00		5.00	%	$	1,249		$	1,713		$	2,082
Expense Ratio Before																											76	%		75	%		81	%
	Reserves		65	%							71	%							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)

VALUATION SERVICES	93	ADVISORY GROUP

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	$	60,767	$	559	$	1.53		1.79	%
2001	$	48,649	$	399	$	1.09		1.14	%
2002	$	49,075	$	407	$	1.12		1.05	%
2003 Annualized	$	42,524	$	348	$	0.95		0.83	%
C&W Forecast	$	100,000	$	860	$	2.36		1.99	%

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 $100,000 or $ 860 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	$	887,467	$	8,157	$	22.35		26.07	%
2001	$	986,061	$	8,082	$	22.14		23.16	%
2002	$	995,324	$	8,260	$	22.63		21.29	%
2003 Annualized	$	1,038,974	$	8,504	$	23.30		20.22	%
C&W Forecast	$	1,200,000	$	10,323	$	28.28		23.90	%

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 fall towards the lower portion of the comparable range and we believe a slightly higher cost would be reasonable. We have forecast Year 1 wages and salary costs at $1,200,000 or $10,323 per resident.

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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	$	235,443	$	2,164	$	5.93		6.92	%
2001	$	358,283	$	2,937	$	8.05		8.42	%
2002	$	435,474	$	3,614	$	9.90		9.31	%
2003 Annualized	$	427,329	$	3,498	$	9.58		8.32	%
C&W Forecast	$	450,000	$	3,871	$	10.61		8.96	%

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 at the upper end of the range by the comparable properties, but are considered reasonable. We have forecast Year 1 payroll taxes and benefits costs at $450,000 or $3,871 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	$	3,914	$	36	$	0.10		0.11	%
2001	$	4,277	$	35	$	0.10		0.10	%
2002	$	2,623	$	22	$	0.06		0.06	%
2003 Annualized	$	2,357	$	19	$	0.05		0.05	%
C&W Forecast	$	30,000	$	258	$	0.71		0.60	%

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	95	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

would allocate a higher allowance, especially as over one-half 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 $30,000 or $ 258 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	$	259,960	$	2,389	$	6.55		7.64	%
2001	$	249,872	$	2,048	$	5.61		5.87	%
2002	$	261,732	$	2,172	$	5.95		5.60	%
2003 Annualized	$	280,961	$	2,300	$	6.30		5.47	%
C&W Forecast	$	300,000	$	2,581	$	7.07		5.97	%

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 $300,000 or $2,581 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	$	21,697	$	199	$	0.55		0.64	%
2001	$	19,486	$	160	$	0.44		0.46	%
2002	$	27,327	$	186	$	0.51		0.48	%
2003 Annualized	$	24,233	$	198	$	0.54		0.47	%
C&W Forecast	$	30,000	$	258	$	0.71		0.60	%

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	96	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 $30,000 or $ 258 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	$	27,425	$	252	$	0.69		0.81	%
2001	$	25,293	$	207	$	0.57		0.59	%
2002	$	22,392	$	186	$	0.51		0.48	%
2003 Annualized	$	25,448	$	208	$	0.57		0.50	%
C&W Forecast	$	30,000	$	258	$	0.71		0.60	%

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 $30,000 or $ 258 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	$	134,306	$	1,234	$	3.38		3.95	%
2001	$	118,592	$	972	$	2.66		2.79	%
2002	$	117,734	$	977	$	2.68		2.52	%
2003 Annualized	$	112,085	$	917	$	2.51		2.18	%
C&W Forecast	$	120,000	$	1,032	$	2.83		2.39	%

VALUATION SERVICES	97	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 $120,000 or $1,032 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	$	163,298	$	1,501	$	4.11		4.80	%
2001	$	213,837	$	1,753	$	4.80		5.02	%
2002	$	204,358	$	1,696	$	4.65		4.37	%
2003 Annualized	$	223,238	$	1,827	$	5.01		4.34	%
C&W Forecast	$	230,000	$	1,978	$	5.42		4.58	%

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 are supported by the comparable properties. We have forecast Year 1 utility costs at $230,000 or $1,978 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	98	ADVISORY GROUP

INCOME CAPITALIZATION APPROACH

Year	Total		$/Resident		PRD		% of EGI
2000	$	55,931	$	514	$	1.41		1.64	%
2001	$	20,753	$	170	$	0.47		0.49	%
2002	$	38,488	$	319	$	0.88		0.82	%
2003 Annualized	$	26,139	$	214	$	0.59		0.51	%
C&W Forecast	$	40,000	$	344	$	0.94		0.80	%

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 $40,000 or $ 344 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	$	91,063	$	837	$	2.29		2.68	%
2001	$	88,310	$	724	$	1.98		2.07	%
2002	$	96,542	$	801	$	2.20		2.06	%
2003 Annualized	$	103,490	$	847	$	2.32		2.01	%
C&W Forecast	$	180,000	$	1,548	$	4.24		3.58	%

The expense comparables showed expenses for this category from $ 520 to $ 546 per resident (average of $ 504 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 $180,000 or $1,548 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.

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Year	Total		$/Resident		PRD		% of EGI
2000	$	24,182	$	222	$	0.61		0.71	%
2001	$	43,372	$	355	$	0.97		1.02	%
2002	$	81,621	$	677	$	1.86		1.75	%
2003 Annualized	$	80,442	$	658	$	1.80		1.57	%
C&W Forecast	$	83,000	$	714	$	1.96		1.65	%

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 $ 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 $83,000 or $ 714 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 $251,063 or $2,160 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 $37,500 or $ 323 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 $3,081,563 ($26,508 per resident) and 61.37 percent of effective gross income. The sale comparables indicated expense ratios from 52.75 to 67.95 percent (average of 62.89 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 55.7 to 63.8 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 $16,686, which is below the most recent full operating year (2002) of $17,189 per resident. The difference, however, is directly related to our stabilized market occupancy that is lower 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.

Valley View Lodge
STABILIZED OPERATING STATEMENT

							Total		PR		PRD		% of EGI
EFFECTIVE GROSS INCOME							$	5,021,256	$	43,194	$	118.34
EXPENSES
	General/Administrative						$	100,000	$	860	$	2.36		1.99	%
	Payroll (Wages)						$	1,200,000	$	10,323	$	28.28		23.90	%
	Payroll Taxes & Benefits						$	450,000	$	3,871	$	10.61		8.96	%
	Resident Care						$	30,000	$	258	$	0.71		0.60	%
	Food Services						$	300,000	$	2,581	$	7.07		5.97	%
	Activities						$	30,000	$	258	$	0.71		0.60	%
	Housekeeping/Laundry						$	30,000	$	258	$	0.71		0.60	%
	Plant Operations						$	120,000	$	1,032	$	2.83		2.39	%
	Utilities						$	230,000	$	1,978	$	5.42		4.58	%
	Marketing/Promotions						$	40,000	$	344	$	0.94		0.80	%
	Real Estate Taxes						$	180,000	$	1,548	$	4.24		3.58	%
	Insurance						$	83,000	$	714	$	1.96		1.65	%
TOTAL OPERATING EXPENSES					55.6	%	$	2,793,000	$	24,026	$	65.82		55.62	%
Management Fees			5.0	%			$	251,063	$	2,160	$	5.92		5.00	%
Replacement Reserves		$	300				$	37,500	$	323	$	0.88		0.75	%
TOTAL EXPENSES							$	3,081,563	$	26,508	$	72.62		61.37	%
NET OPERATING INCOME							$	1,939,693	$	16,686	$	45.71		38.63	%

(*) 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	Aegis of Napa	Jun-01		1999		95	%		10.76	%
6	Atria Redding	Jul-01		2000		95	%		12.50	%
Low				1986		95	%		10.55	%
High				2000		97	%		12.94	%
Median				1999		95	%		11.16	%
Average				1997		95	%		11.51	%

The overall capitalization rates of the comparable sales range from 10.55 to 12.94 percent, with an average indicated of 11.51 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 11.25 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 $1,939,693

Sensitivity Analysis (0.25% OAR Spread)	Value		$/Unit
Based on Low-Range of 11.00%	$	17,633,575	$	141,069
Based on Most Probable Range of 11.25%	$	17,241,717	$	137,934
Based on High-Range of 11.50%	$	16,866,897	$	134,935
Reconciled Value	$	17,241,717	$	137,934
Rounded to nearest $100,000	$	17,200,000	$	137,600
Value Conclusion:	$	17,200,000

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RECONCILIATION AND FINAL VALUE OPINION

Valuation Methodology Review and Reconciliation

This Appraisal employs all three typical approaches to 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	$	8,600,000
Sales Comparison Approach:	$	16,900,000
Income Capitalization Approach:	$	17,200,000

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. Nonetheless, as the subject represents older construction, the degree of depreciation was moderate and is considered reasonable based on the market data. This approach, however, falls below the indications provided by the Sales Comparison and Income Capitalization Approaches with the difference related to the intrinsic value associated with the going concern of the property. 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 7, 2003 was:

SEVENTEEN MILLION DOLLARS

$17,000,000

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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 $503,125, including a 15 percent factor for entrepreneurial profit.

Physical deterioration (depreciation) must be deducted for the FF&E. The subject opened in 1976. 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 an 80 percent depreciation factor, as summarized in the following table.

Furniture, Fixtures and Equipment

Total Value of FF&E As New	$	503,125
Physical Life (Yrs)		10
Effective Age (Yrs)		8
Percent Depreciated (%)		80
Percent Value Remaining (%)		20
Depreciated Value	$	100,625
Rounded	$	100,000

The contributing value of the FF&E is believed to be the cost of the FF&E less its accrued depreciation. This equates to $100,000 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 $8,600,000. As the value of the going concern (Income Capitalization and Sales Comparison Approaches) was determined to be $17,000,000 (which includes the $100,000 in FF&E), this indicates that there is $8,300,000 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

VALUATION SERVICES	112	ADVISORY GROUP

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

VALUATION SERVICES	113	ADVISORY GROUP

ADDENDA

ADDENDUM A: Letter of Engagement

Cushman & Wakefield of Georgia, Inc.

3300 One Atlantic Center

1201 West Peachtree Street

Atlanta, GA 30309

404-853-6351 Tel

404-874-6046 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 the 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 Fulletton		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 OF 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 use 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

All Policy Forms

SCHEDULE   C

The land referred to in this policy is situated in the State of California, County of Contra Costa, City of Walnut Creek, and is described as follows:

PARCEL ONE:

Parcel C of Parcel Map No. LD-182, recorded January 7, 1976, Book 42 of Parcel Maps, Page 17, Contra Costa County Records.

EXCEPTING THEREFROM:

All mineral rights below 500 feet of the surface of the above described property, without right of surface entry, as reserved in the Deed from Rossmoor Corporation, recorded September 24, 1968 in Book 5718, at Page 456, Contra Costa County Records.

PARCEL TWO:

A right of way (not to be exclusive), for use as a roadway for vehicles of all kinds, pedestrians and animals, for water, gas, oil and sewer pipe lines, and for telephone, electric light and power lines, together with the necessary poles or conduits, to carry said lines over, under and upon the northerly 31 feet of the westerly 378.0 feet (right angle measurements) of Parcel Two, as shown on the Parcel Map filed January 9, 1970 in Book 11 of Parcel Maps, at Page 32, Contra Costa County Records.

PARCEL THREE:

Right of way granted in the Deed to Wir Medical Corporation, recorded August 15, 1969 (File No. 58094), as follows:

A right of way (not to be exclusive) for use as a roadway for vehicles of all kinds, pedestrians and animals, for water, gas, oil and sewer pipe lines, and for telephone, television service, electric light and power lines, together with the necessary poles or conduits, as an appurtenance to Parcel One above, over and under a strip of land 31 feet in width, the North line of which is described as follows:

Beginning on the North line of the parcel of land described as Parcel One in the Deed to Golden Rain Foundation of Walnut Creek, recorded September 27, 1968 in Volume 5718 of Official Records, at Page 456, distant thereon North 82° 43’ 21” West, 514.25 feet from the northeast corner thereof; thence from said point of beginning along the North line of said Parcel One, (5718 OR 456); North 82° 43’ 21” West, 350.18 feet to the Northwest corner thereof.

FIRST AMERICAN TITLE

The above right of way is to terminate on the West by the West line of said Parcel One, (5718 OR 456), and on the East by the West line of Parcel Two above.

PARCEL FOUR:

An easement for pedestrians and vehicular access, ingress & egress over that portion of the Rancho San Ramon, in the City of Walnut Creek, County of Contra Costa, State of California, described as follows:

Commencing at the northwest corner of the parcel of land described as Parcel One in the-Deed from Rossmoor Corporation to Golden Rain Foundation of Walnut Creek, recorded September 27, 1968, in Book 5718, Page 456, of Official Records; thence along the southerly line of the parcel of land described in the Deed to Safecare Company Inc., recorded February 28, 1972, in Book 6594 of Official Records at Page 742, South 82° 43’ 21” East, 393.72 feet to the true point of beginning of the hereinafter description; thence continuing along said southerly line (6594 OR 742) South 82° 43’ 21” East 88.64 feet to the westerly line of the parcel of land described in the Deed to Valley View Lodge at Rossmoor, recorded January 27, 1975 in Book 7418 of Official Records at Page 291; thence along said westerly line (7418 OR 291) North 7° 16’ 39” East, 29.00 feet; thence North 82° 43’ 21” West, 91.22 feet to a point of non-tangent curvature; thence southeasterly, southerly and southwesterly along the arc of a 42.00 foot radius non-tangent curve concave to the West the radial bearing of which being North 71° 53’ 56” East, through a central angle of 40° 33’ 36”, a distance of 29.73 feet to the true point of beginning.

PARCEL FIVE:

An easement for pedestrian and vehicular access, ingress & egress over tha-portion of Parcels A & B of Map recorded January 7, 1976 in Volume 42 of Parcel Maps at Page 17 designated as “Private Street and Non-Exclusive Right of Way” on said Map.

A.P. No.: 189-040-045

FIRST AMERICAN TITLE

ADDENDA

ADDENDUM C: Demographics

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Population by Age		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Population			72,381					73,525					76,684
	Age 45 - 54		11,250		15.54	%		11,824		16.08	%		13,029		16.99	%
	Age 55 - 59		4,122		5.69	%		4,558		6.20	%		5,428		7.08	%
	Age 60 - 64		3,104		4.29	%		3,286		4.47	%		4,071		5.31	%
	Age 65 - 69		2,851		3.94	%		2,797		3.80	%		3,134		4.09	%
	Age 70 - 74		3,501		4.84	%		3,386		4.60	%		3,211		4.19	%
	Age 75 - 79		4,032		5.57	%		3,891		5.29	%		3,723		4.86	%
	Age 80 - 84		3,321		4.59	%		3,417		4.65	%		3,441		4.49	%
	Age 85 and over		3,342		4.62	%		3,535		4.81	%		3,895		5.08	%
Age 55 and over			24,272		33.53	%		24,870		33.83	%		26,902		35.08	%
Age 65 and over			17,047		23.55	%		17,026		23.16	%		17,404		22.70	%
Total Population, Male			33,706					34,237					35,745
	Age 45 - 54		5,386		15.98	%		5,656		16.52	%		6,240		17.46	%
	Age 55 - 59		1,979		5.87	%		2,200		6.43	%		2,617		7.32	%
	Age 60 - 64		1,474		4.37	%		1,555		4.54	%		1,941		5.43	%
	Age 65 - 69		1,218		3.61	%		1,197		3.50	%		1,347		3.77	%
	Age 70 - 74		1,417		4.20	%		1,374		4.01	%		1,314		3.68	%
	Age 75 - 79		1,550		4.60	%		1,499		4.38	%		1,428		3.99	%
	Age 80 - 84		1,207		3.58	%		1,240		3.62	%		1,251		3.50	%
	Age 85 and over		961		2.85	%		985		2.88	%		1,095		3.06	%
Age 55 and over			9,806		29.09	%		10,050		29.35	%		10,992		30.75	%
Age 65 and over			6,353		18.85	%		6,295		18.39	%		6,434		18.00	%
Total Population, Female			38,675					39,288					40,939
	Age 45 -54		5,864		15.16	%		6,168		15.70	%		6,789		16.58	%
	Age 55 - 59		2,143		5.54	%		2,358		6.00	%		2,811		6.87	%
	Age 60 - 64		1,630		4.21	%		1,732		4.41	%		2,130		5.20	%
	Age 65 - 69		1,633		4.22	%		1,599		4.07	%		1,787		4.37	%
	Age 70 - 74		2,084		5.39	%		2,012		5.12	%		1,897		4.63	%
	Age 75 - 79		2,483		6.42	%		2,392		6.09	%		2,296		5.61	%
	Age 80 - 84		2,113		5.46	%		2,178		5.54	%		2,190		5.35	%
	Age 85 and over		2,381		6.16	%		2,550		6.49	%		2,800		6.84	%

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Population by Age		Census		Pct.			Estimate		Pct.			Projection		Pct.
	Age 55 and over		14,466		37.40	%		14,821		37.72	%		15,910		38.86	%
	Age 65 and over		10,693		27.65	%		10,732		27.32	%		27.32		26.79	%

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Population by Single Race Classification		Census		Pct.			Estimate		Pct.			Projection		Pct.
White Alone			62,690					63,123					64,355
	Age 65 and over		16,189		25.82	%		16,112		25.52	%		16,306		25.34	%
Black or African American Alone			626					656					737
	Age 65 and over		67		10.78	%		77		11.79	%		92		12.49	%
American Indian and Alaska Native Alone			224					238					283
	Age 65 and over		18		7.92	%		18		7.45	%		21		7.35	%
Asian Alone			5,432					5,881					6,958
	Age 65 and over		602		11.08	%		637		10.83	%		762		10.95	%
Native Hawaiian and Other Pacific Islander Alone			85					90					111
	Age 65 and over		7		8.43	%		10		10.94	%		12		10.38	%
Some Other Race Alone			1,162					1,264					1,519
	Age 65 and over		49		4.18	%		50		3.93	%		64		4.21	%
Two or More Races			2,161					2,272					2,722
	Age 65 and over		115		5.30	%		123		5.40	%		147		5.40	%

		2000					2002					2007
Population by Hispanic or Latino		Census		Pct.			Estimate		Pct.			Projection		Pct.
Hispanic or Latino			3,806					3,977					4,483
	Age 65 and over		266		6.99	%		281		7.07	%		310		6.91	%
Not Hispanic or Latino			68,575					69,548					72,201
	Age 65 and over		16,781		24.47	%		16,745		24.08	%		17,094		23.68	%

