EMERITUS ANNOUNCES OPERATING RESULTS FOR THIRD QUARTER 2010

- Emeritus Corporation (NYSE: ESC), a national provider of senior living services, today announced its third quarter 2010 results.

Quarter Ended September 30, 2010 Operating Summary Compared to Prior Year Third Quarter

• Total revenues increased $24.2 million, or 10.7%, to $250.0 million.
• Same community average monthly revenue per occupied unit improved by 3.5% to $3,798.
• Same community average occupancy increased 30 basis points to 87.9%.
• Total average occupancy was 87.1% for both periods.
• Adjusted EBITDAR increased $7.3 million, or 11.6%, to $69.9 million.
• CFFO per share improved 63.2% to $0.31 compared to $0.19.

“Our solid performance has continued due to the strong underlying fundamentals of our need-driven business, along with solid execution from our entire organization,” commented Granger Cobb, President and Co-Chief Executive Officer. “On the consolidation front, we are pleased with the initial integration of the recently acquired Sunwest communities and are confident that the additional 27 leased communities from HCP in the fourth quarter will likewise be incorporated into our portfolio efficiently and effectively.”

2010 Third Quarter Results

Total revenue in the third quarter of 2010 increased 10.7% to $250.0 million, compared to $225.8 million in the 2009 third quarter. The $24.2 million increase consisted of $8.5 million from improved rate and occupancy in our portfolio of 254 communities operated during both periods, $13.7 million from the acquisition, development, and expansion of communities since January 1, 2009, and $2.5 million in management fees primarily from the Sunwest acquisition, with offsets of $0.5 million from unallocated community revenue adjustments (primarily an increase in the deferral of move-in fee revenues). The improvement in same community revenues consisted of $7.7 million in rate improvement and $0.8 million in occupancy gains.

Total average monthly revenue per occupied unit increased 5.0% to $3,833 in the third quarter of 2010 from $3,649 in the third quarter of 2009. On a same community basis, average monthly revenue per occupied unit increased 3.5% to $3,798 in the third quarter of 2010 from $3,669 in the corresponding period in 2009.

In the third quarter of 2010, total average occupancy was steady with the third quarter of 2009 at 87.1%; same community average occupancy increased 30 basis points to 87.9% compared to 87.6% in the prior year third quarter.

Community operating expenses increased $14.9 million to $164.3 million in the third quarter of 2010 compared to $149.4 million in the prior year third quarter. Approximately $10.0 million of the increase resulted from the acquisition, development, or expansion of communities since the beginning of 2009, and $6.2 million was from our 254 same community portfolio, with offsets of $1.3 million from unallocated community expense adjustments (primarily a decrease in self-insurance actuarial adjustments). The increase in same community operating expenses consisted primarily of a $3.2 million increase in labor and benefits, including an increase in payroll taxes of $0.4 million and salary and wages of $2.6 million, or an increase of 3.9%.

Community operating income (community revenues less community operating expenses) increased $6.7 million, or 9.0%, to $81.7 million in the third quarter of 2010 compared with $75.0 million in the third quarter of 2009.

Community Transactions

During the third quarter of 2010, the joint venture between Emeritus, Blackstone Real Estate Advisors and Columbia Pacific Advisors acquired 140 communities previously owned and operated by Sunwest. The acquisition of four additional communities is expected at a later date. Emeritus began operating 138 of the 144 communities under management agreements effective as of August 5, 2010.

As of September 30, 2010, the consolidated Emeritus portfolio consisted of 278 communities, of which 254 communities are included in our definition of same community.

In October 2010, the Company announced that it had entered into two agreements with affiliates of HCP, Inc. (NYSE: HCP) to lease a total of 27 senior living communities. The communities are located in 13 states and consist of approximately 3,239 units, comprised of 2,021 assisted living, 631 memory care, 450 skilled nursing and 137 independent living units. We assumed operation of the communities under the leases on November 1, 2010.

Balance Sheet

As of September 30, 2010, the Company had $42.8 million of cash and cash equivalents, and had no outstanding borrowings under its $25.0 million line of credit. On September 30, 2010, total assets were $2.1 billion, including $1.7 billion of net investments in properties, total debt was $1.6 billion, including capital lease obligations, of which $61.0 million is classified as current. Shareholders’ equity was $282.9 million.

