UNITED STATES SECURITIES AND EXCHANGE COMMISSION
    Washington, D.C. 20549
    Form 10-K/A
 (Amendment No. 1)
  ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
    fiscal year ended December 31, 2007
  Commission File Number 1-16499
  SUNRISE
    SENIOR LIVING,
    INC. (Exact name of registrant as specified in its charter)
  Delaware

54-1746596(State or other jurisdiction
    incorporation or organization)

(I.R.S. Employer
    Identification No.)7902 Westpark
    Drive McLean, VA

22102(Address of principal
    executive offices)

(Zip Code)   (703) 273-7500
    Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, $.01 par value per share

New York Stock Exchange     o þ
  o þ
  o þ
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





Explanatory
    Note
  Form 10-K Form 10-K). Form 10-K, Form 10-K Rule 3-09 Regulation S-X
  Form 10-K/A Form 10-K Rule 3-09 Form 10-K, Rule 12b-15 Form 10-K Rule 3-09
      Form 10-K Form 10-K,
  Rule 12b-15
 2




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##### 



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
      
    management fees for operating communities, which can also
    include incentive management fees;
    resident fees for communities that we own;
    development and pre-opening fees related to the development of
    new Sunrise communities;
    our share of income and losses for those communities in which we
    have an ownership interest;
    recapitalizations and sales of communities by ventures in which
    we have an equity interest; and
    fees for hospice services.    Management
    of Communities
    Development
    of Communities
     3




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##### 



and/or
    Senior
    Living Condominium Developments
    Special
    Independent Committee Inquiry and Accounting Review
  Form 10-K.
     4




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##### 




    no evidence of backdating or other intentional misconduct with
    respect to the grants on the 38 grant dates examined, including
    those specifically questioned by the SEIU, or the possible
    errors identified by the Special Independent Committee in the
    accounting for stock options;
    no evidence of an intention to reach an inappropriate accounting
    result with respect to the two categories of real estate
    accounting errors reviewed, no knowledge that these accounting
    errors were incorrect at the time they were made, and no
    evidence that information was concealed from review by the
    external auditors at the time the accounting judgments were
    made; and
    no evidence that any director or officer who traded in the
    months prior to the announcement of the Accounting Review had
    material non-public information relating to either of these two
    categories of real estate accounting errors.    and/or
  and/or Form 10-K,
 5




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##### 



Form 10-K. Form 10-K.
  Form 10-K.
  Significant
    Developments
    Restatement Related to Statement of Cash Flows
    Classifications and Accounting for Lease Payments and
    Non-Refundable Entrance Fees for Two Continuing Care Retirement
    Communities
  Form 10-K, Accounting Changes and Error
    Corrections.
  Results
    of Operations
    
    management fees related to services provided to operating and
    pre-opened communities for unconsolidated ventures and
    third-party owners;
    professional fees from development, marketing and other services; 6




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##### 




    resident fees for consolidated communities;
    hospice and other ancillary fees; and
    reimbursed contract service revenue related to unconsolidated
    ventures and third party owners.    
    development and venture expense for site selection, zoning,
    community design, construction management and financing incurred
    for development communities;
    community expense for our consolidated communities, which
    includes labor, food, marketing and other direct community
    expense;
    hospice and other ancillary expense;
    lease expense for certain consolidated communities;
    general and administrative expense related to headquarters and
    regional staff expenses and other administrative costs;
    loss on financial guarantees and other contracts;
    provision for doubtful accounts;
    impairment of communities;
    impairment of goodwill and intangible assets;
    depreciation and amortization;
    write-off of abandoned projects;
    write-off of unamortized contract costs; and
    reimbursed contract service expense related to unconsolidated
    ventures and third-party owners.  Accounting for Sales of Real Estate
 7




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##### 



Percent ChangeYear Ended December 31,


2007 vs.