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 55 - 64			3,768					4,608					5,488
	Income less than $15,000		290		7.70	%		165		3.58	%		140		2.55	%
	Income $15,000 - $24,999		328		8.72	%		187		4.05	%		141		2.57	%
	Income $25,000 - $34,999		442		11.72	%		232		5.04	%		248		4.53	%
	Income $35,000 - $49,999		698		18.52	%		429		9.30	%		395		7.20	%
	Income $50,000 - $74,999		878		23.31	%		791		17.17	%		771		14.05	%
	Income $75,000 - $99,999		531		14.10	%		663		14.38	%		767		13.98	%
	Income $100,000 - $149,999		397		10.54	%		965		20.93	%		1,151		20.98	%
	Income $150,000 - $249,999		140		3.73	%		865		18.78	%		1,067		19.44	%
	Income $250,000 - $499,999		60		1.58	%		221		4.80	%		619		11.28	%
	Income $500,000 and more		30		0.80	%		91		1.98	%		188		3.43	%
Median Household Income			53,982					93,910					112,240

Prepared on: October 14, 2003 03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 65 - 69			2,441					1,743					1,926
	Income less than $15,000		289		11.83	%		108		6.20	%		87		4.54	%
	Income $15,000 - $24,999		381		15.62	%		113		6.51	%		99		5.13	%
	Income $25,000 - $34,999		388		15.89	%		189		10.85	%		152		7.88	%
	Income $35,000 - $49,999		434		17.77	%		265		15.18	%		253		13.11	%
	Income $50,000 - $74,999		452		18.52	%		381		21.85	%		361		18.77	%
	Income $75,000 - $99,999		238		9.77	%		271		15.55	%		332		17.25	%
	Income $100,000 - $149,999		122		5.00	%		216		12.41	%		327		16.96	%
	Income $150,000 - $249,999		42		1.73	%		155		8.90	%		194		10.10	%
	Income $250,000 - $499,999		13		0.53	%		36		2.04	%		100		5.19	%
	Income $500,000 and more		3		0.12	%		9		0.50	%		21		1.07	%
Median Household Income			39,234					62,861					75,901
Householder Age 70 - 74			2,285					2,145					2,017
	Income less than $15,000		331		14.49	%		138		6.43	%		95		4.73	%
	Income $15,000 - $24,999		413		18.06	%		150		7.01	%		104		5.14	%
	Income $25,000 - $34,999		404		17.67	%		258		12.05	%		180		8.92	%
	Income $35,000 - $49,999		453		19.81	%		339		15.79	%		289		14.34	%
	Income $50,000 - $74,999		440		19.24	%		483		22.51	%		394		19.56	%
	Income $75,000 - $99,999		218		9.52	%		313		14.60	%		341		16.91	%
	Income $100,000 - $149,999		119		5.22	%		258		12.03	%		326		16.14	%
	Income $150,000 - $249,999		41		1.80	%		155		7.25	%		180		8.93	%
	Income $250,000 - $499,999		13		0.57	%		38		1.75	%		85		4.20	%
	Income $500,000 and more		4		0.18	%		12		0.57	%		23		1.13	%
Median Household Income			37,318					59,679					71,551
Householder Age 75 - 79			2,246					2,691					2,552
	Income less than $15,000		461		20.52	%		276		10.24	%		182		7.11	%
	Income $15,000 - $24,999		403		17.94	%		307		11.40	%		225		8.83	%
	Income $25,000 - $34,999		399		17.79	%		335		12.45	%		308		12.07	%
	Income $35,000 - $49,999		426		18.97	%		450		16.74	%		378		14.80	%
	Income $50,000 - $74,999		294		13.10	%		612		22.75	%		514		20.13	%
	Income $75,000 - $99,999		101		4.50	%		327		12.16	%		394		15.44	%
	Income $100,000 - $149,999		65		2.89	%		234		8.71	%		322		12.62	%
	Income $150,000 - $249,999		27		1.19	%		104		3.86	%		153		6.00	%
	Income $250,000 - $499,999		13		0.57	%		30		1.10	%		54		2.13	%

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

	1990*					2002					2007
Household Income by Age of Householder	Census		Pct.			Estimate		Pct.			Projection		Pct.
Income $500,000 and more		5		0.21	%		15		0.57	%		22		0.86	%
Median Household Income		30,812					49,218					58,949

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 80 - 84			1,752					2,378					2,391
	Income less than $15,000		396		22.62	%		261		10.99	%		179		7.47	%
	Income $15,000 - $24,999		324		18.50	%		272		11.44	%		219		9.15	%
	Income $25,000 - $34,999		334		19.05	%		318		13.37	%		293		12.26	%
	Income $35,000 - $49,999		331		18.92	%		413		17.37	%		382		15.97	%
	Income $50,000 - $74,999		230		13.16	%		508		21.38	%		465		19.45	%
	Income $75,000 - $99,999		81		4.61	%		264		11.10	%		345		14.44	%
	Income $100,000 - $149,999		57		3.25	%		196		8.25	%		287		12.01	%
	Income $150,000 - $249,999		23		1.29	%		106		4.46	%		140		5.87	%
	Income $250,000 - $499,999		10		0.55	%		27		1.15	%		60		2.51	%
	Income $500,000 and more		3		0.15	%		12		0.50	%		21		0.87	%
Median Household Income			30,165					47,240					56,652
Householder Age 85 and over			1,409					2,340					2,578
	Income less than $15,000		325		23.04	%		312		13.34	%		236		9.16	%
	Income $15,000 - $24,999		257		18.23	%		269		11.48	%		249		9.66	%
	Income $25,000 - $34,999		240		17.06	%		330		14.09	%		322		12.49	%
	Income $35,000 - $49,999		240		17.07	%		428		18.28	%		438		17.01	%
	Income $50,000 - $74,999		158		11.23	%		478		20.42	%		503		19.50	%
	Income $75,000 - $99,999		46		3.24	%		247		10.54	%		358		13.87	%
	Income $100,000 - $149,999		34		2.42	%		177		7.58	%		293		11.35	%
	Income $150,000 - $249,999		10		0.74	%		67		2.88	%		116		4.50	%
	Income $250,000 - $499,999		9		0.67	%		16		0.68	%		40		1.57	%
	Income $500,000 and more		4		0.30	%		17		0.72	%		23		0.88	%
Median Household Income			28,340					44,060					52,137

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		1990*					2002					2007
Households by Household Income		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Households			31,028					33,694					34,910
	Income less than $15,000		3,079		9.92	%		1,743		5.17	%		1,277		3.66	%
	Income $15,000 -$24,999		3,573		11.52	%		1,789		5.31	%		1,379		3.95	%
	Income $25,000 - $34,999		4,252		13.70	%		2,557		7.59	%		2,184		6.26	%
	Income $35,000 - $49,999		5,590		18.02	%		4,121		12.23	%		3,420		9.80	%
	Income $50,000 - $74,999		6,346		20.45	%		6,570		19.50	%		5,768		16.52	%
	Income $75,000 - $99,999		3,794		12.23	%		4,965		14.74	%		5,284		15.14	%
	Income $100,000 - $149,999		2,923		9.42	%		5,475		16.25	%		6,579		18.84	%
	Income $150,000 -$249,999		1,015		3.27	%		4,826		14.32	%		5,195		14.88	%
	Income $250,000 - $499,999		383		1.24	%		1,192		3.54	%		2,951		8.45	%
	Income $500,000 and more		149		0.48	%		456		1.35	%		873		2.50	%
Average Household Income		$	61,116				$	101,803				$	122,535
Median Household Income		$	47,473				$	75,335				$	91,212
Per Capita Income		$	28,183				$	46,920				$	55,795

		1990*					2002					2007
Specified Owner-Occupied Housing Unit Values		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Specified Owner-Occupied Housing Unit Values			15,105					16,402					16,969
	Value less than $25,000		22		0.14	%		14		0.09	%		10		0.06	%
	Value $25,000 - $49,999		50		0.33	%		29		0.18	%		23		0.13	%
	Value $50,000 - $74,999		196		1.30	%		55		0.33	%		38		0.22	%
	Value $75,000 - $99,999		248		1.64	%		187		1.14	%		111		0.66	%
	Value $100,000 - $149,999		520		3.45	%		359		2.19	%		327		1.93	%
	Value $150,000 - $199,999		1,221		8.08	%		404		2.46	%		279		1.65	%
	Value $200,000 - $299,999		4,838		32.03	%		1,868		11.39	%		1,059		6.24	%
	Value $300,000 - $399,999		4,196		27.78	%		3,415		20.82	%		2,298		13.54	%
	Value $400,000 - $499,999		1,959		12.97	%		3,443		20.99	%		2,934		17.29	%
	Value $500,000 Or More		1,855		12.28	%		6,628		40.41	%		9,891		58.29	%
Median Specified Owner-Occupied Housing Unit Value			310,913					454,371					571,252

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Group Quarters by Population Type		Census		Pct.			Estimate		Pct.			Projection		Pct.
Institutionalized:			565					567					569
	Correctional Institutions		0		0.00	%		0		0.00	%		0		0.00	%
	Nursing Homes		547		96.81	%		549		96.82	%		551		96.83	%
	Other Institutions		18		3.19	%		18		3.18	%		18		3.17	%
Noninstitutionalized			693					693					696

	2000		2002		2007
Tenure of Occupied Housing Units	Census		Estimate		Projection
Owner Occupied		23,025		23,309		24,002
Renter Occupied		10,174		10,385		10,908

			Pop 65
1990* Census Household Type and Relationship			and Over		Pct.
Total				15,145
In Family Households				9,077		59.93	%
	Householder			4,834		31.92	%
	Spouse			3,788		25.01	%
	Other relative			437		2.89	%
	Non-Relative			17		0.11	%
In Group Quarters				677		4.47	%
	Institutionalized			677		4.47	%
	Other			0		0.00	%
In Non-Family Households				5,391		35.60	%
	Male Householder			837		5.53	%
		Living Alone		738		4.88	%
		Not Living Alone		99		0.65	%
	Female Householder			4,422		29.20	%
		Living Alone		4,327		28.57	%
		Not Living Alone		95		0.63	%
Non-Relative				131		0.87	%

Prepared on: October 14, 2003   03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

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			15,322					4,218
	Less than 20%		7,116		46.45	%		2,857		67.72	%
	20 to 24%		1,955		12.76	%		353		8.36	%
	25 to 29%		1,749		11.42	%		228		5.39	%
	30 to 34%		1,163		7.59	%		162		3.83	%
	35% or more		3,278		21.39	%		597		14.15	%
	Not Computed		60		0.39	%		23		0.55	%

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			9,613					1,690
	Less than 20%		2,543		26.45	%		223		13.17	%
	20 to 24%		1,702		17.70	%		185		10.94	%
	25 to 29%		1,163		12.10	%		100		5.89	%
	30 to 34%		955		9.94	%		167		9.91	%
	35% or more		3,010		31.31	%		921		54.49	%
	Not Computed		240		2.50	%		95		5.60	%

						65 Yrs
1990* Census Occupied Housing Units	Total Units		Pct.			and Over		Pct.
Owner Occupied Units		21,432		68.99	%		8,467		83.36	%
Renter Occupied Units		9,635		31.01	%		1,690		16.64	%
Complete Plumbing Facilities		31,026		99.87	%		10,148		99.92	%
Lacking Plumbing Facilities		42		0.13	%		0		0.00	%
With Telephone		30,924		99.54	%		10,130		99.74	%
No Telephone		147		0.47	%		22		0.22	%
One or more Vehicles		29,021		93.41	%		8,630		84.97	%
No Vehicles Available		2,046		6.59	%		1,518		14.95	%

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

1990* Census Poverty Status													75 Yrs
By Household Type By Age of Householder			Total		Pct.			Age 65 - 74		Pct.			and Over		Pct.
Total Households				31,106					4,799					5,305
Married Couple Family				15,861		50.99	%		2,607		54.33	%		1,822		34.35	%
Other Family				2,474		7.95	%		203		4.22	%		207		3.90	%
	Male Householder			654		2.10	%		45		0.95	%		46		0.87	%
	Female Householder			1,820		5.85	%		157		3.28	%		161		3.03	%
Non-Family				12,771		41.06	%		1,989		41.44	%		3,276		61.75	%
	Householder Living Alone			10,490		33.72	%		1,873		39.04	%		3,197		60.26	%
	Householder not Living Alone			2,281		7.33	%		116		2.41	%		79		1.49	%
Above Poverty				29,925		96.20	%		4,628		96.45	%		5,001		94.26	%
	Married Couple Family			15,613		50.19	%		2,579		53.75	%		1,791		33.75	%
	Other Family			2,335		7.51	%		203		4.22	%		202		3.81	%
		Male Householder		633		2.04	%		45		0.95	%		46		0.87	%
		Female Householder		1,701		5.47	%		157		3.28	%		156		2.94	%
	Non-Family			11,978		38.51	%		1,846		38.47	%		3,008		56.69	%
		Householder Living Alone		9,807		31.53	%		1,749		36.45	%		2,933		55.28	%
		Householder not Living Alone		2,171		6.98	%		97		2.02	%		75		1.41	%
Below Poverty				1,181		3.80	%		171		3.55	%		305		5.74	%
	Married Couple Family			248		0.80	%		28		0.58	%		31		0.59	%
	Other Family			139		0.45	%		0		0.00	%		5		0.09	%
		Male Householder		20		0.07	%		0		0.00	%		0		0.00	%
		Female Householder		119		0.38	%		0		0.00	%		5		1.86	%
	Non-Family			793		2.55	%		143		2.97	%		268		5.06	%
		Householder Living Alone		683		2.20	%		124		2.58	%		264		4.98	%
		Householder not Living Alone		110		0.35	%		19		0.39	%		4		0.08	%

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 3.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

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				56,180					14,454					6,985
With Mblty or Care Lmts				3,184		5.67	%		2,043		14.13	%		1,469		21.03	%
	Mobility Limits Only			1,176		2.09	%		855		5.91	%		647		9.26	%
	Self Care Limits Only			1,024		1.82	%		491		3.39	%		289		4.14	%
	Both Limits			985		1.75	%		697		4.82	%		534		7.64	%
No Mblty or Care Limits				52,996		94.33	%		12,411		85.87	%		5,516		78.97	%
With a Work Disability				5,526		9.84	%		3,246		22.46	%
	In Labor Force			1,252		2.23	%		126		0.87	%
		Employed		1,183		2.11	%		124		0.86	%
		Unemployed		69		0.12	%		2		0.01	%
	Not in Labor Force			4,273		7.61	%		3,120		21.59	%
		Prevented from Working		3,364		5.99	%		2,553		17.66	%
		Not Prevented from Wrk		909		1.62	%		568		3.93	%
No Work Disability				50,655		90.16	%		11,206		77.53	%
	In Labor Force			34,049		60.61	%		1,519		10.51	%
		Employed		33,136		58.98	%		1,455		10.07	%
		Unemployed		913		1.63	%		64		0.44	%
	Not in Labor Force			16,606		29.56	%		9,687		67.02	%

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

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Population by Age		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Population			163,333					165,802					172,672
	Age 45 - 54		26,694		16.34	%		28,021		16.90	%		30,692		17.77	%
	Age 55 - 59		9,885		6.05	%		10,912		6.58	%		12,987		7.52	%
	Age 60 - 64		7,519		4.60	%		7,942		4.79	%		9,862		5.71	%
	Age 65 - 69		6,596		4.04	%		6,529		3.94	%		7,288		4.22	%
	Age 70 - 74		6,891		4.22	%		6,677		4.03	%		6,388		3.70	%
	Age 75 - 79		6,989		4.28	%		6,779		4.09	%		6,556		3.80	%
	Age 80 - 84		5,097		3.12	%		5,291		3.19	%		5,373		3.11	%
	Age 85 and over		5,022		3.07	%		5,360		3.23	%		5,944		3.44	%
Age 55 and over			47,997		29.39	%		49,490		29.85	%		54,399		31.50	%
Age 65 and over			30,594		18.73	%		30,636		18.48	%		31,549		18.27	%
Total Population, Male			77,623					78,713					81,982
	Age 45 - 54		12,839		16.54	%		13,441		17.08	%		14,745		17.99	%
	Age 55 - 59		4,756		6.13	%		5,272		6.70	%		6,257		7.63	%
	Age 60 - 64		3,566		4.59	%		3,749		4.76	%		4,686		5.72	%
	Age 65 - 69		3,030		3.90	%		3,005		3.82	%		3,353		4.09	%
	Age 70 - 74		2,967		3.82	%		2,890		3.67	%		2,778		3.39	%
	Age 75 - 79		2,855		3.68	%		2,785		3.54	%		2,693		3.29	%
	Age 80 - 84		1,935		2.49	%		2,003		2.54	%		2,035		2.48	%
	Age 85 and over		1,425		1.84	%		1,458		1.85	%		1,631		1.99	%
Age 55 and over			20,534		26.45	%		21,163		26.89	%		23,433		28.58	%
Age 65 and over			12,212		15.73	%		12,142		15.43	%		12,490		15.23	%
Total Population, Female			85,710					87,089					90,690
	Age 45 - 54		13,855		16.17	%		14,579		16.74	%		15,947		17.58	%
	Age 55 - 59		5,128		5.98	%		5,640		6.48	%		6,729		7.42	%
	Age 60 - 64		3,953		4.61	%		4,193		4.81	%		5,177		5.71	%
	Age 65 - 69		3,565		4.16	%		3,524		4.05	%		3,935		4.34	%
	Age 70 - 74		3,924		4.58	%		3,787		4.35	%		3,610		3.98	%
	Age 75 - 79		4,134		4.82	%		3,993		4.59	%		3,863		4.26	%
	Age 80 - 84		3,162		3.69	%		3,288		3.78	%		3,339		3.68	%
	Age 85 and over		3,597		4.20	%		3,901		4.48	%		4,313		4.76	%

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Population by Age		Census		Pct.			Estimate		Pct.			Projection		Pct.
	Age 55 and over		27,463		32.04	%		28,327		32.53	%		30,966		34.14	%
	Age 65 and over		18,382		21.45	%		18,494		21.24	%		21.24		21.02	%

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Population by Single Race Classification		Census		Pct.			Estimate		Pct.			Projection		Pct.
White Alone			137,384					138,102					140,267
	Age 65 and over		28,617		20.83	%		28,554		20.68	%		29,086		20.74	%
Black or African American Alone			1,766					1,870					2,136
	Age 65 and over		145		8.20	%		155		8.28	%		183		8.56	%
American Indian and Alaska Native Alone			492					518					616
	Age 65 and over		25		5.05	%		25		4.79	%		28		4.60	%
Asian Alone			14,786					15,843					18,385
	Age 65 and over		1,400		9.47	%		1,465		9.25	%		1,712		9.31	%
Native Hawaiian and Other Pacific Islander Alone			237					249					293
	Age 65 and over		13		5.49	%		16		6.44	%		19		6.50	%
Some Other Race Alone			3,074					3,358					4,047
	Age 65 and over		123		4.02	%		137		4.08	%		184		4.54	%
Two or More Races			5,593					5,862					6,928
	Age 65 and over		270		4.83	%		284		4.85	%		338		4.87	%

