The senior living industry is highly fragmented and characterized predominantly by numerous local and regional senior living operators. Senior living providers may operate freestanding independent living, assisted living or skilled nursing residences, or communities that feature a combination of senior living options such as continuing care retirement communities, commonly referred

to as CCRCs, which typically consist of large independent living campuses with assisted living and skilled nursing sections. The level of care and services offered by providers varies along with the size of communities, number of residents served and design of properties.

The senior living industry has evolved to meet the growing demand for senior care generated by an aging population demanding new and/or better living alternatives/options. The senior living industry encompasses a broad spectrum of senior living service and care options, which include senior apartments, independent living, assisted living and skilled nursing care. The decision as to which option is chosen is typically made by the resident and/or his or her family members and depends on many factors, including but not limited to

location, service and care needs, financial considerations and personal preferences. A senior and/or his or her family members have several care options, including staying in the senior's home and bringing in services when and if needed, moving the senior in with a family member who provides care or moving into a property that provides a combination of services.

During the 1990s, demand in the senior living industry created an abundance of public and private capital for real estate development in the senior living sector. Currently, construction activity in independent and assisted living properties has abated, which has led to greater industry stability and growth and improved fundamentals for healthcare operators and owners of senior living properties.

As of October 31, 2004, the Company owns 68 properties in 19 states comprised of approximately 6,819 residential living units which are considered as either independent living units or assisted living units, all of which are leased pursuant to 15-year triple-net leases with renewal options.

The 21 Brookdale Properties are large in size (containing an average of 213 units per property) and are designed for middle to upper income residents who desire an upscale residential environment providing the highest level of quality, care and value. The Hallmark is a 341-unit, 37-floor apartment building. It offers residents such conveniences as restaurant-style meals, housekeeping, activities, emergency call response and scheduled transportation. The Devonshire is a 321-unit, five-floor complex that offers residents such services as restaurant-style meals, housekeeping, scheduled transportation and 24-hour staff availability. Woodside Terrace is a 270-unit, three-floor complex that offers residents such services as a dining program with a variety of menu choices, housekeeping, scheduled transportation and 24-hour staff availability. The Atrium of San Jose is a 291-unit, three-floor complex that offers residents such amenities and services as a dining program with a variety of menu choices, housekeeping, scheduled transportation and 24-hour staff availability. The Heritage of Des Plaines is a 255-unit, five-floor building that offers residents such services as a dining program with a variety of menu choices, housekeeping, scheduled transportation, activities and 24-hour staff availability.

The 47 Alterra Properties primarily focus on assisted living residents served through three primary residence models (Wynwood, Sterling House and Villas) and residents with cognitive impairments served through two primary residence models (Clare Bridge and Clare Bridge Cottages). The Wynwood multi-story residences are designed to serve primarily upper income frail/elderly individuals in metropolitan and suburban markets. Sterling House are apartment-style residences generally located in select suburban communities and in small or medium-sized towns with populations of 10,000 or more persons. Villas are private apartment-style residences designed to serve upper-income independent individuals in metropolitan and suburban markets. The Clare Bridge dementia residence model typically ranges in size from 20,500 to 31,000 square feet, is a single-story residence accommodating 38 to 52 residents, and is primarily located in metropolitan and suburban markets.

Rental income for the period March 1, 2004 (inception) to December 31, 2004 was approximately $19.6 million.

Interest income for the period March 1, 2004 (inception) to December 31, 2004 was approximately $1.1 million.

General and administrative expenses for the period March 1, 2004 (inception) to December 31, 2004 were approximately $462.0 thousand.

Interest expense on mortgages and other debt for the period March 1, 2004 (inception) to December 31, 2004 was approximately $6.3 million.

Depreciation and amortization on real estate investments for the period March 1, 2004 (inception) to December 31, 2004 was approximately $5.7 million.