2006 vs.(In thousands, except per share amounts)

2007


2006


2005


2006


2005(Restated)


(Restated)Operating revenue:Management fees

$
127,830


$
117,228


$
104,823



9.0
%


11.8
%Buyout fees


1,626



134,730



83,036



(98.8
)%


62.3
%Professional fees from development, marketing and other


38,855



28,553



24,920



36.1
%


14.6
%Resident fees for consolidated communities


402,396



381,709



341,610



5.4
%


11.7
%Hospice and other ancillary services


125,796



76,882



44,641



63.6
%


72.2
%Reimbursed contract services


956,047



911,979



911,992



4.8
%


Total operating revenue


1,652,550



1,651,081



1,511,022



0.1
%


9.3
%Operating expenses:Development and venture expense


79,203



69,145



41,064



14.5
%


68.4
%Community expense for consolidated communities


290,203



276,833



251,058



4.8
%


10.3
%Hospice and other ancillary services expense


134,634



74,767



45,051



80.1
%


66.0
%Community lease expense


68,994



61,991



57,946



11.3
%


7.0
%General and administrative


187,325



131,473



106,601



42.5
%


23.3
%Accounting Restatement and Special Independent Committee
    inquiry, SEC investigation and pending stockholder litigation


51,707



2,600







1888.7
%


N/ALoss on financial guarantees and other contracts


22,005



89,676







(75.5
)%


N/AProvision for doubtful accounts


9,564



14,632



1,675



(34.6
)%


773.6
%Impairment of owned communities


7,641



15,730



2,472



(51.4
)%


536.3
%Impairment of goodwill and intangible assets


56,729











N/A



N/AWrite-off of abandoned development projects


28,430



1,329



902



2039.2
%


47.3
%Depreciation and amortization


55,280



48,648



42,981



13.6
%


13.2
%Write-off of unamortized contract costs






25,359



14,609



(100.0
)%


73.6
%Reimbursed contract services


956,047



911,979



911,992



4.8
%


0.0
%Total operating expenses


1,947,762



1,724,162



1,476,351



13.0
%


16.8
%(Loss) income from operations


(295,212
)


(73,081
)


34,671



304.0
%


(310.8
)%Other non-operating income (expense):Interest income


9,894



9,577



6,231



3.3
%


53.7
%Interest expense


(6,647
)


(6,204
)


(11,882
)


7.1
%


(47.8
)%(Loss) gain on investments






(5,610
)


2,036



(100.0
)%


(375.5
)%Other (expense) income


(6,089
)


6,706



3,105



(190.8
)%


116.0
%Total other non-operating income (expense)


(2,842
)


4,469



(510
)


(163.6
)%


(976.3
)%Gain on the sale and development of real estate and equity
    interests


105,081



51,347



81,723



104.6
%


(37.2
)%Sunrises share of earnings and return on investment in
    unconsolidated communities


108,947



43,702



13,472



149.3
%


224.4
%Gain (loss) from investments accounted for under the profit
    sharing method


22



(857
)


(857
)


(102.6
)%


0.0
%Minority interests


4,470



6,916



6,721



(35.4
)%


2.9
%(Loss) income before provision for income taxes


(79,534
)


32,496



135,220



(344.8
)%


(76.0
)%Benefit from (provision for) income taxes


9,259



(17,212
)


(52,156
)


(153.8
)%


(67.0
)%Net (loss) income

$
(70,275
)

$
15,284


$
83,064



(559.8
)%


(81.6
)%Basic net (loss) income per share

$
(1.41
)

$
0.31


$
2.00



(554.8
)%


(84.5
)%Diluted net (loss) income per share


(1.41
)


0.30



1.74



(570.0
)%


(82.8
)%  8




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##### 



Percent ChangeAs of December 31,


2007 vs.


2006 vs.2007


2006


2005


2006


2005Total communitiesConsolidated


63



62



59



1.6
%


5.1
%Unconsolidated


198



180



153



10.0
%


17.6
%Managed


178



180



186



(1.1
)%


(3.2
)%Total


439



422



398



4.0
%


6.0
%Resident capacity


53,917



52,170



50,673



3.3
%


3.0
%         (In millions)

2007


2006


2005Buyout of Five Star management contracts

$



$
135


$
83Write-off of intangible assets associated with buyout of
    Five-Star management contracts






(25
)


(15
)Loss on guarantees related to our Germany venture


(16
)


(50
)


Loss on guarantees related to The Fountains venture






(22
)


Impairment of Trinity goodwill and intangible assets


(57
)






Accounting Restatement, Special Independent Committee inquiry,
    SEC investigation and pending stockholder litigation