		2000					2002					2007
Population by Hispanic or Latino		Census		Pct.			Estimate		Pct.			Projection		Pct.
Hispanic or Latino			9,830					10,308					11,702
	Age 65 and over		664		6.75	%		702		6.81	%		789		6.75	%
Not Hispanic or Latino			153,504					155,494					160,970
	Age 65 and over		29,930		19.50	%		29,934		19.25	%		30,760		19.11	%

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 55 - 64			9,213					10,838					12,934
	Income less than $15,000		544		5.90	%		271		2.50	%		221		1.71	%
	Income $15,000 - $24,999		744		8.08	%		412		3.80	%		298		2.30	%
	Income $25,000 - $34,999		863		9.36	%		567		5.23	%		574		4.44	%
	Income $35,000 - $49,999		1,495		16.22	%		903		8.33	%		881		6.81	%
	Income $50,000 - $74,999		2,251		24.43	%		1,717		15.84	%		1,683		13.01	%
	Income $75,000 - $99,999		1,363		14.79	%		1,601		14.78	%		1,729		13.37	%
	Income $100,000 - $149,999		1,244		13.50	%		2,291		21.14	%		2,714		20.99	%
	Income $150,000 - $249,999		485		5.26	%		2,214		20.43	%		2,696		20.85	%
	Income $250,000 - $499,999		182		1.97	%		623		5.75	%		1,620		12.53	%
	Income $500,000 and more		77		0.83	%		239		2.20	%		517		4.00	%
Median Household Income			60,851					99,189					119,936

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 65 - 69			4,930					3,954					4,352
	Income less than $15,000		542		11.00	%		212		5.36	%		158		3.62	%
	Income $15,000 - $24,999		696		14.13	%		257		6.49	%		211		4.85	%
	Income $25,000 - $34,999		765		15.51	%		377		9.52	%		328		7.54	%
	Income $35,000 - $49,999		940		19.08	%		538		13.61	%		512		11.76	%
	Income $50,000 - $74,999		870		17.64	%		890		22.51	%		826		18.98	%
	Income $75,000 - $99,999		504		10.21	%		608		15.39	%		738		16.95	%
	Income $100,000 - $149,999		247		5.01	%		548		13.85	%		752		17.27	%
	Income $150,000 - $249,999		94		1.91	%		397		10.03	%		503		11.55	%
	Income $250,000 - $499,999		35		0.71	%		92		2.34	%		258		5.93	%
	Income $500,000 and more		12		0.24	%		36		0.90	%		67		1.54	%
Median Household Income			40,555					66,671					79,793
Householder Age 70 - 74			3,896					4,101					3,880
	Income less than $15,000		558		14.33	%		239		5.82	%		156		4.03	%
	Income $15,000 - $24,999		669		17.18	%		293		7.14	%		201		5.19	%
	Income $25,000 - $34,999		655		16.82	%		432		10.52	%		318		8.19	%
	Income $35,000 - $49,999		786		20.18	%		582		14.20	%		494		12.74	%
	Income $50,000 - $74,999		716		18.37	%		918		22.37	%		743		19.15	%
	Income $75,000 - $99,999		408		10.47	%		596		14.53	%		643		16.57	%
	Income $100,000 - $149,999		204		5.25	%		551		13.44	%		643		16.57	%
	Income $150,000 - $249,999		76		1.94	%		365		8.89	%		418		10.77	%
	Income $250,000 - $499,999		32		0.83	%		89		2.18	%		202		5.21	%
	Income $500,000 and more		10		0.26	%		37		0.90	%		61		1.58	%
Median Household Income			38,316					63,739					76,069
Householder Age 75 - 79			3,248					4,508					4,318
	Income less than $15,000		784		24.14	%		506		11.22	%		330		7.65	%
	Income $15,000 - $24,999		616		18.98	%		519		11.52	%		410		9.49	%
	Income $25,000 - $34,999		571		17.59	%		516		11.44	%		480		11.12	%
	Income $35,000 - $49,999		569		17.52	%		754		16.73	%		616		14.26	%
	Income $50,000 - $74,999		384		11.83	%		951		21.09	%		857		19.84	%
	Income $75,000 - $99,999		151		4.66	%		538		11.94	%		615		14.24	%
	Income $100,000 - $149,999		100		3.07	%		398		8.83	%		535		12.40	%
	Income $150,000 - $249,999		38		1.17	%		226		5.01	%		299		6.94	%
	Income $250,000 - $499,999		17		0.53	%		57		1.26	%		121		2.80	%

Prepared on: October 14, 2003 03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

	1990*					2002					2007
Household Income by Age of Householder	Census		Pct.			Estimate		Pct.			Projection		Pct.
Income $500,000 and more		10		0.32	%		44		0.97	%		55		1.27	%
Median Household Income		28,846					49,166					59,408

Prepared on: October 14, 2003 03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		1990*					2002					2007
Household Income by Age of Householder		Census		Pct.			Estimate		Pct.			Projection		Pct.
Householder Age 80 - 84			2,335					3,537					3,573
	Income less than $15,000		632		27.07	%		428		12.10	%		287		8.03	%
	Income $15,000 - $24,999		451		19.33	%		430		12.15	%		352		9.86	%
	Income $25,000 - $34,999		425		18.20	%		433		12.25	%		430		12.04	%
	Income $35,000 - $49,999		415		17.76	%		602		17.02	%		526		14.73	%
	Income $50,000 - $74,999		278		11.91	%		714		20.18	%		692		19.38	%
	Income $75,000 - $99,999		101		4.34	%		383		10.83	%		489		13.69	%
	Income $100,000 - $149,999		79		3.39	%		290		8.19	%		413		11.56	%
	Income $150,000 - $249,999		33		1.41	%		183		5.16	%		233		6.52	%
	Income $250,000 - $499,999		11		0.46	%		52		1.46	%		109		3.04	%
	Income $500,000 and more		7		0.28	%		24		0.67	%		41		1.15	%
Median Household Income			28,094					46,885					56,872
Householder Age 85 and over			1,939					3,165					3,511
	Income less than $15,000		537		27.69	%		453		14.30	%		339		9.64	%
	Income $15,000 - $24,999		371		19.15	%		400		12.64	%		368		10.49	%
	Income $25,000 - $34,999		319		16.45	%		419		13.25	%		437		12.46	%
	Income $35,000 - $49,999		298		15.40	%		560		17.70	%		561		15.98	%
	Income $50,000 - $74,999		194		10.01	%		600		18.96	%		665		18.95	%
	Income $75,000 - $99,999		64		3.31	%		326		10.30	%		459		13.08	%
	Income $100,000 - $149,999		49		2.55	%		230		7.26	%		387		11.03	%
	Income $150,000 - $249,999		17		0.87	%		120		3.78	%		178		5.07	%
	Income $250,000 - $499,999		12		0.64	%		34		1.09	%		79		2.25	%
	Income $500,000 and more		5		0.27	%		23		0.73	%		37		1.06	%
Median Household Income			25,784					43,262					51,896

Prepared on: October 14, 2003 03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		1990*					2002					2007
Households by Household Income		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Households			63,949					70,007					72,753
	Income less than $15,000		5,842		9.14	%		3,253		4.65	%		2,351		3.23	%
	Income $15,000 - $24,999		6,335		9.91	%		3,460		4.94	%		2,724		3.74	%
	Income $25,000 - $34,999		7,837		12.25	%		4,555		6.51	%		3,916		5.38	%
	Income $35,000 - $49,999		10,862		16.98	%		7,749		11.07	%		6,312		8.68	%
	Income $50,000 - $74,999		13,615		21.29	%		13,067		18.67	%		11,426		15.71	%
	Income $75,000 - $99,999		8,529		13.34	%		10,387		14.84	%		10,647		14.63	%
	Income $100,000 - $149,999		6,977		10.91	%		12,140		17.34	%		13,998		19.24	%
	Income $150,000 - $249,999		2,620		4.10	%		11,161		15.94	%		12,027		16.53	%
	Income $250,000 - $499,999		1,012		1.58	%		2,971		4.24	%		7,043		9.68	%
	Income $500,000 and more		431		0.67	%		1,263		1.80	%		2,309		3.17	%
Average Household Income		$	66,451				$	110,271				$	132,864
Median Household Income		$	52,122				$	82,023				$	97,651
Per Capita Income		$	27,919				$	47,237				$	56,608

		1990*					2002					2007
Specified Owner-Occupied Housing Unit Values		Census		Pct.			Estimate		Pct.			Projection		Pct.
Total Specified Owner-Occupied Housing Unit Values			36,530					39,762					41,238
	Value less than $25,000		47		0.13	%		23		0.06	%		14		0.03	%
	Value $25,000 - $49,999		110		0.30	%		71		0.18	%		53		0.13	%
	Value $50,000 - $74,999		281		0.77	%		105		0.26	%		91		0.22	%
	Value $75,000 - $99,999		410		1.12	%		255		0.64	%		154		0.37	%
	Value $100,000 - $149,999		1,247		3.41	%		606		1.52	%		484		1.17	%
	Value $150,000 - $199,999		3,165		8.66	%		947		2.38	%		569		1.38	%
	Value $200,000 - $299,999		10,918		29.89	%		4,877		12.26	%		2,731		6.62	%
	Value $300,000 - $399,999		9,835		26.92	%		8,020		20.17	%		5,755		13.96	%
	Value $400,000 - $499,999		5,417		14.83	%		7,949		19.99	%		6,844		16.60	%
	Value $500,000 Or More		5,101		13.96	%		16,910		42.53	%		24,543		59.51	%
Median Specified Owner-Occupied Housing Unit Value			321,243					462,642					579,972

Prepared on: October 14, 2003  03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

		2000					2002					2007
Group Quarters by Population Type		Census		Pct.			Estimate		Pct.			Projection		Pct.
Institutionalized:			1,039					1,042					1,046
	Correctional Institutions		0		0.00	%		0		0.00	%		0		0.00	%
	Nursing Homes		1,021		98.27	%		1,024		98.27	%		1,028		98.28	%
	Other Institutions		18		1.73	%		18		1.73	%		18		1.72	%
Noninstitutionalized			2,498					2,502					2,511

	2000		2002		2007
Tenure of Occupied Housing Units	Census		Estimate		Projection
Owner Occupied		48,948		49,642		51,355
Renter Occupied		19,954		20,365		21,398

			Pop 65
1990* Census Household Type and Relationship			and Over		Pct.
Total				25,731
In Family Households				16,421		63.82	%
	Householder			8,653		33.63	%
	Spouse			6,669		25.92	%
	Other relative			1,040		4.04	%
	Non-Relative			59		0.23	%
In Group Quarters				1,399		5.44	%
	Institutionalized			1,399		5.44	%
	Other			0		0.00	%
In Non-Family Households				7,911		30.75	%
	Male Householder			1,319		5.12	%
		Living Alone		1,178		4.58	%
		Not Living Alone		140		0.55	%
	Female Householder			6,370		24.76	%
		Living Alone		6,199		24.09	%
		Not Living Alone		171		0.67	%
	Non-Relative			223		0.87	%

Prepared on: October 14, 2003 03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

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			37,001					8,718
	Less than 20%		17,086		46.18	%		6,070		69.63	%
	20 to 24%		4,662		12.60	%		775		8.89	%
	25 to 29%		4,036		10.91	%		419		4.81	%
	30 to 34%		3,211		8.68	%		331		3.80	%
	35% or more		7,868		21.27	%		1,069		12.26	%
	Not Computed		138		0.37	%		54		0.62	%

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			18,275					2,904
	Less than 20%		4,762		26.06	%		336		11.58	%
	20 to 24%		2,986		16.34	%		289		9.94	%
	25 to 29%		2,466		13.49	%		202		6.95	%
	30 to 34%		1,858		10.17	%		287		9.89	%
	35% or more		5,804		31.76	%		1,645		56.63	%
	Not Computed		399		2.18	%		145		5.01	%

						65 Yrs
1990* Census Occupied Housing Units	Total Units		Pct.			and Over		Pct.
Owner Occupied Units		45,557		71.31	%		13,520		82.34	%
Renter Occupied Units		18,330		28.69	%		2,900		17.66	%
Complete Plumbing Facilities		63,782		99.84	%		16,415		99.97	%
Lacking Plumbing Facilities		105		0.16	%		0		0.00	%
With Telephone		63,655		99.64	%		16,381		99.76	%
No Telephone		235		0.37	%		36		0.22	%
One or more Vehicles		60,858		95.26	%		14,242		86.74	%
No Vehicles Available		3,029		4.74	%		2,171		13.22	%

Prepared on: October 14, 2003 03:00 PM

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

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

1990* Census Poverty Status														75 Yrs
By Household Type By Age of Householder				Total		Pct.			Age 65 - 74		Pct.			and Over		Pct.
Total Households					64,060					8,816					7,536
Married Couple Family					36,296		56.66	%		5,150		58.42	%		2,706		35.90	%
Other Family					5,683		8.87	%		442		5.02	%		359		4.76	%
	Male Householder				1,636		2.55	%		117		1.32	%		78		1.04	%
	Female Householder				4,047		6.32	%		326		3.69	%		281		3.72	%
Non-Family					22,081		34.47	%		3,224		36.57	%		4,472		59.34	%
	Householder Living Alone				17,682		27.60	%		3,026		34.32	%		4,356		57.80	%
	Householder not Living Alone				4,399		6.87	%		198		2.25	%		116		1.53	%
Above Poverty					61,730		96.36	%		8,519		96.64	%		7,082		93.97	%
	Married Couple Family				35,781		55.86	%		5,114		58.01	%		2,621		34.78	%
	Other Family				5,270		8.23	%		442		5.02	%		354		4.70	%
			Male Householder		1,552		2.42	%		117		1.32	%		78		1.04	%
			Female Householder		3,718		5.80	%		326		3.69	%		276		3.66	%
	Non-Family				20,679		32.28	%		2,963		33.61	%		4,107		54.49	%
			Householder Living Alone		16,592		25.90	%		2,798		31.74	%		3,998		53.05	%
			Householder not Living Alone		4,087		6.38	%		165		1.87	%		108		1.44	%
Below Poverty					2,330		3.64	%		297		3.36	%		454		6.03	%
	Married Couple Family				515		0.80	%		36		0.41	%		84		1.12	%
	Other Family				413		0.65	%		0		0.00	%		5		0.07	%
			Male Householder		84		0.13	%		0		0.00	%		0		0.00	%
			Female Householder		329		0.51	%		0		0.00	%		5		1.37	%
	Non-Family				1,402		2.19	%		261		2.96	%		365		4.84	%
		Householder Living Alone			1,090		1.70	%		228		2.58	%		358		4.75	%
		Householder not Living Alone			312		0.49	%		33		0.37	%		7		0.10	%

Prepared on: October 14, 2003 03:00 PM

© 2002 Claritas. All rights reserved. (800) 866-6511 Page 23 of 24

Senior Life Report
Area(s): Radius 5.0

1228 ROSSMOOR PKWY	Latitude:	37.879017
WALNUT CREEK, CA 94595-2532	Longitude:	-122.069702

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				124,115					24,300					10,190
With Mblty or Care Lmts				5,670		4.57	%		3,251		13.38	%		2,203		21.62	%
	Mobility Limits Only			2,005		1.62	%		1,352		5.56	%		987		9.69	%
	Self Care Limits Only			2,040		1.64	%		784		3.23	%		397		3.90	%
	Both Limits			1,625		1.31	%		1,115		4.59	%		818		8.03	%
No Mblty or Care Limits				118,444		95.43	%		21,048		86.62	%		7,987		78.38	%
With a Work Disability				10,359		8.35	%		5,354		22.03	%
	In Labor Force			2,734		2.20	%		284		1.17	%
		Employed		2,534		2.04	%		275		1.13	%
		Unemployed		200		0.16	%		9		0.04	%
	Not in Labor Force			7,624		6.14	%		5,070		20.87	%
		Prevented from Working		5,927		4.78	%		4,094		16.85	%
		Not Prevented from Wrk		1,697		1.37	%		976		4.02	%
No Work Disability				113,756		91.65	%		18,948		77.98	%
	In Labor Force			79,802		64.30	%		3,207		13.20	%
		Employed		77,621		62.54	%		3,114		12.82	%
		Unemployed		2,181		1.76	%		92		0.38	%
	Not in Labor Force			33,954		27.36	%		15,741		64.78	%

