1011064--3/16/2006--SUNRISE_SENIOR_LIVING

related topics

{investment, property, distribution}

{acquisition, growth, future}

{debt, indebtedness, cash}

{cost, operation, labor}

{capital, credit, financial}

{personnel, key, retain}

{tax, income, asset}

{loss, insurance, financial}

{cost, regulation, environmental}

{operation, international, foreign}

{provision, law, control}

{cost, contract, operation}

{regulation, government, change}

{regulation, change, law}

The operations of Sunrise and other entities that we have or may acquire may not be integrated successfully, and the intended benefits of such transactions may not be realized, each of which could have a negative impact on our revenues, expenses and operating results. We are a promoter of Sunrise REIT under Canadian securities laws and, as such, are jointly and severally liable with Sunrise REIT for any misrepresentation in Sunrise REIT s prospectus. Liability claims against us in excess of insurance limits could adversely affect our financial condition and results of operations. We may not be successful in identifying suitable development projects or acquisitions that meet our criteria, which may impede our growth. Any delays we experience in developing new communities could impede our growth and adversely affect our revenues and results of operations. Our failure to attract partners for developing senior living communities in the future could adversely affect our revenues and results of operations, and harm our ability to finance the construction of new communities. Our current and future investments in ventures could be adversely affected by our lack of sole decision-making authority, our reliance on venture partners financial condition, any disputes that may arise between us and our venture partners and our exposure to potential losses from the actions of our venture partners. Our failure to secure additional financing to fund our development and acquisition activities could slow our growth and could adversely affect our revenues and results of operations. Our failure to generate sufficient cash flow to cover required interest, principal and operating lease payments could result in defaults of the related debt or operating leases. Our failure to comply with financial covenants contained in debt instruments could result in the acceleration of the related debt and may restrict our operating and acquisition activity. Our results of operations could be adversely affected if we are required to perform under various financial guarantees or support arrangements that we have entered into as part of our operating strategy. Interest rate increases could adversely affect our earnings because a portion of our total debt is floating rate debt. We may be adversely affected by fluctuations in currency exchange rates. Early termination or non-renewal of our management service agreements could cause a loss in revenues. Due to the dependency of our revenues on private pay sources, events which adversely affect the ability of seniors to afford our daily resident fees could cause our resident fee revenues and results of operations to decline. Termination of resident agreements could adversely affect our revenues and earnings. Departure of our key officers could harm our business. We are subject to risks associated with complying with Section 404 of the Sarbanes-Oxley Act of 2002. The discovery of environmental problems on any of the communities we own or operate could result in substantial costs to us. Risks Relating to the Senior Living Industry Competition in our industry is high and may increase, which could impede our growth and have a material adverse effect on our revenues and earnings. Our success depends on attracting and retaining skilled personnel, and increased competition for or a shortage of skilled personnel could increase our staffing and labor costs, which we may not be able to offset by increasing the rates we charge to our residents. The need to comply with government regulation of senior living communities may increase our costs of doing business and increase our operating costs. Anti-takeover provisions in our governing documents and under Delaware law could make it more difficult to effect a change in control.

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1011064--3/16/2006--SUNRISE_SENIOR_LIVING_INC