(52
)


(3
)


Loss on guarantees related to the condominium project


(6
)


(17
)


Write-off of other condominium projects


(21
)






Write-down of Aston Gardens and other equity investments


(25
)






Net impact on (loss) income from operations


(177
)


18



68Real estate gains from prior years recognized in the current
    period


85



35



81Venture recapitalizations


57



48



17Net impact on (loss) income before benefit from (provision for)
    income taxes

$
(35
)

$
101


$
166  9




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##### 



Operating
    Revenue
  Management
    fees
      
    $7.2 million from fees associated with existing North
    American communities primarily due to increases in rates;
    $3.1 million of incremental revenues from existing
    international communities;
    $3.8 million of incremental revenues from 31 new
    communities managed in 2007 for unconsolidated ventures and
    third parties;
    $5.1 million in incremental incentive management
    fees; and
    $6.6 million decrease due to contract terminations.      
    $6.9 million of incremental revenues in 2006 from 31
    management contracts obtained in 2005 from the Greystone and The
    Fountains acquisitions that were included for a full year in
    2006;
    $7.7 million from increased fees associated with existing
    communities due to increases in rates and occupancy;
    $4.8 million of incremental revenues from 36 new
    communities managed in 2006 for unconsolidated ventures and
    third parties that were included for a full year in 2006;
    $5.1 million of incremental revenues from international
    communities;
    $2.3 million decrease in guarantee amortization due to the
    expirations of guarantees in 2006; and
    $9.7 million decrease due to contract terminations in 2005.  Buyout
    fees
    Professional
    fees from development, marketing and other
    (In millions)

2007


2006


2005North America

$
8.2


$
4.5


$
2.9International


18.9



12.5



14.8Greystone


11.8



11.6



7.2$
38.9


$
28.6


$
24.9  10




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##### 




    $5.2 million in fees paid to us by our ventures or venture
    partners as compensation for either brokering the sale of
    venture assets or the sale of the majority partners equity
    interest in a venture;
    $3.2 million in North American and international
    development fees from 23 communities under development in 2007
    compared to 17 communities under development in 2006; and
    $2.6 million of fees generated by a Greystone seed capital
    venture. These fees are earned when the initial development
    services are successful and permanent financing for the project
    is obtained.      Resident
    fees for consolidated communities
      
    $17.3 million from existing communities due to an increase
    in the average daily rate and fees for other services; and
    $3.4 million from the acquisition of one community.      
    $37.6 million from existing consolidated communities of
    which $34.2 million is due to increases in rate and
    $4.3 million is due to increases in occupancy;
    $4.1 million from the acquisition of three consolidated
    communities; and
    $1.3 million decrease from the disposition of two
    consolidated communities in 2006.  Hospice
    and other ancillary services
     11




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##### 



Reimbursed
    contract services
    Operating
    Expenses
  Development
    and venture expense
          
    $13.0 million from activity of Greystone that was included
    for a full year in 2006;
    $10.0 million from North American development. There were
    29 North American communities under development in 2006 compared
    to 28 in 2005; and
    $3.0 million from European development. The increase was
    primarily due to continuing development in the United Kingdom
    and the weakening of the U.S. dollar against the British
    pound and Euro from 2005 to 2006.  Community
    expense for consolidated communities
      
    $11.4 million increase from existing communities resulting
    primarily from increased labor costs; and
    $2.0 million increase from the acquisition of one community.      
    $22.8 million from existing communities resulting primarily
    from increased labor costs;
    $4.0 million from the acquisition of three communities;
    $1.0 million decrease from the closing of two communities
    in 2005.  Hospice
    and other ancillary services
   12