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

Prepared on: October 14, 2003 03:00 PM

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

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	Valley View Lodge
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAP Table	JAN			FEB			MAR			APR			MAY			JUN			JUL			AUG			AUG YTD
40005 Revenue-Rental		371,360			365,134			366,879			283,045			451,108			355,357			353,448			352,095			2,898,428
40010 Revenue-Rent Refunds/Proration		—			—			—			—			(4,042	)		—			(953	)		—			(4,995	)
Total Rental Revenue		371,360			365,134			366,879			283,045			447,066			355,357			352,495			352,095			2,893,431
40110 Revenue-AL Level 1		6,725			6,725			6,300			5,623			7,611			6,056			6,750			5,333			51,123
40115 Revenue-AL Level 2		13,375			14,494			11,696			9,484			16,301			14,047			11,669			14,220			105,286
40120 Revenue-AL Level 3		6,150			6,150			2,603			3,418			7,187			3,300			3,300			4,750			36,858
40125 Revenue-AL Level 4		8,100			9,649			13,025			8,702			16,818			12,625			11,625			12,025			92,570
40130 Revenue-AL Level 5		6,050			5,394			7,275			6,517			7,493			9,725			7,300			7,300			57,054
40135 Revenue-AL Level 6		8,750			8,775			8,965			7,858			12,642			7,750			10,250			10,250			75,240
40140 Revenue-AL Level 7		8,575			8,575			6,860			5,259			4,331			3,180			4,745			4,745			46,270
40170 Revenue-Alzh Lev 1		—			—			—			—			—			—			—			—			—
Total AL Services Revenue		57,725			59,761			56,725			46,861			72,384			56,683			55,639			58,623			464,401
40515 Revenue-Other		852			1,537			1,511			1,906			1,746			1,626			1,657			2,333			13,167
40525 Revenue-Processing/App Fees		2,000			12,000			6,000			1,533			10,467			12,000			6,000			10,000			60,000
Total Other Revenue		2,852			13,537			7,511			3,440			12,213			13,626			7,657			12,333			73,167
40575 Rev-Process Fee Concessions		—			—			—			—			—			(1,250	)		(2,000	)		(2,000	)		(5,250	)
40015 Rev-Rent Concessions		—			—			—			—			—			—			—			—			—
40215 Rev-A/L Concessions		—			—			—			—			—			—			—			—			—
Total Concessions		—			—			—			—			—			(1,250	)		(2,000	)		(2,000	)		(5,250	)
Total Revenue		431,937			438,432			431,114			333,346			531,662			424,416			413,790			421,051			3,425,749
50005 Payroll Expense-Regular		83,118			76,128			79,265			66,690			102,908			80,680			88,332			83,971			661,092
50405 Payroll Expense-Overtime		2,491			2,594			2,834			4,605			3,267			3,162			3,695			3,139			25,787
50705 Payroll Expense-Doubletime		441			98			103			439			245			351			372			738			2,786
51005 Bonuses		(2,786	)		12,314			4,314			3,607			5,170			5,799			4,699			5,967			39,083
51505 Vacation, Sick, Holiday		4,738			5,477			6,335			6,905			9,898			7,046			6,927			7,246			54,574
51805 Employee Recognition		—			90			27			16			161			147			210			160			810
52005 Payroll Taxes		10,305			14,923			7,496			7,174			9,961			6,823			8,026			7,276			71,985
52505 401K/401A		328			656			209			277			392			310			343			436			2,952
52805 Group Insurance		6,179			5,811			6,625			7,158			6,300			6,808			7,088			8,686			54,655
53005 Worker’s Comp Insurance		5,268			5,268			5,303			15,791			5,348			6,316			9,548			7,984			60,628
Total Payroll Expenses		110,083			123,357			112,513			112,662			143,651			117,442			129,240			125,604			974,551
53305 Outside Service-Medical		—			—			—			—			—			—			60			395			455
53505 Temporary Services		—			—			—			—			—			—			—			—			—
53510 Temporary Services - AL		—			—			—			—			—			—			—			—			—
54005 Payroll Service		279			660			282			(1	)		394			366			241			309			2,529
55005 Outside Service Other		—			—			—			—			—			—			—			—			—
Total Purchase Services		279			660			282			(1	)		394			366			301			704			2,984
Total Payroll Related		110,362			124,017			112,795			112,661			144,045			117,808			129,540			126,308			977,536
Total Payroll Related % Total Revenue		26	%		28	%		26	%		34	%		27	%		28	%		31	%		30	%		29	%
56505 Food		19,890			18,747			19,742			18,334			18,047			25,338			24,268			19,545			163,911
57005 Housekeeping		1,323			353			1,426			1,429			870			414			825			1,331			7,971
57505 Kitchen Supplies		1,815			1,821			1,125			1,296			1,483			4,581			2,518			2,957			17,597
58005 Assisted Living Supplies		321			9			261			155			30			395			120			279			1,571
58505 Alzheimer Supplies		—			—			—			—			—			—			—			—			—
59005 Laundry & Linen/Uniforms		—			—			3,015			(337	)		—			(162	)		—			(10	)		2,506
59010 Laun/Lin/Unif Kitchen		644			735			534			649			648			910			278			1,401			5,799
59015 Laund/Lin/Unif Housekeeping		601			1,117			561			916			758			905			410			1,220			6,489
59505 Activities-Asst Living		1,711			1,302			1,741			1,836			1,320			1,514			1,649			1,882			12,955
59510 Banquet Expense		400			400			400			1,008			(208	)		400			400			400			3,200
59555 NMS-Foodservices		—			—			—			—			—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—			—			—			—			—
Total Variable Expense		26,706			24,485			28,806			25,286			22,947			34,295			30,467			29,005			221,997
60005 Office Supplies		958			621			557			793			551			505			436			1,113			5,535
61005 Repairs and Maint - Building		—			—			—			—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—			—			455			455
61015 Repairs - Electrical		—			—			—			—			669			—			235			410			1,315
61020 Repairs -Plumbing		—			418			603			366			(72	)		60			377			—			1,752
61025 Repairs - Fire Systems		—			468			—			439			603			—			—			—			1,510
61030 Repairs -HVAC		49			20			698			—			968			877			—			2,109			4,722
61035 Repairs -Gen. Supplies		1,355			734			1,570			1,364			781			2,235			958			2,256			11,254
61040 Repairs - Equipment		301			298			—			469			623			335			—			719			2,744
61045 Repairs - Other Interior		936			282			592			385			173			353			295			980			3,995
61055 Repairs -Other Exterior		162			—			—			—			—			—			—			—			162
61100 Loss on Early Retirement Asset		—			555			—			—			—			—			—			1,277			1,833
Total Repair Maintenance		2,803			2,775			3,463			3,023			3,745			3,860			1,866			8,206			29,741
61505 Contracts - Elevator		557			557			557			588			842			556			557			557			4,771
61510 Contracts - Floor Maint		—			(1,083	)		482			(40	)		(438	)		—			—			—			(1,079	)
61515 Contracts - Alarm/Fire		26			574			243			871			349			—			296			918			3,267
61520 Contracts-HVAC		150			141			141			258			324			156			141			291			1,605
61525 Contracts - Pest Control		175			173			169			129			228			264			305			179			1,622
61535 Contacts- Other		179			111			519			339			282			264			114			548			2,355
Total Service Contracts		1,086			474			2,110			2,146			1,587			1,240			1,404			2,494			12,541
62005 Land Maintenance		1,313			1,313			1,426			1,039			1,752			1,313			1,313			1,438			10,904
Total Land Maintenance		1,313			1,313			1,426			1,039			1,752			1,313			1,313			1,438			10,904
62505 Rental/Lease - Cable		2,273			2,394			2,394			1,836			2,952			2,394			2,393			2,393			19,029
62510 Rental/Lease - Security		—			—			—			—			—			—			—			—			—
62525 Rental/Lease - Furniture		—			—			—			—			—			—			—			—			—
62535 Rental/Lease - Equipment		305			441			461			286			301			227			261			227			2,508
62540 Rental/Lease - Auto		—			—			—			—			—			—			—			—			—
62555 Rental/Lease - Other		—			—			—			—			—			—			—			—			—
Total Rental and Leases		2,577			2,835			2,855			2,122			3,253			2,621			2,654			2,620			21,537
63010 Utilities - Electricity		8,112			6,907			8,150			5,720			12,650			16,171			17,177			18,321			93,208

PII- ITEM A-6

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2003
	Version	AA
	Community	Valley View Lodge
	Department	Total Department
	Month	Along Columns
	GLAccount	Along Rows

OLAP Table	JAN			FEB			MAR			APR			MAY			JUN			JUL			AUG			AUG YTD
63015 Utilities - Water		1,587			1,243			1,557			1,109			2,069			2,112			2,230			2,081			13,987
63020 Utilities - Gas		6,013			4,478			4,366			2,487			4,001			1,548			2,326			2,094			27,313
63025 Utilities - Telephone		586			587			570			468			715			738			1,096			727			5,468
63030 Utilities - Trash		1,076			1,076			864			825			1,327			1,076			1,288			1,318			8,849
Total Utilities		17,374			14,271			15,508			10,609			20,761			21,645			24,116			24,541			148,825
63505 Marketing and Advertising		727			891			737			504			779			758			687			577			5,661
63510 Printed Materials		64			75			318			231			35			—			168			321			1,212
63515 Special Events		650			845			476			537			1,546			351			230			217			4,852
63520 Yellow Pages		466			466			466			357			575			466			466			466			3,730
63525 Newspaper and Magazine		78			78			78			78			78			78			7			—			472
63530 Advertising		54			27			(81	)		—			—			—			—			—			(0	)
64005 Referral Fees - Residents		—			—			500			500			—			500			—			—			1,500
Total Marketing and Advertising		2,039			2,381			2,494			2,206			3,013			2,153			1,559			1,582			17,426
60510 Delivery		—			—			—			—			—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			—			—			—			—			—
65005 Gas		218			181			200			142			257			250			308			262			1,816
65010 Auto Service And Repair		—			614			92			—			—			598			3,340			110			4,754
65015 Other Automobile		—			—			—			—			—			—			—			—			—
65505 Travel & Lodging		147			—			—			79			75			15			—			—			316
66005 Mileage		—			89			—			—			114			—			—			73			276
66505 Meals & Entertainment		—			56			—			—			339			—			—			188			583
67005 License and Fingerprints		585			164			379			500			338			289			44			1,616			3,965
68005 Dues and Subscriptions		(452	)		127			127			37			139			127			127			132			366
68505 Seminars and Training		447			—			245			—			1,305			(245	)		—			315			2,067
69005 Employee Recruiting		—			—			224			119			330			—			—			—			672
69505 Other		—			—			—			47			—			—			—			—			47
69605 Discounts Lost		—			—			—			—			—			—			—			67			67
69610 Discounts Taken		—			—			(63	)		(130	)		(154	)		17			(96	)		(134	)		(561	)
69525 Sales & Use Tax Due		—			—			—			—			—			—			—			—			—
Total Misc. Expenses		945			1,231			1,203			793			2,792			1,051			3,723			2,629			14,367
Total Operating Expense		166,163			174,403			171,216			160,677			204,445			186,490			197,079			199,934			1,460,409
Gross Margin		265,775			264,029			259,898			172,669			327,217			237,925			216,711			221,116			1,965,340
Gross Margin Percent		62	%		60	%		60	%		52	%		62	%		56	%		52	%		53	%		57	%
69705 Casualty Loss		—			—			—			—			—						—			—			—
69805 Bad Debt Expense		—			—			—			—			—			—			—			—			—
70005 Corporate Allocation		—			—			—			—			—			—			—			—			—
72305 Property Taxes		8,539			8,539			8,539			6,546			10,531			8,539			8,880			8,880			68,993
72405 Insurance-Liability & Hazard		8,508			7,152			7,026			6,213			5,979			4,155			7,368			7,227			53,628
Total Other Fees		17,047			15,691			15,565			12,760			16,510			12,694			16,248			16,107			122,621
72505 Accounting		796			796			796			1,413			366			2,013			983			1,051			8,213
73005 Legal		511			443			521			343			433			507			664			403			3,824
73510 Donations & Contributions		—			—			—			—			89			—			—			—			89
74005 Consulting Fees		—			—			—			—			251			257			64			64			636
74015 Professional Fees - Other		—			—			—			—			500			—			128			295			922
75005 Property Management Fees		21,597			21,829			21,559			16,758			26,583			21,221			20,690			21,053			171,287
75105 Partnership Admin Fees		13,282			13,856			13,454			7,057			17,539			10,156			10,123			9,383			94,851
75510 Other Penalties/Fin. Fee		—			—			—			—						—			37			—			37
75515 Licenses & Fees Legal		—			261			—			—			—			—			—						261
75505 Bank Charges		—			—			—			—			—			—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			800			—			—			—			—			800
75525 Collection Fees		—			—			—			—			—			—			—			—			—
Total Professional Fees		36,186			37,185			36,330			26,370			45,761			34,154			32,688			32,248			280,921
EBITDAR		212,542			211,153			208,004			133,538			264,946			191,077			167,775			172,762			1,561,798
EBITDAR Percent		49	%		48	%		48	%		40	%		50	%		45	%		41	%		41	%		46	%
77005 Operating Lease		—			—			—			—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—			—			—			—
Total Leases		—			—			—			—			—			—			—			—			—
80005 Interest Income		(235	)		(150	)		(133	)		(147	)		(204	)		—			(396	)		(194	)		(1,460	)
80505 Other Non-Operating Income		—			—			—			—			—			—			—			—			—
87010 Extraordinary Items -Net Tax		—			—			—			—			—			—			—			—			—
Total Non-Operating Income/Expense		(235	)		(150	)		(133	)		(147	)		(204	)		—			(396	)		(194	)		(1,460	)
83005 Interest Expense		75,017			74,978			75,017			57,166			92,327			74,106			74,703			74,663			597,976
83025 Int Exp MIP		4,697			4,697			4,639			3,578			5,757			4,668			4,668			4,668			37,370
Total Interest Expense		79,713			79,675			79,655			60,744			98,083			78,773			79,371			79,331			635,346
EBTDA		133,064			131,629			128,482			72,941			167,067			112,304			88,799			93,625			927,912
EBTDA Percent		31	%		30	%		30	%		22	%		31	%		26	%		21	%		22	%		27	%
77505 Depreciation		22,585			22,547			22,185			17,012			27,389			22,212			44,515			(444	)		177,980
78005 Amortization		505			505			505			387			623			505			1,011			505			4,548
78015 Amortization - Start Up		—			—			—			—			—			—			—			—			—
Total Depreciation & Amortization		23,070			23,053			22,690			17,399			28,013			22,717			45,526			61			182,528
Net Income (Loss)		109,994			108,576			105,792			55,542			139,055			89,587			43,274			93,564			745,384

PII - ITEM A-5

Database:
Cube:
Page: POLAPSVR
Financial Data
Year
Version
Community
Department
Month
GLAccount

2002
AA
Valley View
Total Department
Along Columns
Along Rows

OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN			JUL
40005 Revenue-Rental		334,037			334,317			334,484			324,800			329,340			330,759			329,861
40010 Revenue-Rent Refunds/Proration		(666	)		—			—			—			(896	)		—			(142	)
Total Rental Revenue		333,372			334,317			334,484			324,800			328,444			330,759			329,719
40110 Revenue-AL Level 1		7,950			6,999			8,350			6,894			7,100			6,477			6,675
40115 Revenue-AL Level 2		9,372			11,900			12,685			12,015			9,187			8,515			8,466
40120 Revenue-AL Level 3		7,764			2,988			3,394			4,775			3,975			4,775			3,975
40125 Revenue-AL Level 4		8,453			9,387			8,141			8,000			8,000			9,000			9,633
40130 Revenue-AL Level 5		6,570			7,339			7,614			6,000			6,000			7,200			6,225
40135 Revenue-AL Level 6		6,172			9,584			8,775			8,775			10,250			9,070			7,300
40140 Revenue-AL Level 7		663			1,715			4,442			3,330			3,339			3,380			3,805
40170 Revenue-Alzh Lev1		—			—			—			—			—			—			—
Total AL Services Revenue		46,943			49,913			53,401			49,789			47,850			48,417			46,079
40515 Revenue-Other		(74	)		3,113			2,357			1,384			2,486			1,008			440
40525 Revenue-Processing/App Fees		6,000			2,820			4,820			820			820			7,820			3,820
Tolal Other Revenue		5,926			5,933			7,177			2,204			3,306			8,828			4,260
40575 Rev-Process Fee Concessions		—			—			—			—			—			—			—
40015 Rev-Rent Concessions		—			—			—			—			—			—			—
40215 Rev-A/L Concessions		—			—			—			—			—			—			—
Total Concessions		—			—			—			—			—			—			—
Total Revenue		386,241			390,162			395,061			376,794			379,600			388,003			380,058
50005 Payroll Expense-Regular		78,194			75,787			76,855			80,088			73,618			75,997			80,591
50405 Payroll Expense-Overtime		4,270			3,312			3,140			2,272			3,005			4,702			3,116
50705 Payroll Expense-Doubleti me		124			62			123			141			219			235			89
51005 Bonuses		3,518			3,518			32,633			2,518			2,718			11,739			1,268
51505 Vacation, Sick, Holiday		6,045			6,240			6,675			6,507			6,052			7,423			6,730
51805 Employee Recognition		50			—			84			83			163			197			231
52005 Payroll Taxes		10,540			8,928			7,880			8,202			6,850			7,253			7,402
52505 401K/401A		277			258			173			184			391			273			267
52805 Group Insurance		6,593			5,492			4,686			4,316			4,281			4,716			5,654
53005 Worker’s Comp Insurance		8,868			7,793			12,093			10,009			9,257			10,166			10,236
Total Payroll Expenses		118,478			111,389			144,342			114,320			106,552			122,700			115,582
53305 Outside Service - Medical		—			—			—			—			—			—			—
53505 Temporary Services		—			—			—			—			—			—			—
53510 Temporary Services - AL		—			—			—			—			—			—			—
54005 Payroll Service		286			245			603			317			260			165			332
55005 Outside Service Other		—			36			—			—			—			—			65
Total Purchase Services		286			281			603			317			260			165			397
Total Payroll Related		118,764			111,670			144,945			114,637			106,812			122,864			115,979
Total Payroll Related % Total Revenue		31	%		29	%		37	%		30	%		28	%		32	%		31	%
56505 Food		16,522			18,383			21,065			17,416			18,032			19,466			19,186
57005 Housekeeping		1,010			398			771			891			1,369			1,178			1,171
57505 Kitchen Supplies		2,365			2,011			1,408			1,257			2,343			3,664			1,909
58005 Assisted Living Supplies		153			261			97			304			(29	)		479			660
58505 Alzheimer Supplies		—			—			—			—			—			—			—
59005 Laundry & Linen/Uniforms		816			625			653			—			—			—			—
59010 Laun/Lin/Unif Kitchen		243			307			588			505			—			621			555
59015 Laund/Lin/Unif Housekeeping		—			274			688			768			484			952			684
59505 Activities-Asst Lving		1,919			1,412			2,074			909			634			1,584			1,646
59510 Banquet Expense		400			400			400			400			11			400			400
59555 NMS-Foodservices		—			—			—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—			—			—
Total Variable Expense		23,428			24,071			27,746			22,450			22,844			28,343			26,212
60005 Office Supplies		2,043			1,176			1,244			617			414			160			1,195
61005 Repairs and Maint - Building		—			—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—			—
61015 Repairs - Electrical		379			212			75			—			—			92			—
61020 Repairs - Plumbing		1,454			—			685			750			(610	)		163			1,097
61025 Repairs - Fire Systems		—			—			—			—			—			—			120
61030 Repairs - HVAC		405			(264	)		968			189			639			648			838
61035 Repairs - Gen. Supplies		1,175			2,436			3,140			335			609			1,407			874
61040 Repairs - Equipment		—			—			—			—			698			282			517
61045 Repairs - Other Interior		160			92			1,122			—			125			218			525
61055 Repairs - Other Exterior		477			77			449			—			—			—			—
61100 Loss on Early Retierment Asset		—			—			—			—			—			—			—
Total Repair & Maintenance		4,049			2,553			6,439			1,274			1,462			2,811			3,972
61505 Contracts - Elevator		557			557			557			557			557			557			667
61510 Contracts - Floor Maint		650			650			650			650			1,516			650			433
61515 Contracts - Alarm/Fire		144			162			342			556			162			252			(179	)
61520 Contracts-HVAC		55			55			55			—			698			140			—
61525 Contracts - Pest Control		163			163			163			—			169			332			325
61535 Contracts - Other		68			289			543			801			1,566			261			111
Total Service Contracts		1,637			1,876			2,310			2,564			4,667			2,191			1,357
62005 Land Maintenance		1,250			1,250			1,250			1,625			2,724			1,777			2,288
Total Land Maintenance		1,250			1,250			1,250			1,625			2,724			1,777			2,288
62505 Rental/Lease - Cable		2,045			2,045			2,453			2,249			2,254			2,254			2,254
62510 Rental/Lease - Security		—			—			—			—			—			—			—
62525 Rental/Lease - Furniture		—			—			—			—			—			—			—
62535 Rental/Lease - Equipment		617			340			283			1,060			210			(390	)		360
62540 Rental/Lease - Auto		—			—			—			—			—			—			—
62555 Rental/Lease - Other		—			—			—			—			—			—			—
Total Rental and Leases		2,662			2,385			2,735			3,308			2,464			1,864			2,614
63010 Utilities - Electricity		7,387			7,012			7,914			8,820			12,244			14,893			17,359
63015 Utilities - Water		1,146			917			1,411			1,824			1,769			1,971			1,976
63020 Utilities - Gas		4,644			3,910			2,216			2,067			2,404			1,191			1,167
63025 Utilities-Telephone		842			457			603			494			880			586			596
63030 Utilities-Trash		1,247			212			1,667			1,096			1,076			1,076			1,076
Total Utilities		15,266			12,507			13,811			14,303			18,374			19,717			22,173
63505 Marketing and Advertising		308			256			270			233			246			1,001			2,633
63510 Printed Materials		2,861			28			361			133			11			196			—
63515 Special Events		300			388			97			2,408			—			1,120			36
63520 Yellow Pages		425			641			231			262			1,728			395			179
63525 Newspaper and Magazine		504			1,194			364			290			626			127			182
63530 Advertising		—			—			—			—			—			—			—
64005 Referral Fees - Residents		—			500			—			1,440			—			—			500
Total Marketinq and Advertising		4,398			3,008			1,323			4,767			2,612			2,839			3,529
60510 Delivery		—			—			—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			—			150			—
65005 Gas		187			—			—			200			124			192			167
65010 Auto Service And Repair		107			1,044			197			—			90			—			—
65015 Other Automobile		14			—			11			46			—			—			—
65505 Travel & Lodging		234			20			100			20			85			229			518
66005 Mileage		—			—			—			33			—			—			—
66505 Meals & Entertainment		62			105			101			19			30			23			25
67005 License and Fingerprints		828			1,850			1,681			399			1,023			441			943

