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Major Operators

6 Months Ended

Jun. 30, 2011

8. Major Operators

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

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

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

The following table summarizes Extendicare REIT’s, ALC’s and Brookdale’s financial information as of and for the three months ended March 31, 2011 per the operators’ public filings (in thousands, unaudited). Our other operator is privately owned and thus no public financial information is available.

	Extendicare REIT(1)			ALC			Brookdale

Current assets	$	517,048		$	24,513		$	254,253
Non-current assets	1,426,236			451,282			4,177,015
Current liabilities	940,628			38,466			726,733
Non-current liabilities	919,709			143,130			2,651,776
Stockholders’ equity	82,947			294,199			1,052,759

Gross revenue	519,541			58,409			569,440
Operating expenses	459,663			49,067			557,440
(Loss) income from continuing operations	(8,394		)	5,011			(12,305		)
Net (loss) income	(8,394		)	5,011			(12,305		)

Cash provided by operations	28,889			14,977			92,666
Cash used in investing activities	(19,457		)	(3,635		)	(26,677		)
Cash used in financing activities	(289		)	(21,798		)	(111,084		)

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

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

Extendicare REIT and ALC collectively lease 37 assisted living properties with a total of 1,427 units owned by us representing approximately 9.2%, or $56,559,000, of our total assets at June 30, 2011 and 14.6% of rental revenue and interest income from mortgage loans recognized as of June 30, 2011.

Brookdale Communities leases 35 assisted living properties with a total of 1,416 units owned by us representing approximately 9.2%, or $56,453,000, of our total assets at June 30, 2011 and 14.0% of rental revenue and interest income from mortgage loans recognized as of June 30, 2011.

Preferred Care, Inc. (or Preferred Care), through various wholly owned subsidiaries, operates 30 skilled nursing properties and two other senior housing properties that we own or on which we hold mortgages secured by first trust deeds. These properties consist of a total of 3,861 skilled nursing beds and 49 assisted living units. This represents approximately 9.5%, or $58,187,000, of our total assets at June 30, 2011 and 12.9% of rental revenue and interest income from mortgage loans recognized as of June 30, 2011. They also operate one skilled nursing property under a sub-lease with another lessee we have which is not included in the Preferred Care rental revenue and interest income from mortgage loans.

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