Subsequent Events

On November 1, 2010, the Company entered into agreements with Nationwide Health Properties, Inc. (“NHP”) to amend the terms of two loans payable to NHP. One loan in the amount of $21.4 million was due in March 2012 and the second loan in the amount of $30.0 million was due in April 2012. The due dates on both notes have been extended until March 31, 2017. The interest rate on both notes is 8.50%, increasing annually on the anniversary date by 0.15%. Monthly payments on the notes are interest only, with the unpaid principal balance due at maturity.

Additionally, on November 1, 2010, the Company entered into an agreement with KeyCorp Real Estate Capital Markets, Inc. to refinance mortgage debt due in October 2011 with an outstanding principal balance of $5.8 million. The loan was repaid from proceeds of a new Fannie Mae mortgage loan. The principal balance of the Fannie Mae Loan is $4.5 million and has a ten-year term. The interest rate is fixed at 5.38%. The Fannie Mae Loan requires equal monthly payments of principal and interest based on a 30-year amortization period.

Conference Call

The Company will host a conference call on Thursday, November 4, 2010, at 5:00 P.M. Eastern Time to discuss its financial results for the quarter ended September 30, 2010. Hosting the call will be Mr. Daniel Baty, Chairman and Co-Chief Executive Officer, Mr. Granger Cobb, President and Co-Chief Executive Officer, and Mr. Robert Bateman, Executive Vice President and Chief Financial Officer.

The conference call will be webcast live over the internet from the Company’s web site at www.emeritus.com under the “investors” section. The conference call can also be accessed by dialing (877) 407-0789, or for international participants (201) 689-8562. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Thursday, November 4, 2010, until midnight Eastern Time, Thursday, November 11, 2010. The dial in numbers for the replay are (877) 870-5176, or for international participants (858) 384-5517. To access the telephonic replay, enter the conference ID 359410.

Non-GAAP Financial Measures Adjusted EBITDA/EBITDAR and Cash From Facility Operations (CFFO) are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We believe these non-GAAP measures are useful in identifying trends in our day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in our industry. We strongly urge you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR, and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with our consolidated balance sheets, statements of operations, and cash flows. We define Adjusted EBITDA/EBITDAR and CFFO and provide other information about these non-GAAP measures in our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2010, and in any subsequent Quarterly Reports on Form 10-Q.

The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three and nine month periods ended September 30, 2010 and 2009 (in thousands):

The following table shows the reconciliation of net cash provided by operating activities to CFFO and CFFO, as adjusted, for the three and nine month periods ended September 30, 2010 and 2009 (in thousands):

We define recurring capital expenditures as actual costs incurred to maintain our communities for their intended business purpose and exclude expenditures for acquisitions, development, expansions and general corporate purposes.

For a more detailed understanding of Emeritus, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 15, 2010 and any subsequent Quarterly Reports on Form 10-Q, or visit the Company’s Internet site at www.emeritus.com to obtain copies.

About Emeritus Senior Living

Emeritus Corporation is a national provider of senior living services. Emeritus is one of the largest and most experienced operators of freestanding assisted living communities located throughout the United States. These communities provide a residential housing alternative for senior citizens who need assistance with the activities of daily living, with an emphasis on personal care services, which provides support to the residents in the aging process. Emeritus currently operates 479 communities in 43 states representing capacity for approximately 42,400 units and approximately 49,700 residents, including the recent lease of 27 communities. Our common stock is traded on the New York Stock Exchange under the symbol ESC, and our home page can be found on the Internet at www.emeritus.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: A number of the matters and subject areas discussed in this report that are not historical or current facts deal with potential future circumstances, operations, and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and increase our resident charges in accordance with our rate enhancement programs without adversely affecting occupancy levels; increases in interest costs as a result of refinancings; our ability to control community operation expenses without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workers’ compensation claims. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009 and any subsequent Quarterly Report on Form 10-Q. The Company undertakes no obligation to update the information provided herein.

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