[Additional columns below]

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

	AUG			SEP			OCT			NOV			DEC			DEC YTD
40005 Revenue-Rental		330,996			332,362			333,696			339,118			349,162			4,002,951
40010 Revenue-Rent Refunds/Proration		—			(5,599	)		(453	)		—			(497	)		(8,253	)
Total Rental Revenue		330,996			326,763			333,244			339,118			348,685			3,994,699
40110 Revenue-AL Level 1		7,638			7,413			7,525			8,162			7,550			88,734
40115 Revenue-AL Level 2		10,620			8,975			9,068			8,400			11,425			120,627
40120 Revenue-AL Level 3		3,175			4,850			3,275			6,151			4,725			53,823
40125 Revenue-AL Level 4		6,000			6,000			7,025			8,325			8,925			96,889
40130 Revenue-AL Level 5		9,675			9,675			7,250			6,050			6,050			85,648
40135 Revenue-AL Level 6		8,775			8,775			7,300			7,300			7,300			99,376
40140 Revenue-AL Level 7		3,330			4,845			8,825			8,825			8,972			55,471
40170 Revenue-Alzh Lev1		—			—			—			—			—			—
Total AL Services Revenue		49,213			50,533			50,268			53,214			54,947			600,567
40515 Revenue-Other		989			1,079			2,263			2,867			2,071			19,982
40525 Revenue-Processing/App Fees		3,820			4,820			7,820			9,820			3,800			57,000
Tolal Other Revenue		4,809			5,899			10,083			12,687			5,871			76,982
40575 Rev-Process Fee Concessions		—			3,000			—			—			—			3,000
40015 Rev-Rent Concessions		—			—			—			—			—			—
40215 Rev-A/L Concessions		—			—			—			—			—			—
Total Concessions		—			3,000			—			—			—			3,000
Total Revenue		385,018			386,195			393,595			405,019			409,503			4,675,248
50005 Payroll Expense-Regular		80,217			83,372			83,487			83,099			82,381			953,686
50405 Payroll Expense-Overtime		2,790			2,556			3,667			3,139			3,705			39,673
50705 Payroll Expense-Doubletime		300			158			31			193			290			1,965
51005 Bonuses		(2,214	)		6,395			3,333			6,018			15,002			86,444
51505 Vacation, Sick, Holiday		3,196			6,186			6,753			7,109			6,707			75,620
51805 Employee Recognition		50			209			145			151			155			1,518
52005 Payroll Taxes		6,781			7,408			7,125			6,681			7,991			93,042
52505 401K/401A		255			298			227			314			336			3,255
52805 Group Insurance		6,393			7,645			3,338			6,465			6,309			65,889
53005 Worker’s Comp Insurance		10,008			4,742			8,594			8,576			9,367			109,707
Total Payroll Expenses		107,777			118,970			116,700			127,144			132,244			1,430,798
53305 Outside Service - Medical		—			—			—			15			—			15
53505 Temporary Services		—			—			—			—			—			—
53510 Temporary Services - AL		—			—			—			—			—			—
54005 Payroll Service		289			192			329			321			36			3,375
55005 Outside Service Other		32			—			49			—			—			182
Total Purchase Services		321			192			378			336			36			3,572
Total Payroll Related		108,097			119,162			117,078			122,080			132,280			1,434,370
Total Payroll Related % Total Revenue		28	%		31	%		30	%		30	%		32	%		31	%
56505 Food		18,191			22,293			19,300			23,046			15,294			228,194
57005 Housekeeping		1,372			755			1,126			960			591			11,593
57505 Kitchen Supplies		1,542			2,336			3,437			2,249			2,835			27,356
58005 Assisted Living Supplies		262			138			47			86			165			2,623
58505 Alzheimer Supplies		—			—			—			—			—			—
59005 Laundry & Linen/Uniforms		87			—			121			—			—			2,301
59010 Laun/Lin/Unif Kitchen		760			858			546			647			551			6,182
59015 Laund/Lin/Unif Housekeeping		872			907			1,154			1,120			595			8,498
59505 Activities-Asst Lving		1,808			1,787			1,893			1,630			1,309			18,605
59510 Banquet Expense		400			400			400			400			4,712			8,722
59555 NMS-Foodservices		—			—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—			—
Total Variable Expense		25,294			29,475			28,023			30,138			26,052			314,075
60005 Office Supplies		610			672			624			1,208			735			10,699
61005 Repairs and Maint - Building		—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—
61015 Repairs - Electrical		—			—			481			198			—			1,436
61020 Repairs - Plumbing		(132	)		150			174			150			—			3,881
61025 Repairs - Fire Systems		—			—			—			—			480			600
61030 Repairs - HVAC		1,429			486			1,001			294			996			7,630
61035 Repairs - Gen. Supplies		1,404			1,437			1,510			1,452			2,134			17,914
61040 Repairs - Equipment		2,441			(275	)		—			—			—			3,664
61045 Repairs - Other Interior		—			—			—			190			(419	)		2,013
61055 Repairs - Other Exterior		91			—			75			310			—			1,478
61100 Loss on Early Retierment Asset		—			—			—			—			—			—
Total Repair & Maintenance		5,233			1,798			3,241			2,595			3,191			38,616
61505 Contracts - Elevator		557			557			557			557			557			6.794
61510 Contracts - Floor Maint		1,733			1,083			1,083			1,083			—			10,181
61515 Contracts — Alarm/Fire		288			485			606			485			—			3,301
61520 Contracts-HVAC		140			—			—			—			583			1.727
61525 Contracts - Pest Control		169			175			171			169			(27	)		1,970
61535 Contracts - Other		44			320			320			263			571			5,156
Total Service Contracts		2,931			2,620			2,737			2,557			1,684			29,130
62005 Land Maintenance		1,250			1,250			1,490			1,283			1.250			18,687
Total Land Maintenance		1,250			1,250			1,490			1,283			1,250			18,687
62505 Rental/Lease - Cable		2,254			2,254			2,254			2,254			2,254			26,819
62510 Rental/Lease - Security		—			—			—			—			—			—
62525 Rental/Lease - Furniture		—			—			—			—			—			—
62535 Rental/Lease - Equipment		566			320			429			328			360			4,483
62540 Rental/Lease - Auto		—			—			—			—			—			—
62555 Rental/Lease - Other		—			—			—			—			—			—
Total Rental and Leases		2,819			2,574			2,683			2,582			2,613			31,301
63010 Utilities - Electricity		16,376			13,526			14,160			6,571			6,824			133,085
63015 Utilities - Water		2,408			2,731			2,978			143			472			19,747
63020 Utilities - Gas		1,350			1,432			1,673			3,713			4,630			30,397
63025 Utilities - Telephone		675			581			650			586			839			7,790
63030 Utilities - Trash		1,076			1,076			1,375			1,076			1,288			13,340
Total Utilities		21,884			19,345			20,836			12,089			14,053			204,358
63505 Marketing and Advertising		252			454			618			740			412			7,423
63510 Printed Materials		36			42			116			231			107			4,121
63515 Special Events		368			528			(555	)		711			532			5,934
63520 Yellow Pages		98			1,968			230			1,548			542			8,247
63525 Newspaper and Magazine		64			64			78			269			78			3,840
63530 Advertising		—			—			—			—			—			—
64005 Referral Fees - Residents		—			3,225			1,490			1,768			—			8,923
Total Marketinq and Advertising		818			6,281			1,976			5,266			1,670			38,488
60510 Delivery		—			—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			—			150
65005 Gas		218			1			157			266			139			1,650
65010 Auto Service And Repair		—			—			—			—			—			1,438
65015 Other Automobile		—			—			9			—			80			160
65505 Travel & Lodging		312			—			—			325			141			1,984
66005 Mileage		—			15			56			249			54			407
66505 Meals & Entertainment		—			47			274			88			8			780
67005 License and Fingerprints		597			623			767			1,082			1,061			11,294

PII - ITEM A-5

Database:
Cube:
Page: POLAPSVR
Financial Data
Year
Version
Community
Department
Month
GLAccount

2002
AA
Valley View
Total Department
Along Columns
Along Rows

OLAPT Table

	JAN			FEB			MAR			APR			MAY			JUN			JUL
68005 Dues and Subscriptions		130			130			420			130			483			157			157
68505 Seminars and Training		363			137			856			141			611			117			122
69005 Employee Recruiting		617			670			368			—			—			61			916
69505 Other		748			375			—			44			57			237			24
69605 Discounts Lost		—			—			—			—			—			—			—
69610 Discounts Taken		—			—			—			—			—			—			—
69525 Sales & Use Tax Due		—			—			—			—			—			—			—
Total Misc. Expenses		3.289			4,331			3,733			1,031			2,503			1,607			2,871
Total Operating Expense		176,785			164,827			205,537			166,575			164,875			184,172			182,191
Gross Margin		209,456			225,335			189,525			210,218			214,725			203,831			197,866
Gross Margin Percent		54	%		58	%		48	%		56	%		57	%		53	%		52	%
69705 Casualty Loss		—			—			—			—			—			—			—
69805 Bad Debt Expense		12			(9	)		—			193			625			(366	)		(94	)
70005 Corporate Allocation		—			—			—			—			—			—			—
72305 Property Taxes		7,552			7,552			7,552			7,552			7,552			7,552			7.854
72405 Insurance-Liability & Hazard		4,108			4,108			4,108			7,174			7.174			7,174			7.174
Total Other Fees		11,672			11,651			11,660			14,919			15.351			14,360			14,934
72505 Accounting		91			891			891			691			1,211			1,316			940
73005 Legal		393			446			478			836			400			608			951
73510 Donations & Contributions		—			—			—			—			—			—			—
74005 Consulting Fees		—			—			—			—			—			—			—
74015 Professional Fees — Other		—			—			—			37			—			—			—
75005 Property Management Fees		19,211			19,983			19,379			18,790			18,979			19,452			19,003
75105 Partnership Admin Fees		9,319			9,183			6,758			9,416			8,915			7,077			8,086
75510 Other Penalties/Fin. Fee		—			—			—			—			—			—			3
75515 Licenses & Fees Legal		—			—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			800			—			—			—
75525 Collection Fees		—			—			—			—			—			—			—
Total Professional Fees		29,014			30,503			27,506			30,770			29,505			28,452			28,992
EBITDAR		168,769			183,181			150,359			164,530			169,869			161,019			153,941
EBITDAR Percent		44	%		47	%		38	%		44	%		45	%		41	%		41	%
77005 Operating Lease		—			—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—			—
Total Leases		—			—			—			—			—			—			—
80005 Interest Income		(690	)		(689	)		(565	)		(268	)		(263	)		(297	)		(258	)
80505 Other Non-Operating Income		—			—			—			(109,000	)		—			109,000			—
84105 State Income Tax		—			—			—			—			—			—			—
Total Non-Operating Income/Expense		(690	)		(689	)		(565	)		(109,268	)		(263	)		108,703			(258	)
83005 Interest Expense		75,456			75,456			75,243			75,456			75,135			75,241			75,204
83025 Int Exp MIP		—			4,697			4,697			4,697			4,697			4,697			4,697
Total Interest Expense		75,456			80,153			79,940			80,153			79,831			79,937			79,901
EBTDA		94,003			103,718			70,984			193,645			90,301			(27,621	)		74,299
EBTDA Percent		24	%		27	%		18	%		51	%		24	%		-7	%		20	%
77505 Depreciation		23,190			23,268			22,465			22,519			22,456			22,366			22,384
78005 Amortization		505			505			505			505			505			505			505
78015 Amortization — Start Up		—			—			—			—			—			—			—
Total Depreciation & Amortization		23,695			23,773			22,971			23,025			22,971			22,871			22,889
Net Income (Loss)		70,308			79,944			49,014			170,620			67,330			(50,493	)		51,409

[Additional columns below]

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

	AUG			SEP			OCT			NOV			DEC			DEC YTD
68005 Dues and Subscriptions		127			775			127			256			130			3,023
68505 Seminars and Training		685			216			117			117			156			3,638
69005 Employee Recruiting		790			100			194			557			466			4,738
69505 Other		49			—			24			182			—			1,740
69605 Discounts Lost		—			—			—			—			—			—
69610 Discounts Taken		—			—			—			—			—			—
69525 Sales & Use Tax Due		—			—			—			—			—			—
Total Misc. Expenses		2,779			1,776			1,725			3,122			2,235			31,002
Total Operating Expense		171,715			184,953			180,413			182,920			185,763			2,150,726
Gross Margin		213,303			201,242			213,182			222,099			223,741			2,524,522
Gross Margin Percent		55	%		52	%		54	%		55	%		55	%		54	%
69705 Casualty Loss		—			—			—			—			—			—
69805 Bad Debt Expense		(183	)		—			—			—			—			179
70005 Corporate Allocation		—			—			—			—			—			—
72305 Property Taxes		7,854			7,854			9,224			9,224			9,224			96,542
72405 Insurance-Liability & Hazard		10,626			6,859			8,395			8,457			6,264			81,621
Total Other Fees		18,297			14,713			17,618			17,680			15,488			178,342
72505 Accounting		891			1,211			1,911			1,721			(2,171	)		9,794
73005 Legal		350			2,107			673			429			392			8,063
73510 Donations & Contributions		—			—			—			—			—			—
74005 Consulting Fees		—			—			—			—			—			—
74015 Professional Fees — Other		—			510			(510	)		—			—			37
75005 Property Management Fees		19,251			19,310			19,281			20,650			20,475			233,762
75105 Partnership Admin Fees		8,487			6,666			9,178			9,217			10,019			102,329
75510 Other Penalties/Fin. Fee		—			—			—			—			—			3
75515 Licenses & Fees Legal		—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			—			—			800
75525 Collection Fees		—			—			—			—			—			—
Total Professional Fees		28,079			29,803			30,533			32,017			28,716			354,789
EBITDAR		166,027			156,726			165,031			172,402			179,537			1,991,391
EBITDAR Percent		43	%		41	%		42	%		43	%		44	%		43	%
77005 Operating Lease		—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—
Total Leases		—			—			—			—			—			---
80005 Interest Income		(288	)		(303	)		(261	)		(293	)		(297	)		(4,472	)
80505 Other Non-Operating Income		—			—			—			(214	)		—			(214	)
84105 State Income Tax		—			—			—			—			—			—
Total Non-Operating Income/Expense		(288	)		(303	)		(261	)		(507}			(297	)		(4,687	)
83005 Interest Expense		75,167			75,130			75,092			75,167			74,904			902,651
83025 Int Exp MIP		4,697			4,697			4,697			4,697			4,697			51,663
Total Interest Expense		79,864			79,826			79,789			79,864			79,601			954,314
EBTDA		86,451			77,203			85,503			93,045			100,234			1,041,764
EBTDA Percent		22	%		20	%		22	%		23	%		24	%		22	%
77505 Depreciation		22,349			22,255			22,522			22,173			22,136			270,093
78005 Amortization		505			505			505			505			505			6,064
78015 Amortization — Start Up		—			—			—			—			—			—
Total Depreciation & Amortization		22,854			22,761			23,028			22,679			22,641			276,157
Net Income (Loss)		63,597			54,442			62,475			70,366			77,592			765,606

Database:
Cube:
Page: POLAPSVR
Financial Data
Year
Version
Community
Department
Month
GLAccount