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##### 



Community
    lease expense
          General
    and administrative
      
    $29.2 million increase in bonus expense primarily relating
    to gains at one of our ventures. During 2007, our first UK
    venture in which we have a 20% equity interest sold seven
    communities to a venture in which we have a 10% interest.
    Primarily as a result of the gains on these asset sales recorded
    in the ventures, we recorded equity in earnings in 2007 of
    approximately $75.5 million. When our UK and Germany
    ventures were formed, we established a bonus pool in respect to
    each venture for the benefit of employees and others responsible
    for the success of these ventures. At that time, we agreed with
    our partner that after certain return thresholds were met, we
    would each reduce our percentage interests in venture
    distributions with such excess to be used to fund these bonus
    pools. During 2007, we recorded bonus expense of
    $27.8 million in respect of the bonus pool relating to the
    UK venture. These bonus amounts are funded from capital
    events and the cash is retained by us in restricted cash
    accounts. As of December 31, 2007, approximately
    $18.0 million of this amount was included in restricted
    cash. Under this bonus arrangement, no bonuses are payable until
    we receive distributions at least equal to certain capital
    contributions and loans made by us to the UK and Germany
    ventures. We currently expect this bonus distribution limitation
    will be satisfied in late 2008, at which time bonus payments
    would become payable. See Item 1,
    Business  Significant 2007
    Developments  Ventures.
    $8.9 million increase in legal expense related to the
    Trinity OIG investigation, our exploration of strategic
    alternatives and the settlement of litigation;
    $2.6 million increase related to costs associated with
    potential acquisitions that we decided not to pursue;
    $9.0 million increase related to the implementation of
    outsourcing of our payroll processing function to ADP; and
    $5.7 million increase in salaries, employee benefits and
    travel costs as the result of additional employees to support 17
    additional communities in 2007. 13




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##### 




    $9.0 million in salaries, employee benefits, travel and
    related costs associated with additional employees to support
    the increased number of communities we manage;
    $5.0 million loss for possible damages related to the
    Trinity OIG investigation and qui tamaction;
    $5.1 million of expense to support new communities in
    Canada, the UK and Germany; and
    $1.8 million in transition costs for the terminated Five
    Star contracts.  Accounting
    Restatement, Special Independent Committee Inquiry, SEC
    investigation and pending stockholder litigation
    Loss on
    financial guarantees and other contracts
      Provision
    for doubtful accounts
          Impairment
    of owned communities
    Impairment
    of goodwill and intangible assets
   14




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##### 



Write-off
    of abandoned projects
    Depreciation
    and amortization
    (In thousands)

2007


2006


2005North America

$
47,843


$
44,115


$
40,791Greystone


4,068



3,462



1,992International (including Canada)


886



240



198Hospice


2,483



831



$
55,280


$
48,648


$
42,981             Write-off
    of unamortized contract costs
    Other
    Non-operating Income (Expense)
    fully-reserved
 15




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##### 



Gain
    on the Sale and Development of Real Estate and Equity
    Interests
    December 31,2007


2006


2005Properties accounted for under basis of performance of services

$
3.6


$
1.8


$
0.6Properties accounted for previously under financing method


32.8







Properties accounted for previously under deposit method


52.4



35.3



81.3Land sales


5.7



5.4



(0.2
)Sales of equity interests and other sales


10.6



8.8



Total gains on sale

$
105.1


$
51.3


$
81.7     Sunrises
    Share of Earnings and Return on Investment in Unconsolidated
    Communities
  December 31,(In millions)

2007


2006


2005Sunrises share of earnings (losses) in unconsolidated
    communities

$
60.7


$
(12.0
)

$
(13.1
)Return on investment in unconsolidated communities


72.7



55.7



26.5Impairment of equity investments


(24.5
)






$
108.9


$
43.7


$
13.4     lease-up
   16




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##### 



Benefit
    from (Provision for) Income Taxes
      Liquidity
    and Capital Resources
  Overview
     17




---



##### 



Long-Term
    Debt and Bank Credit Facility
     18




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##### 




    modified to August 20, 2008 the delivery date for the
    unaudited financial statements for the quarter ended
    March 31, 2008;
    modified to September 10, 2008 the delivery date for the
    unaudited financial statements for the quarter ending
    June 30, 2008;
    temporarily (in February 2008) and then permanently (in
    July 2008) reduced the maximum principal amount available
    under the Bank Credit Facility to $160.0 million; and
    waived compliance with financial covenants in the Bank Credit
    Facility for the year ended December 31, 2007 and for the
    fiscal quarters ended March 31, 2008 and June 30,
    2008, and waived compliance with the leverage ratio and fixed
    charge coverage ratio covenants for the fiscal quarter ending
    September 30, 2008.  Form 10-K
  