2001
AA
Valley View
Total Department
Along Columns
Along Rows

OLAPTable	JAN			FEB			MAR			APR			MAY			JUN			JUL
40005 Revenue-Rental		305,720			300,341			299,333			301,706			299,679			319,412			325,818
40010 Revenue-Rent Refund/Proration		—			(2,730	)		—			—			(9,289	)		(3,396	)		—
Total Rental Revenue		305,720			297,611			299,333			301,706			290,390			316,016			325,818
40110 Revenue-AL Level 1		10,499			12,131			13,375			13,600			8,620			13,163			7,542
40115 Revenue-AL Level 2		5,961			8,525			8,750			6,775			6,200			6,661			5,055
40120 Revenue-AL Level 3		8,958			11,800			6,178			9,145			8,665			11,198			4,750
40125 Revenue-AL Level 4		8,270			3,826			7,650			6,875			3,775			3,600			3,407
40130 Revenue-AL Level 5		2,392			1,001			3,106			3,910			6,165			7,393			5,800
40135 Revenue-AL Level 6		1,400			1,400			1,400			1,400			1,715			9,700			8,775
40140 Revenue-AL Level 7		1,541			96			910			(897	)		2,800			1,086			(110	)
40180 Revenue-Extended Cong Care		—			—			—			—			—			—			—
Total AL Services Revenue		39,021			38,779			41,369			40,808			37,940			52,801			35,219
40515 Revenue-Other		947			794			944			915			944			737			803
40525 Revenue-Processing/App Fees		2,500			3,000			1,750			—			500			5,300			—
Total Other Revenue		3,447			3,794			2,694			915			1,444			6,037			803
40575 Rev-Process Fee Concessions		—			—			—			—			—			—			—
40015 Rev-Rent Concessions		(6,000	)		—			—			—			—			—			—
40215 Rev-A/L Concessions		—			—			—			—			—			—			—
Total Concessions		(6,000	)		—			—			—			—			—			—
Total Revenue		342,188			340,184			343,396			343,429			329,774			374,853			361,840
50005 Payroll Expense-Regular		70,023			68,984			73,297			63,710			75,585			73,445			79,957
50405 Payroll Expense-Overtime		9,338			8,069			8,043			7,576			7,448			7,518			5,097
50705 Payroll Expense-Doubletime		1,311			1,090			762			513			151			981			661
51005 Bonuses		1,923			5,673			9,788			(1,447	)		4,507			3,273			1,551
51505 Vacation, Sick, Holiday		7,445			6,759			5,385			5,952			3,629			10,017			2,731
51805 Employee Recognition		—			134			—			—			28			—			—
52005 Payroll Taxes		10,767			9,621			9,115			7,515			7,912			5,489			7,629
52505 401K/401A		410			389			253			297			275			336			327
52805 Group Insurance		3,070			3,793			3,745			3,836			3,948			453			3,440
53005 Worker’s Comp Insurance		5,714			6,327			5,396			4,880			5,199			6,088			5,796
Total Payroll Expenses		110,002			110,839			115,782			92,832			108,681			107,600			107,188
53305 Outside Service - Medical		—			—			—			—			—			—			—
53505 Temporary Services		670			2,316			100			—			—			(561	)		—
53510 Temporary Services - AL		—			—			488			(488	)		—			—			—
54005 Payroll Service		161			183			165			197			165			168			168
55005 Outside Service Other		345			—			32			131			32			33			64
Total Purchase Services		1,176			2,479			784			328			196			(848	)		232
Total Payroll Related		111,178			113,317			116,566			93,160			108,878			106,752			107,420
Total Payroll Related % Total Revenue		32	%		33	%		34	%		27	%		33	%		28	%		30	%
56505 Food		16,442			19,408			20,557			15,646			19,817			17,393			18,401
57005 Housekeeping		957			607			1,217			783			651			1,295			708
57505 Kitchen Supplies		1,691			2,614			2,377			3,382			2,043			2,749			2,039
58005 Assisted Living Supplies		874			642			446			—			418			163			368
59005 Laundry & Linen/Uniforms		1,010			1,750			866			2,388			2,299			873			1,036
59010 Laun/Lin/Unif Kitchen		—			—			—			—			—			—			—
59015 Laund/Lin/Unif Housekeeping		—			—			—			—			—			—			—
59505 Activities-Asst Lving		1,441			1,702			662			512			1,276			971			1,605
59510 Banquet Expense		400			400			400			400			400			400			400
59555 NMS-Foodservices		—			—			—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—			—			—
Total Variable Expense		22,814			27,123			26,526			23,122			26,904			23,844			24,557
60005 Office Supplies		1,458			931			333			2,106			739			883			1,147
61005 Repairs and Maint - Building		—			—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—			—
61015 Repairs -Electrical		—			—			—			147			—			—			—
61020 Repairs - Plumbing		—			279			882			(32	)		667			155			311
61025 Repairs - Fire Systems		779			—			—			—			775			—			—
61030 Repairs - HVAC		1,195			810			256			100			1,045			2,318			509
61035 Repairs - Gen. Supplies		1,894			962			1,856			3,524			902			160			551
61040 Repairs - Equipment		626			881			—			—			453			856			624
61045 Repairs - Other Interior		357			897			1,016			895			3,240			969			284
61055 Repairs - Other Exterior		570			1,037			—			—			—			—			—
61100 Loss on Early Retierment Asset		—			—			—			—			—			—			—
Total Repair & Maintenance		5,422			4865			4,009			4,633			7,082			4,447			2,278
61505 Contracts - Elevator		557			557			557			557			557			557			557
61510 Contract - Floor Maint		—			—			—			—			—			—			900
61515 Contracts -Alarm/Fire		29			—			485			514			144			—			—
61520 Contract-HVAC		—			645			—			—			182			—			—
61525 Contract - Pest Control		326			163			(63	)		100			200			463			326
61535 Contract - Other		135			(68	)		141			—			334			698			—
Total Service Contracts		1,047			1,298			1,12O			1,171			1,417			1,718			1,783
62005 Land Maintenance		1,250			1,250			1,250			1,250			1,946			1,250			1,730
Total Land Maintenance		1,250			1,250			1,250			1,250			1,946			1,250			1,730
62505 Rental/Lease - Cable		2,040			2,040			2,040			2,040			2,040			2,040			2,040
62510 Rental/Lease - Security		—			—			—			132			—			—			—
62525 Rental/Lease - Furniture		—			—			—			—			—			—			—
62535 Rental/Lease - Equipment		459			310			173			91			75			110			497
62540 Rental/Lease - Auto		—			—			87			—			—			—			—
62555 Rental/Lease - Other		217			49			68			76			—			—			149
Total Rental and Leases		2,716			2,399			2,367			2,338			2,115			2,150			2,686
63010 Utilities - Electricity		5,762			5,746			5,761			3,805			9,849			16,062			16,756
63015 Utilities - Water		1,607			1,517			1,357			1,833			1,627			2,582			2,126
63020 Utilities - Gas		10,980			12,541			7,462			3,358			2,922			1,882			1,832
63025 Utilities - Telephone		862			1,040			839			1,045			862			655			652
63030 Utilities - Trash		720			617			947			829			1,083			1,035			1,235
Total Utilities		19,932			21,461			16,366			10,870			16,363			22,217			22,601
63505 Marketing and Advertising		641			523			648			353			368			304			618
63510 Printed Materials		83			—			90			—			18			625			63
63515 Special Events		194			65			30			75			—			—			—
63520 Yellow Pages		632			632			632			532			632			632			632
63525 Newspaper and Magazine		85			387			1,140			445			332			347			32
63530 Advertising		—			—			—			180			—			—			—
64005 Referral Fees - Residents		—			—			1,459			1,215			2,460			—			—
Total Marketing and Advertising		1,634			1,607			3,998			2,900			3,809			1,907			1,344
60510 Delivery		—			—			—			—			—			—			—
64505 Computers/Peripherals/Software		—			—			—			—			—			—			—
65005 Gas		134			196			111			212			127			229			128
65010 Auto Service And Repair		657			—			—			—			—			910			138
65015 Other Automobile		—			—			—			—			—			—			—
65505 Travel & Lodging		1,015			(61	)		—			210			229			158			429
66005 Mileage		—			—			—			—			—			—			—
66505 Meals & Entertainment		—			24			14			79			—			65			41
67005 License and Fingerprints		448			1,869			1,417			392			1,105			937			232
68005 Dues and Subscriptions		—			—			—			293			473			848			263

[Additional columns below]

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

OLAPTable	AUG			SEP			OCT			NOV			DEC			DEC YTD
40005 Revenue-Rental		311,661			312,044			321,304			308,765			300,485			3,706,268
40010 Revenue-Rent Refund/Proration		—			(200	)		(200	)		(966	)		(2,542	)		(19,323	)
Total Rental Revenue		311,631			311,844			321,104			307,799			297,943			3,686,945
40110 Revenue-AL Level 1		10,322			9,513			8,822			8,985			9,709			126,281
40115 Revenue-AL Level 2		6,206			7,806			5,075			6,935			8,160			82,108
40120 Revenue-AL Level 3		9,240			8,163			9,939			6,723			6,618			101,377
40125 Revenue-AL Level 4		5,000			6,575			8,260			8,000			9,713			74,952
40130 Revenue-AL Level 5		5,975			4,878			7,626			8,832			8,400			65,479
40135 Revenue-AL Level 6		10,914			8,775			8,139			11,725			8,775			74,118
40140 Revenue-AL Level 7		(1,037	)		2,483			1,028			1,248			1,311			10,458
40180 Revenue-Extended Cong Care		—			—			—			—			—			—
Total AL Services Revenue		46,620			48,193			48,889			52,448			52,686			534,772
40515 Revenue-Other		1,272			1,277			1,409			564			3,135			13,742
40525 Revenue-Processing/App Fees		2,500			4,000			3,950			1,000			3,500			28,000
Total Other Revenue		3,772			5,277			5,359			1,564			6,635			41,742
40575 Rev-Process Fee Concessions		—			—			—			—			—			—
40015 Rev-Rent Concessions		—			—			—			—			—			(6,000	)
40215 Rev-A/L Concessions		—			—			—			—			—			—
Total Concessions		—			—			—			—			—			(6,000	)
Total Revenue		362,054			365,314			375,351			361,812			357,264			4,257,459
50005 Payroll Expense-Regular		82,764			72,327			80,054			75,824			82,487			898,456
50405 Payroll Expense-Overtime		4,343			5,647			3,798			3,854			4,400			75,131
50705 Payroll Expense-Doubletime		326			409			95			545			162			7,004
51005 Bonuses		4,825			3,980			5,490			11,928			8,176			59,663
51505 Vacation, Sick, Holiday		6,096			6,666			6,114			6,041			8,619			75,455
51805 Employee Recognition		121			53			—			42			73			450
52005 Payroll Taxes		6,820			6,882			7,038			5,740			7,380			91,910
52505 401K/401A		299			298			302			364			219			3,788
52805 Group Insurance		5,886			6,983			5,520			6,049			5,332			52,055
53005 Worker’s Comp Insurance		5,987			8,080			6,995			6,995			7,504			74,962
Total Payroll Expenses		117,468			111,324			115,406			117,401			124,351			1,338,874
53305 Outside Service - Medical		—			—			—			—			—			—
53505 Temporary Services		—			—			—			—			2			2,528
53510 Temporary Services - AL		—			—			—			—			—			—
54005 Payroll Service		168			168			235			217			258			2,234
55005 Outside Service Other		(22	)		68			27			—			—			708
Total Purchase Services		146			237			262			217			260			5,470
Total Payroll Related		117,614			111,561			115,668			117,618			124,611			1,344,344
Total Payroll Related % Total Revenue		32	%		31	%		31	%		33	%		35	%		32	%
56505 Food		21,426			17,486			19,025			20,299			17,482			220,379
57005 Housekeeping		778			810			1,084			766			952			10,618
57505 Kitchen Supplies		2,583			2,093			2,730			1,795			3,397			29,493
53005 Assisted Living Supplies		255			281			427			131			272			4,277
59005 Laundry & Linen/Uniforms		1,095			779			158			935			1,486			14,675
59010 Laun/Lin/Unif Kitchen		—			—			—			—			—			—
59015 Laund/Lin/Unif Housekeeping		—			—			—			—			—			—
59505 Activities-Asst Lving		2,771			765			2,196			214			2,256			16,372
59510 Banquet Expense		400			400			400			436			(1,322	)		3,114
59555 NMS-Foodservices		—			—			—			—			—			—
59560 NMS-Housekeeping		—			—			—			—			—			—
Total Variable Expense		29,308			22,613			23,021			24,574			24,523			293,929
60005 Office Supplies		975			899			751			971			1,633			12,827
61005 Repairs and Maint - Building		—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—
61015 Repairs -Electrical		—			—			—			365			(290	)		222
61020 Repairs - Plumbing		1,233			463			—			14			795			4,766
61025 Repairs - Fire Systems		—			—			311			—			—			1,665
61030 Repairs - HVAC		140			140			—			—			1,247			7,760
61035 Repairs - Gen. Supplies		1,301			1,012			414			1,216			4,173			17,964
61040 Repairs - Equipment		336			823			496			—			130			5,225
61045 Repairs - Other Interior		836			417			1,149			548			520			11,148
61055 Repairs - Other Exterior		—			333			—			86			227			2,254
61100 Loss on Early Retierment Asset		—			—			—			—			—			—
Total Repair & Maintenance		3,877			3,189			2,370			2,228			6,803			51,204
61505 Contracts - Elevator		557			557			557			557			557			6,684
61510 Contract - Floor Maint		650			650			650			650			650			4,150
61515 Contracts -Alarm/Fire		—			485			233			—			485			2,375
61520 Contract-HVAC		—			—			388			720			55			1,990
61525 Contract - Pest Control		163			163			163			—			489			2,493
61535 Contract - Other		68			68			897			342			734			3,348
Total Service Contracts		1,438			1,923			2,888			2,269			2,971			21,041
62005 Land Maintenance		1,250			1,421			1,250			1,320			1,250			16,417
Total Land Maintenance		1,250			1,421			1,260			1,320			1,250			16,417
62505 Rental/Lease - Cable		2,040			2,040			2,040			2,040			2,040			24,481
62510 Rental/Lease - Security		—			—			—			—			—			132
62525 Rental/Lease - Furniture		—			—			—			—			—			—
62535 Rental/Lease - Equipment		653			521			511			394			723			4,516
62540 Rental/Lease - Auto		—			—			—			—			—			87
62555 Rental/Lease - Other		—			—			68			89			—			714
Total Rental and Leases		2,693			2,561			2,619			2,523			2,763			29,930
63010 Utilities - Electricity		13,456			14,204			13,714			8,249			6,464			119,828
63015 Utilities - Water		1,881			1,626			1,306			2,039			1,700			21,201
63020 Utilities - Gas		2,120			1,288			1,137			1,876			4,460			51,860
63025 Utilities - Telephone		516			698			653			728			737			9,307
63030 Utilities - Trash		1,035			1,035			1,035			1,035			1,035			11,640
Total Utilities		19,008			18,851			17,845			13,927			14,397			213,837
63505 Marketing and Advertising		533			650			220			189			208			5,254
63510 Printed Materials		114			183			66			204			1,198			2,643
63515 Special Events		270			510			(63	)		28			528			1,638
63520 Yellow Pages		632			632			632			(5,528	)		1,037			1,829
63525 Newspaper and Magazine		104			64			314			206			3,453
63530 Advertising		—			—			63			32			27			302
64005 Referral Fees - Residents		500			—			—			—			—			5,634
Total Marketing and Advertising		2,153			1,975			982			(4,762	)		3,205			20,753
60510 Delivery		—			—			—			—			—			—
64605 Computers/Peripherals/Software		—			—			—			—			—			—
65005 Gas		144			193			10			111			178			1,775
65010 Auto Service And Repair		375			—			—			—			—			2,080
65015 Other Automobile		—			—			—			—			—			—
65505 Travel & Lodging		17			—			512			382			887			3,777
66005 Mileage		—			—			64			—			150			214
66505 Meals & Entertainment		—			240			33			77			28			600
67005 License and Fingerprints		1,784			554			612			242			1,618			11,211
68006 Dues and Subscriptions		36			211			1,167			635			259			4,183

Database:
Cube:
Page: POLAPSVR
Financial Data
Year
Version
Community
Department
Month
GLAccount

2001
AA
Valley View
Total Department
Along Columns
Along Rows

OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN
68505 Seminars and Training		—			—			—			—			333			545
69005 Employee Recruiting		—			—			904			339			212			—
69505 Other		351			130			669			9			120			697
69605 Discounts Lost		—			—			—			—			—			553
69610 Discounts Taken		(199	)		(235	)		(131	)		(166	)		(132	)		(251	)
69525 Sales & Use Tax Due		—			—			—			—			—			—
Total Misc. Expenses		2,405			1,923			2,984			1,365			2,468			4,692
Total Operating Expense		169,857			176,173			175,519			142,915			171,723			169,859
Gross Margin		172,331			164,011			167,877			200,514			159,052			204,994
Gross Margin Percent		50	%		48	%		49	%		58	%		48	%		55	%
69705 Casualty Loss		—			—			—			—			—			—
69805 Bad Debt Expense		(1,719	)		51			3			(439	)		116			(108	)
70005 Corporate Allocation		—			—			—			—			—			—
72305 Property Taxes		7,801			7,801			7,801			7,801			5,898			5,898
72405 Insurance-Liability & Hazard		2,114			2,114			2,113			4,108			4,108			4,030
Total Other Fees		12,798			5,365			9,918			11,470			10,722			9,819
72505 Accounting		596			320			458			458			318			318
73005 Legal		5,728			(4,861	)		510			1,774			471			355
73510 Donations & Contributions		—			—			—			—			—			—
74005 Consulting Fees		—			—			157			—			—			—
74015 Professional Fees - Other		—			—			—			—			—			—
75005 Property Management Fees		17,118			16,995			17,170			17,171			16,494			18,743
75105 Partnership Admin Fees		13,811			(761	)		7,446			6,596			4,863			4,740
75510 Other Penalties/Fin. Fee		—			—			—			—			—			—
75515 Licenses & Fees Legal		—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			—			—			—
75525 Collection Fees		—			—			—			—			—			—
Total Professional Fees		37,253			11,693			25,741			26,000			22,146			24,156
EBITDAR		122,281			146,953			132,219			163,043			125,784			171,019
EBITDAR Percent		36	%		43	%		39	%		47	%		38	%		46	%
77005 Operating Lease		—			—			—			—			—			—
77010 Add'l Lease		—			—			—			—			—			—
Total Leases		—			—			—			—			—			—
80005 Interest Income		—			(150	)		—			(413	)		(2,054	)		(823	)
80505 Other Non-Operating Income		—			—			—			—			—			—
87010 Extraordinary Items -Net Tax		—			—			—			—			—			—
Total Non-Operating Income/Expense		—			(150	)		—			(413	)		(2,054	)		(823	)
83005 Interest Expense		75,797			75,421			75,764			75,730			75,697			75,663
83025 Int Exp MIP		—			9,203			4,602			4,602			6,824			6,824
Total Interest Expense		75,797			84,624			80,365			80,332			82,521			82,487
EBTDA		46,484			62,479			51,854			83,124			45,317			89,356
EBTDA Percent		14	%		18	%		15	%		24	%		14	%		24	%
77505 Depreciation		20,792			20,876			21,535			21,096			21,318			21,548
78005 Amortization		567			575			330			494			494			494
78015 Amortization - Start Up		—			—			—			—			—			—
Total Depreciation & Amortization		21,359			21,451			21,865			21,589			21,811			22,041
Net Income (Loss)		25,125			41,028			29,989			61,535			23,506			67,314

[Additional columns below]

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

	JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
68505 Seminars and Training		432			314			722			298			385			386			3,416
69005 Employee Recruiting		—			257			—			376			—			—			2,087
69505 Other		374			—			275			588			28			492			3,732
69605 Discounts Lost		—			—			66			—			—			21			640
69610 Discounts Taken		(27	)		(21	)		(18	)		(21	)		—			—			(1,203	)
69525 Sales & Use Tax Due		—			—			—			—						—			—
Total Misc. Expenses		2,010			2,907			2,242			3,640			1,860			4,018			32,513
Total Operating Expense		167,556			181,222			167,236			171,032			162,528			186,174			2,041,793
Gross Margin		194,284			180,832			198,078			204,319			199,284			171,089			2,215,665
Gross Margin Percent		54	%		50	%		54	%		54	%		55	%		48	%		52	%
69705 Casualty Loss		—			—			—			—			—			—			—
69805 Bad Debt Expense		—			2			—			877			—			(877	)		(2,094	)
70005 Corporate Allocation		—			—			—			—			—			—			—
72305 Property Taxes		7,801			7,801			7,801			7,801			7,801			6,303			88,310
72405 Insurance-Liability & Hazard		3,884			4,333			4,108			4,243			4,108			4,108			43,372
Total Other Fees		11,685			12,136			11,909			12,922			11,909			9,534			129,588
72505 Accounting		381			381			381			881			3,081			2,816			10,387
73005 Legal		626			743			564			483			378			636			7,408
73510 Donations & Contributions		—			—			—			—			—			—			—
74005 Consulting Fees		—			—			250			—			—			—			407
74015 Professional Fees - Other		28			—			—			—			—			—			28
75005 Property Management Fees		18,092			18,083			18,286			18,768			18,091			17,862			212,672
75105 Partnership Admin Fees		7,380			5,983			6,956			8,924			7,675			5,989			79,604
75510 Other Penalties/Fin. Fee		—			—			—			—			—			—			—
75515 Licenses & Fees Legal		—			—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—			—
75520 Franchise Tax Filing Fee		—			—			—			—			—			—			—
75525 Collection Fees		—			—			—			—			—			—			—
Total Professional Fees		26,507			25,190			26,436			29,056			29,225			27,303			310,705
EBITDAR		156,092			143,506			159,732			162,342			158,150			134,252			1,775,372
EBITDAR Percent		43	%		40	%		44	%		43	%		44	%		38	%		42	%
77005 Operating Lease		—			—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—			—
Total Leases		—			—			—			—			—			—			—
80005 Interest Income		(838	)		(822	)		(943	)		(759	)		(881	)		(816	)		(8,499	)
80505 Other Non-Operating Income		—			—			—			—			—			—			—
87010 Extraordinary Items -Net Tax		—			—			—			—			—			—
Total Non-Operating Income/Expense		(838	)		(822	)		(943	)		(759	)		(881	)		(816	)		(8,499	)
83005 Interest Expense		75,629			75,595			75,561			75,526			75,491			75,456			907,330
83025 Int Exp MIP		6,824			6,824			6,824			6,824			6,824			—			66,173
Total Interest Expense		82,453			82,419			82,384			82,350			82,315			75,456			973,503
EBTDA		74,477			61,909			78,290			80,751			76,715			59,612			810,368
EBTDA Percent		21	%		17	%		21	%		22	%		21	%		17	%		19	%
77505 Depreciation		21,453			21,413			23,418			23,323			23,371			23,243			263,384
78005 Amortization		496			500			505			500			502			505			5,962
78015 Amortization - Start Up		—			—			—			—			—			—			—
Total Depreciation & Amortization		21,949			21,914			23,923			23,823			23,873			23,748			269,347
Net Income (Loss)		52,529			39,995			54,367			56,928			52,842			35,864			541,021

PII - ITEM A-5

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2000
	Version	AA
	Community	VALLEY VIEW LODGE
	Department	Total Departments
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN			JUL
40005 Revenue-Rental		249,774			221,528			215,371			221,288			237,451			228,959			252,578
40010 Revenue-Rent Refunds/Proration		(1,620	)		(755	)		(33	)		(1,446	)		—			—			(1,152	)
Total Rental Revenue		248,154			220,773			215,338			219,842			237,451			228,959			251,426
40110 Revenue-AL Level 1		14,994			(749	)		8,609			8,500			9,800			8,670			7,915
40115 Revenue-AL Level 2		9,970			11,015			14,071			9,375			6,762			8,407			6,807
40120 Revenue-AL Level 3		6,350			13,200			136			6,025			8,844			7,000			9,500
40125 Revenue-AL Level 4		4,875			3,965			4,875			6,634			5,850			7,341			5,850
40130 Revenue-AL Level 5		2,350			3,150			3,425			4,595			2,350			1,175			2,550
40135 Revenue-AL Level 6		—			—			—			1,400			—			1,400			1,400
40140 Revenue-AL Level 7		9,105			2,990			2,990			1,590			2,990			1,590			1,590
40170 Revenue-Alzh Lev 1		—			—			—			—			—			—			—
Total AL Services Revenue		47,644			33,571			34,106			38,119			36,596			35,583			35,612
40515 Revenue-Other		642			1,144			481			634			574			923			1,346
40525 Revenue-Processing/App Fees		6,200			—			—			—			—			1,500			5,000
Total Other Revenue		6,842			1,144			481			634			574			2,423			6,346
40575 Rev-Process Fee Concessions		—			—			—			—			—			—			—
40015 Rev-Rent Concessions		(4,026	)		(1,600	)		(2,411	)		(3,854	)		(2,530	)		(7,290	)		(4,860	)
40215 Rev-A/L Concessions		—			—			—			—			—			—			—
Total Concessions		(4,026	)		(1,600	)		(2,411	)		(3,854	)		(2,530	)		(7,290	)		(4,860	)
Total Revenue		298,614			253,888			247,514			254,741			272,091			259,675			288,524
50005 Payroll Expense-Regular		47,360			49,936			55,101			55,131			58,948			50,192			60,534
50405 Payroll Expense-Overtime		11,173			8,091			6,406			3,851			3,815			5,837			7,295
50705 Payroll Expense-Doubletime		4,640			2,642			1,655			597			233			1,452			1,345
51005 Bonuses		500			950			1,300			800			1,400			1,550			1,882
51505 Vacation, Sick, Holiday		6,388			4,790			2,560			3,157			2,864			4,329			1,804
51805 Employee Recognition		—			—			—			—			—			—			—
52005 Payroll Taxes		8,264			6,580			6,730			6,179			6,335			5,619			6,855
52505 401K/401A		269			262			213			233			127			204			224
52805 Group Insurance		1,681			1,595			2,689			1,013			1,310			1,265			1,626
53005 Worker’s Comp Insurance		2,477			2,477			3,036			4,472			4,309			4,414			4,753
Total Payroll Expenses		82,752			77,323			79,691			75,432			79,341			74,862			86,318
53305 Outside Service - Medical		—			1,676			330			530			—			—			—
53505 Temporary Services		7,236			6,424			16,257			1,275			1,013			2,304			2,304
53510 Temporary Services - AL		2,934			3,009			144			376			292			—			—
54005 Payroll Service		—			366			187			139			161			158			151
55005 Outside Service Other		25			4,225			4,270			(4,233	)		—			—			—
Total Purchase Services		10,194			15,701			21,188			(1,912	)		1,466			2,463			2,455
Total Payroll Related		92,946			93,023			100,879			73,520			80,807			77,325			88,773
Total Payroll Related % Total Revenue		31	%		37	%		41	%		29	%		30	%		30	%		31	%
56505 Food		21,391			9,653			10,640			14,835			15,616			15,092			15,607
57005 Housekeeping		773			1,604			502			1,124			1,010			977			1,010
57505 Kitchen Supplies		2,968			4,952			2,828			2,302			2,183			2,111			2,181
58005 Assisted Living Supplies		382			402			69			25			583			402			359
58505 Alzheimer Supplies		—			—			—			—			—			—			—
59005 Laundry & Linen/Uniforms		994			1,323			2,152			1,301			806			593			459
59010 Laun/Lin/Unif Kitchen		—			—			—			—			—			—			—
59015 Laund/Lin/Unif Housekeeping		—			—			—			—			—			—			—
59505 Activities-Asst Lving		1,040			2,912			2,501			1,320			1,620			2,007			739
59510 Banquet Expense		221			500			500			—			—			—			—
59555 NMS-Foodservices		—			—			—			16,992			10,258			(1,982	)		4,509
59560 NMS-Housekeeping		—			—			—			3,705			2,039			6,100			1,984
Total Variable Expense		27,769			21,346			19,193			41,604			34,115			25,300			26,847
60005 Office Supplies		2,471			4,265			2,491			1,031			1,570			413			1,481
61005 Repairs and Maint - Building		—			—			—			—			—			—			—
61010 Repairs - Phone System		—			—			—			—			—			—			34
61015 Repairs -Electrical		380			472			598			(428	)		—			—			—
61020 Repairs -Plumbing		(26	)		—			351			96			145			700			86
61025 Repairs - Fire Systems		—			—			—			256			(256	)		—			—
61030 Repairs - HVAC		209			217			708			—			457			1,602			236
61035 Repairs - Gen. Supplies		315			(100	)		1,024			540			1,395			999			4,654
61040 Repairs - Equipment		791			1,724			411			781			1,110			1,666			2,424
61045 Repairs - Other Interior		1,874			753			1,020			808			260			2,805			2,206
61055 Repairs - Other Exterior		130			—			—			—			449			—			—
61100 Loss on Early Retierment Asset		—			—			—			—			—			—			—
Total Repair & Maintenance		3,673			3,066			4,113			2,054			3,560			7,772			9,641
61505 Contracts - Elevator		557			557			557			939			557			887			1,325
61510 Contracts - Floor Maint		369			369			622			430			1,175			—			—
61515 Contracts - Alarm/Fire		—			—			506			144			489			211			—
61520 Contracts-HVAC		—			626			—			—			—			—			645
61525 Contracts - Pest Control		163			163			163			163			163			1,593			163
61535 Contracts -Other		270			199			192			215			577			81			68
Total Service Contracts		1,359			1,914			2,040			1,891			2,961			2,772			2,201
62005 Land Maintenance		1,250			1,250			2,292			1,942			2,360			2,245			1,374
Total Land Maintenance		1,250			1,250			2,292			1,942			2,360			2,245			1,374
62505 Rental/Lease - Cable		2,039			2,039			2,039			2,039			2,039			2,039			2,039
62510 Rental/Lease - Security		—			—			—			372			372			372			(372	)
62525 Rental/Lease - Furniture		—			—			—			—			—			—			—
62535 Rental/Lease - Equipment		499			33			111			160			70			708			396
62540 Rental/Lease - Auto		—			—			—			—			—			—			—
62555 Rental/Lease - Other		—			74			—			—			91			435			—
Total Rental and Leases		2,539			2,146			2,150			2,571			2,573			3,554			2,063
63010 Utilities - Electricity		5,637			4,245			5,542			5,985			8,293			12,491			9,622
63015 Utilities - Water		943			722			1,238			1,826			1,759			1,594			1,620
63020 Utilities - Gas		3,462			3,088			3,208			1,915			(2,182	)		1,362			1,747
63025 Utilities - Telephone		556			615			668			547			624			718			725
63030 Utilities - Trash		617			581			762			1,184			1,482			617			720
Total Utilities		11,215			9,252			11,418			11,457			9,976			16,782			14,434
63505 Marketing and Advertising		4,297			2,738			1,345			1,246			6,369			1,281			2,394
63510 Printed Materials		364			2,988			—			1,116			96			—			61
63515 Special Events		—			739			660			319			312			393			76
63520 Yellow Pages		—			—			—			—			—			—			—
63525 Newspaper and Magazine		—			—			—			—			—			—			—
63530 Advertising		—			—			—			—			—			—			—
64005 Referral Fees - Residents		—			—			—			—			1,215			1,715			—
Total Marketing and Advertising		4,662			6,466			2,005			2,682			7,992			3,389			2,530
60510 Delivery		—			—			—			—			—			—			—
64505 Computers/Peripherals/ Software		—			—			—			—			—			—			—
65005 Gas		128			76			101			—			107			95			102
65010 Auto Service And Repair		—			—			1,295			—			—			—			3,156
65015 Other Automobile		—			—			—			—			—			—			—
65505 Travel & Lodging		233			—			51			—			9			—			—
66005 Mileage		—			—			47			51			—			—			127
66505 Meals & Entertainment		—			—			—			—			140			131			—
67005 License and Fingerprints		333			665			(26	)		986			1,996			1,252			2,050

[Additional columns below]

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

	AUG			SEP			OCT			NOV			DEC			DEC YTD
40005 Revenue-Rental		261,946			277,690			278,031			290,547			256,395			2,991,558
40010 Revenue-Rent Refunds/Proration		(2,449	)		—			(2,393	)		(1,884	)		(5,161	)		(16,893	)
Total Rental Revenue		259,497			277,690			275,638			288,663			251,234			2,974,665
40110 Revenue-AL Level 1		8,857			9,931			9,698			10,800			5,101			102,126
40115 Revenue-AL Level 2		6,736			7,885			7,548			6,325			(2,274	)		92,627
40120 Revenue-AL Level 3		7,600			7,925			7,544			8,575			7,292			89,991
40125 Revenue-AL Level 4		4,388			7,764			7,950			6,825			4,415			70,732
40130 Revenue-AL Level 5		3,525			1,175			1,175			1,175			2,550			29,195
40135 Revenue-AL Level 6		1,400			1,400			1,400			1,400			1,400			11,200
40140 Revenue-AL Level 7		1,590			1,590			1,590			1,565			—			29,180
40170 Revenue-Alzh Lev 1		—			—			—			—			—			—
Total AL Services Revenue		34,096			37,670			36,905			36,665			18,484			425,050
40515 Revenue-Other		665			851			874			—			1,327			9,462
40525 Revenue-Processing/App Fees		2,750			3,000			—			1,000			2,000			21,450
Total Other Revenue		3,415			3,851			874			1,000			3,327			30,912
40575 Rev-Process Fee Concessions		—			—			—			—			—			—
40015 Rev-Rent Concessions		(490	)		—			—			—			—			(27,061	)
40215 Rev-A/L Concessions		—			—			—			—			—			—
Total Concessions		(490	)		—			—			—			—			(27,061	)
Total Revenue		296,518			319,211			313,417			326,328			273,045			3,403,566
50005 Payroll Expense-Regular		64,647			59,817			70,869			68,848			64,764			706,148
50405 Payroll Expense-Overtime		7,960			12,497			14,218			11,751			10,299			103,193
50705 Payroll Expense-Doubletime		1,093			2,430			3,195			1,911			1,750			22,942
51005 Bonuses		1,566			4,700			2,800			1,100			2,950			21,498
51505 Vacation, Sick, Holiday		2,589			9,835			7,139			3,986			2,201			51,641
51805 Employee Recognition		—			—			—			—			—			—
52005 Payroll Taxes		5,228			6,698			8,070			7,082			6,460			80,100
52505 401K/401A		241			267			341			511			575			3,466
52805 Group Insurance		(114	)		4,060			2,960			3,644			3,822			25,550
53005 Worker’s Comp Insurance		5,054			5,322			5,924			5,810			5,138			53,186
Total Payroll Expenses		88,264			105,626			115,514			104,643			97,958			1,067,726
53305 Outside Service-Medical		687			—			—			—			—			3,223
53505 Temporary Services		1,465			444			—			—			—			38,722
53510 Temporary Services-AL		—			—			—			—			—			6,755
54005 Payroll Service		158			154			165			173			167			1,981
55005 Outside Service Other		122			—			60			—			33			4,503
Total Purchase Services		2,433			598			226			173			201			55,184
Total Payroll Related		90,697			106,224			115,740			104,816			98,159			1,122,909
Total Payroll Related % Total Revenue		31	%		33	%		37	%		32	%		36	%		33	%
56505 Food		22,094			17,231			23,445			15,065			19,760			200,431
57005 Housekeeping		1,449			1,315			1,608			804			980			13,157
57505 Kitchen Supplies		1,714			2,377			2,195			1,681			2,642			30,134
58005 Assisted Living Supplies		245			737			447			82			181			3,914
58505 Alzheimer Supplies		414			(414	)		—			—			—			—
59005 Laundry & Linen/Uniforms		1,053			1,370			1,282			1,569			1,367			14,268
59010 Laun/Lin/Unif Kitchen		—			—			—			—			—			—
59015 Laund/Lin/Unif Housekeeping		—			—			—			—			—			—
59505 Activities-Asst Lving		1,349			1,545			1,234			1,451			1,407			19,123
59510 Banquet Expense		500			500			500			500			(647	)		2,574
59555 NMS-Foodservices		—			—			—			(383	)		—			29,395
59560 NMS-Housekeeping		—			—			—			(614	)		—			13,214
Total Variable Expense		28,818			24,661			30,711			20,155			25,690			326,209
60005 Office Supplies		1,117			1,275			1,068			(81	)		1,261			18,362
61005 Repairs and Maint-Building		—			—			—			—			—			—
61010 Repairs-Phone System		—			—			—			—			—			34
61015 Repairs-Electrical		—			196			—			677			—			1,896
61020 Repairs-Plumbing		—			2,543			505			1,808			221			6,428
61025 Repairs-Fire Systems		675			—			—			—			—			675
61030 Repairs-HVAC		932			524			—			1,106			725			6,717
61035 Repairs-Gen. Supplies		2,162			1,882			2,254			3,571			2,084			20,781
61040 Repairs-Equipment		456			676			603			153			338			11,134
61045 Repairs-Other Interior		250			500			988			—			148			11,613
61055 Repairs-Other Exterior		—			—			—			77			—			656
61100 Loss on Early Retierment Asset		—			—			—			—			—			—
Total Repair & Maintenance		4,475			6,322			4,350			7,393			3,516			59,935
61505 Contracts-Elevator		1,114			557			557			557			557			8,721
61510 Contracts-Floor Maint		—			—			300			—			—			3,264
61515 Contracts-Alarm/Fire		—			535			400			144			485			2,914
61520 Contracts-HVAC		—			—			645			645			—			2,562
61525 Contracts-Pest Control		163			—			288			326			163			3,511
61535 Contracts -Other		68			149			491			—			246			2,555
Total Service Contracts		1,345			1,240			2,681			1,672			1,451			23,526
62005 Land Maintenance		1,441			1,887			1,466			1,306			1,250			20,062
Total Land Maintenance		1,441			1,887			1,466			1,306			1,250			20,062
62505 Rental/Lease-Cable		2,039			2,039			2,039			2,039			2,039			24,473
62510 Rental/Lease-Security		—			—			—			1,116			—			1,860
62525 Rental/Lease-Furniture		—			—			—			—			—			—
62535 Rental/Lease-Equipment		254			203			417			(52	)		182			2,981
62540 Rental/Lease-Auto		—			—			—			—			—			—
62555 Rental/Lease-Other		—			—			217			435			217			1,469
Total Rental and Leases		2,294			2,243			2,674			3,539			2,439			30,783
63010 Utilities -Electricity		11,750			9,808			9,546			5,110			4,602			92,630
63015 Utilities- Water		2,235			1,836			2,719			1,387			1,917			19,796
63020 Utilities - Gas		1,841			2,444			2,981			5,046			7,770			32,682
63025 Utilities - Telephone		770			676			694			916			837			8,345
63030 Utilities - Trash		762			720			958			720			720			9,845
Total Utilities		17,357			15,485			16,899			13,178			15,846			163,298
63505 Marketing and Advertising		4,915			1,115			987			880			742			28,310
63510 Printed Materials		—			12			160			2,814			94			7,707
63515 Special Events		555			241			777			378			824			5,273
63520 Yellow Pages		—			—			—			—			3,499			3,499
63525 Newspaper and Magazine		—			520			32			32			109			693
63530 Advertising		—			—			—			—			—			—
64005 Referral Fees-Residents		1,215			1,215			—			2,309			2,780			10,449
Total Marketing and Advertising		6,685			3,104			1,956			6,412			8,049			55,931
60510 Delivery		—			—			—			—			—			—
64505 Computers/Peripherals/ Software		—			—			—			—			—			—
65005 Gas		274			226			217			304			131			1,761
65010 Auto Service And Repair		60			—			135			500			—			5,145
65015 Other Automobile		—			—			—			—			80			80
65505 Travel & Lodging		384			—			—			473			192			1,343
66005 Mileage		89			—			—			—			—			313
66505 Meals & Entertainment		—			45			66			49			169			601
67005 License and Fingerprints		1,233			213			1,873			907			1,857			13,340

Database:	POLAPSVR
Cube:	Financial Data
Page:	Year	2000
	Version	AA
	Community	VALLEY VIEW LODGE
	Department	Total Departments
	Month	Along Columns
	GLAccount	Along Rows

OLAPTable

	JAN			FEB			MAR			APR			MAY			JUN
68005 Dues and Subscriptions		246			96			—			(48	)		77			443
68505 Seminars and Training		124			441			73			—			200			294
69005 Employee Recruiting		—			—			1,607			—			1,287			2,515
69505 Other		(24	)		821			185			67			328			1,300
69605 Discounts Lost		—			—			—			—			—			—
69610 Discounts Taken		(24	)		(36	)		(29	)		(11	)		—			—
69525 Sales & Use Tax Due		—			—			—			—			—			—
Total Misc. Expenses		1,016			2,064			3,303			1,045			4,144			6,030
Total Operating Expense		148,901			144,792			149,883			139,796			150,057			145,582
Gross Margin		149,713			109,097			97,630			114,945			112,034			114,093
Gross Margin Percent		50	%		43	%		39	%		45	%		45	%		44	%
69705 Casualty Loss		—			—			—			—			—			—
69805 Bad Debt Expense		(5	)		(3,662	)		164			(365	)		747			(100	)
70005 Corporate Allocation		—			—			—			—			—			—
72305 Property Taxes		4,822			7,522			7,801			7,801			8,947			7,361
72405 Insurance-Liability & Hazard		1,724			1,724			1,729			2,102			2,102			2,114
72410 Mortgage Insurance Premium		—			—			—			—			—			—
Total Other Fees		6,542			5,585			9,695			9,538			11,796			9,375
72505 Accounting		417			417			417			417			417			346
73005 Legal		877			568			164			1,600			409			784
73510 Donations & Contributions		—			—			—			—			—			—
74005 Consulting Fees		—			—			69			—			—			—
74015 Professional Fees - Other		—			—			—			—			—			—
75005 Property Management Fees		14,621			12,694			12,686			12,737			13,605			12,984
75105 Partnership Admin Fees		1,979			3,139			(824	)		(3,427	)		5,501			797
75510 Other Penalties/Fin. Fee		—			—			—			—			—			80
75515 Licenses & Fees Legal		—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			250
75520 Franchise Tax Filing Fee		—			—			—			—			—			—
75525 Collection Fees		—			—			—			—			—			—
Total Professional Fees		17,893			16,818			12,511			11,326			19,931			15,241
EBITDAR		125,278			86,694			75,424			94,080			90,308			89,477
EBITDAR Percent		42	%		34	%		30	%		37	%		33	%		34	%
77005 Operating Lease		—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—
Total Leases		—			—			—			—			—			—
80005 Interest Income		—			—			—			—			—			—
80505 Other Non-Operating Income		—			—			—			—			—			—
87010 Extraordinary Items-		—			—			—			—			—			—
Total Non-Operating Income/Expense		—			—			—			—			—			—
83005 Interest Expense		82,994			82,914			82,838			82,758			82,968			82,307
83025 Int Exp MIP		—			—			—			—			—			—
Total Interest Expense		82,994			82,914			82,838			82,758			82,968			82,307
EBTDA		42,284			3,780			(7,414	)		11,323			7,340			7,171
EBTDA Percent		14	%		1	%		-3	%		4	%		3	%		3	%
77505 Depreciation		18,834			18,764			18,877			18,981			18,981			19,983
78005 Amortization		17,339			17,091			17,443			16,740			17,091			17,091
78015 Amortization - Start Up		—			—			—			—			—			—
Total Depreciation & Amortization		36,173			35,856			36,320			35,721			36,073			37,074
Net Income (Loss)		6,111			(32,076	)		(43,734	)		(24,398	)		(28,733	)		(29,904	)

[Additional columns below]

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

	JUL			AUG			SEP			OCT			NOV			DEC			DEC YTD
68005 Dues and Subscriptions		292			—			—			804			86			—			1,997
68505 Seminars and Training		208			356			25			298			500			—			2,518
69005 Employee Recruiting		(41	)		2,029			1,196			—			—			395			8,988
69505 Other		218			888			825			307			226			370			5,512
69605 Discounts Lost		—			—			—			—			—			—			—
69610 Discounts Taken		—			(18	)		(38	)		(39	)		(41	)		(14	)		(250	)
69525 Sales & Use Tax Due		—			—			—			—			—			—			—
Total Misc. Expenses		6,113			5,295			2,492			3,662			3,002			3,180			41,347
Total Operating Expense		155,458			159,523			164,933			181,207			161,392			160,840			1,862,364
Gross Margin		133,065			136,995			154,278			132,210			164,936			112,205			1,541,202
Gross Margin Percent		46	%		46	%		48	%		42	%		51	%		41	%		45	%
69705 Casualty Loss		—			—			—			—			—			—			—
69805 Bad Debt Expense		197			5,938			—			(1,401	)		(855	)		(2,381	)		(1,723	)
70005 Corporate Allocation		—			—			—			—			—			—			—
72305 Property Taxes		7,801			7,801			7,801			7,801			7,801			7,801			91,063
72405 Insurance-Liability & Hazard		2,114			2,114			2,114			2,114			2,114			2,114			24,182
72410 Mortgage Insurance Premium		—			—			—			—			—			6,230			6,230
Total Other Fees		10,113			15,854			9,916			8,515			9,061			13,764			119,752
72505 Accounting		346			346			472			346			346			1,665			5,949
73005 Legal		1,502			1,051			6,258			847			348			353			14,760
73510 Donations & Contributions		—			—			—			—			—			—			—
74005 Consulting Fees		—			—			—			—			—			116			184
74015 Professional Fees - Other		—			—			—			—			—			—			—
75005 Property Management Fees		14,421			14,831			15,961			15,671			16,462			13,507			170,178
75105 Partnership Admin Fees		8,518			2,447			3,770			2,495			5,635			284			30,313
75510 Other Penalties/Fin. Fee		—			—			—			—			—			—			80
75515 Licenses & Fees Legal		—			—			—			—			—			—			—
75505 Bank Charges		—			—			—			—			—			—			250
75520 Franchise Tax Filing Fee		—			—			—			—			—			—			—
75525 Collection Fees		—			—			—			—			—			—			—
Total Professional Fees		24,787			18,674			26,460			19,359			22,791			15,924			221,715
EBITDAR		98,165			102,467			117,903			104,337			133,084			82,517			1,199,735
EBITDAR Percent		34	%		35	%		37	%		33	%		41	%		30	%		35	%
77005 Operating Lease		—			—			—			—			—			—			—
77010 Add’l Lease		—			—			—			—			—			—			—
Total Leases		—			—			—			—			—			—			—
80005 Interest Income		(624	)		—			(368	)		(142	)		(65	)		(65	)		(1,265	)
80505 Other Non-Operating Income		—			—			—			—			—			—			—
87010 Extraordinary Items-		—			—			—			—			—			113,023			113,023
Total Non-Operating Income/Expense		(624	)		—			(368	)		(142	)		(65	)		112,958			111,758
83005 Interest Expense		22,374			82,437			82,351			82,275			82,188			79,776			928,180
83025 Int Exp MIP		—			—			—			—			—			—			—
Total Interest Expense		22,374			82,437			82,351			82,275			82,188			79,776			928,180
EBTDA		76,416			20,030			35,921			22,204			50,962			(110,217	)		159,798
EBTDA Percent		26	%		7	%		11	%		7	%		16	%		-40	%		5	%
77505 Depreciation		19,807			20,028			21,536			20,214			20,239			20,233			236,478
78005 Amortization		17,091			17,091			17,091			17,091			17,091			6,638			194,890
78015 Amortization - Start Up		—			—			—			—			—			—			—
Total Depreciation & Amortization		36,898			37,120			38,627			37,305			37,330			26,871			431,368
Net Income (Loss)		39,518			(17,090	)		(2,707	)		(15,101	)		13,632			(137,088	)		(271,569	)

ADDENDA

ADDENDUM F: Comparable Land Sale Data Sheets

Land Comparable 1

	4756 Clayton Road
	Concord, CA 94521
593-C4	County: Contra Costa
Zoning: PD	Parcels and/or Legal:
	133-080-039

POTENTIAL LAND USES

Potential Land Uses:
Apartment:	Yes	Industrial:	No	Utilities Available:
Free Standing Retail:	No	Office:	No	all to site
Golf:	No	Shopping Center:	No
Health Care:	No	Single Family:	No
Hospitality:	No	Special Purpose:	No

TRANSACTION INFORMATION

Sale Status:	Recorded Sale
Financing:	Cash To Seller
Sale Date:		7/2002
Sale Price
Reported:		4,400,000
Cash Equivalent:		4,400,000
		0
Adjusted:		4,400,000
$ Per SqFt:	$	20.91

SITE ATTRIBUTES

	SqFt			Acres
Total Land Area:		210,438.00		4.83
Net Usable Area:		210,438.00		4.83
Percent Usable:		100.00	%
Ground Leased:		No

VERIFICATION

Recording Reference: 239093
Grantor: Master Links Investment Corp.

Grantee: Oakmont SL of concord

Verification Contact:
  Public records

REMARKS

At the time of sale the site was improved with a heavily depreciated minature golf course. Reportedly, the buyer is planning on replacing these improvements with a 146-unit apartment complex.

Land Comparable 2

Property Name: Hotel Site	2611 Contra Costa Blvd
	Pleasant Hill, CA 94523 -4220
592 - C/6	County: Contra Costa
Zoning: PUD, Pleasant Hill	Parcels and/or Legal:
	APN: 149-110-085,086 Legal: Por lots 13 thru 19
	Walnut Creek Acres Unit 1 bk 25 pgs 848 & 849

POTENTIAL LAND USES

Potential Land Uses:

Apartment:	No	Industrial:	No	Utilities Available:
		Office:	No	All Available to the Site
Golf:	No
Health Care:	No	Single Family:	No

TRANSACTION INFORMATION

Sale Status:		Recorded Sale
Financing:		Cash To Seller
Sale Date:			9/2001
Sale Price
Reported:			2,200,000
Cash Equivalent:			2,200,000
			0
Adjusted:			2,200,000
	$ Per SqFt:	$	17.49

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		125,801.00		2.89
Net Usable Area:		125,801.00		2.89
Percent Usable:		100.00	%

VERIFICATION

Recording Reference: 288121

Grantor: Pleasant Hill Redevelopment Agency

Grantee: Pleasant Hill Lodging Partner (LP)

Verification Contact:

  Seller: Diane Keams (925) 671-5215
  Buyer: Roy Baker (316) 681-5100

REMARKS

The subject property was purchased to construct a 132-room all suites hotel. This hotel is under construction at this time.

Land Comparable 3

	4640 Pacheco Boulevard
	Martinez, CA 94553
n/a	County: Contra Costa
Zoning: PD	Parcels and/or Legal:
	161-262-023-5

POTENTIAL LAND USES

Potential Land Uses:
Apartment:                 Yes		Utilities Available:
		None Available
	Proposed Use
	120 Unit Apartment
	Complex

TRANSACTION INFORMATION

Sale Status:		Recorded Sale
Financing:		Cash To Seller
Sale Date:			3/1999
Sale Price
Reported:			3,500,000
Cash Equivalent:			3,500,000
Capital Costs:			100,000
Adjusted:			3,600,000
	$ Per SqFt:	$	8.42

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		427,759.00			9.82
Net Usable Area:		427,759.00			9.82
Percent Usable:		100.00	%

VERIFICATION

Recording Reference: 111016

Grantor: Muirterco, Inc.

Grantee: Nhpahp Development II LP

Verification Contact:
  Appraiser           — ( )  -

REMARKS

Vacant site located along the south side of Pacheco Boulevard in Martinez. Site has rolling topography. No utilities were available to the site. A cost of $100,000 has been estimated to bring utilities to the property. The transaction had an extended escrow and did not close until 2000. Site was originally proposed for a 120 unit multi-family complex.

Land Comparable 4

	100 Chilpancingo Parkway
Property Subtype: Vacant building site	Pleasant Hill, CA
	County: Contra Costa
Zoning: PUD	Parcels and/or Legal:
	153-030-077-9

POTENTIAL LAND USES

Potential Land Uses:
Apartment:               Yes		Utilities Available:
		All Public
	Proposed Use
	Apartments

TRANSACTION INFORMATION

Sale Status:		Recorded Sale
Financing:		Cash To Seller
Sale Date:			7/1998
Sale Price
Reported:			1,574,000
Cash Equivalent:			1,574,000
			0
Adjusted:			1,574,000
	$ Per SqFt:	$	9.00

SITE ATTRIBUTES

	SqFt			Acres
Total Land Area:		174,936.00			4.02
Net Usable Area:		174,936.00			4.02
Percent Usable:		100.00	%
Ground Leased:		No

VERIFICATION
Recording Reference: 181882,181883

Grantor: Diamond Property, County of Contra Costa

Grantee: Bridge Housing Corp.

Verification Contact:

  Buyer

REMARKS

Transaction is an assemblage of two parcels located Chilpancingo Parkway. One of the two sites acquired was improved with a vacant restaurant building. The buyer planned to demolish the restaurant and use both sites for construction of a 71-unit, low income housing complex. Construction on the project is projected for the Spring of 2000. We estimated demolition costs on the 12,677 square foot restaurant building at $2.00 per square foot.

Land Comparable 5

	Northwest corner of Crow Canyon Road and
	San Ramon, CA 94587
	County: Contra Costa
Zoning: R-M, Multi-Family	Parcels and/or Legal:
	208-510-001

POTENTIAL LAND USES

Potential Land Uses:
Apartment:                  Yes		Utilities Available:
		All available
	Proposed Use
	Townhomes

TRANSACTION INFORMATION

Sale Status:		Recorded Sale
Financing:		Cash To Seller
Sale Date:			4/1998
Sale Price
Reported:			4,600,000
Cash Equivalent:			4,600,000
Capital Costs:			180,000
Adjusted:			4,780,000
	$ Per SqFt:	$	10.97

SITE ATTRIBUTES

	SqFt			Acres
Total Land Area:		435,600.00			10.00
Net Usable Area:		435,600.00			10.00
Percent Usable:		100.00	%

VERIFICATION
Recording Reference: 080683
Grantor: John Muir/Mt. Diablo Health

Grantee: Braddock & Logan

Verification Contact:
  Public Records —————

REMARKS

This is an assemblage purchase of two sites. One site was improved with a 60,000 SF medical office building which the buyer was responsible for demolition. The estimated cost of demolition was $3.00/SF or $180,000. Site was purchased for construction of an 85-unit townhome project.

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 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 stablized operation. Buyer is an experienced operator.

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

	SqFt			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 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.

Improved Comparable 5

Property Name: Aegis of Napa

Property Type: Senior Housing

Property Subtype: Assisted Living 2100 Redwood Road


Napa, CA 94558
County: Napa

Parcels and/or Legal:
007-321-009

IMPROVEMENTS

Class:	A
Est. Gross Building Area:	34,030
Est. Net Building Area:	34,030
Exterior Walls:	Composite siding
Year Built:	1999
Quality:	Good
Condition:	Good
Parking Spaces:	15
Fire Sprinklers:	Yes

TRANSACTION INFO

Sale Status:	Recorded Sale
Interest:	Fee Simple
Sale Date:	06/01/2001

Sale Price

Reported Price:		$	7,200,000
Cash Equivalent:		$	7,200,000
Adj. Sale Price:		$	7,200,000
	$ Per SqFt:	$	211.58
	$ Per Unit:	$	167,442
	$ Per Eff Bed:	$	150,000
	Cap Rate:		10.76	%
	EGIM:		3.43

OCCUPANCY

Seniors

FINANCIAL ANALYSIS

	Amount		Percent
Potential Gross Income:	$	2,100,000
Effective Gross	$	2,100,000
Operating Expenses:	$	1,325,000		63.10	%
Net Operating Income:	$	775,000

SITE ATTRIBUTES

	Sq Ft			Acres
Total Land Area:		48,590			1.12
Net Usable Area:		48,590			1.12
Per Percent Usable:		100	%
Ground Leased:		No

SENIOR HOUSING INFO

Number of AL Units:	34
Number of IL Units:	0
Number of Cottage Units:	0
Number of ALZ Units:	9
Total Number of Units:	43
Average Unit Size:	791
No. of Licensed Beds:	48
No. of Effective Beds:	48
Subsidized:	No

VERIFICATION

Grantor: Aegis Assisted Living Properties LLC
Grantee: Francis & Shannon Connelly
Verification Contact:
   Jeff Owen, Aegis Assisted Living

REMARKS

This is a smaller assisted living facility located in Napa. Contains 34 assisted living units and nine dementia units. Unit mix includes 20 studio units with 386 SF, 5 companion suites with 640 SF and 18 One-bedroom units with 640 SF. Facility opened in 9/1999 and achieved stabilized occupancy in 13 months. Aegis will continue to manage the property. Income and expense data based on actuals at time of sale.

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 tide was changed to Director 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.