    we must maintain liquidity of not less than $50.0 million,
    composed of availability under the Bank Credit Facility plus up
    to not more than $50.0 million in unrestricted cash and
    cash equivalents (tested as of the end of each calendar month),
    and any unrestricted cash and cash equivalents in excess of
    $50.0 million must be used to pay down the outstanding
    borrowings under the Bank Credit Facility;
    we are generally prohibited from declaring or making directly or
    indirectly any payment in the form of a stock repurchase or
    payment of a cash dividend or from incurring any obligation to
    do so; and
    the borrowing rate in US dollars, which was increased effective
    as of February 1, 2008, will remain LIBOR plus 2.75% or the
    Base Rate (the higher of the Federal Funds Rate plus 0.50% and
    Prime) plus 1.25% (through the end of the then-current interest
    period).     19




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##### 



Mortgage
    Financing
  30-year
   20




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##### 



Form 10-K
  Guarantees
  Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others,
  and/or
    FIN 45


FAS 5


TotalLiability


Liability


Liabilityfor Future


for Future


for FutureMaximum Potential


Fundings at


Fundings at


Fundings at


FundingsAmount of Future


December 31,


December 31,


December 31,


duringGuarantee Type

Fundings


2007


2007


2007


2007Debt repayment

$
16,832


$
785


$



$
785


$
Operating deficit


Uncapped



1,371



42,023



43,394



Income support


Uncapped



960



16,525



17,485



5,829Other










4,150



4,150



Total





$
3,116


$
62,698


$
65,814


$
5,829    21




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##### 



Senior
    Living Condominium Developments
    The
    Fountains
    Germany
    Venture
  lease-up
  Other
    Guarantees
   22




---



##### 



Contractual
    Obligations
      Payments due by periodMoreLess Than








ThanContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 YearsLong-term debt

$
153,888


$
122,541


$
3,203


$
2,474


$
25,670Bank Credit Facility


100,000



100,000











Equity investments in unconsolidated entities


61,123



22,105



38,792



226



Operating leases


727,773



68,532



143,997



138,272



376,972Total

$
1,042,784


$
313,178


$
185,992


$
140,972


$
402,642       Cash
    Flows
   23




---



##### 



Accounting for Sales of Real Estate.
             24




---



##### 



Stock
    Repurchase Programs
  and/or and/or and/or
  Market
    Risk
    Maturity Date

Fixed Rate


Variable RateThrough December 31,

Debt


Debt2008

$
4,074


$
218,4672009


1,147



8802010


159



1,0152011


171



1,0402012


183



1,080Thereafter


3,347



22,325Total Carrying Value

$
9,081


$
244,807Average Interest Rate


7.3
%


6.7
%Estimated Fair Market Value

$
9,207


$
244,807     Interest Rate


2007Note V with international venture


4.37
%

$
592Promissory Note XIV


Euribor + 4.25
%


8,837$
9,429Estimated fair market value





$
9,336       Critical
    Accounting Estimates
   25




---



##### 



Impairment
    of Goodwill, Intangible Assets, Long-Lived Assets and
    Investments in Ventures
  Nature of Estimates Required 
    Goodwill.
  Nature of Estimates Required  Intangibles and
    Long-Lived Assets.
  Assumptions and Approach Used. and/or
    
    Business Projections We make assumptions
    regarding the levels of revenue from communities and services.
    We also make assumptions about our cost levels (e.g., capacity
    utilization, labor costs, etc.). Finally, we make assumptions
    about the amount of cash flows that we will receive upon a
    future sale of the communities using estimated cap rates. These
    assumptions are key inputs for developing our cash flow
    projections. These projections are derived using our internal
    business plans and budgets;
    Growth Rate A growth rate is used to
    calculate the terminal value of the business, and is added to
    budgeted earnings before interest, taxes, depreciation and
    amortization. The growth rate is the expected rate at which
    earnings are projected to grow beyond the planning period; 26




---



##### 




    Economic Projections Assumptions regarding
    general economic conditions are included in and affect our
    assumptions regarding pricing estimates for our communities and
    services. These macro-economic assumptions include, but are not
    limited to, industry projections, inflation, interest rates,
    price of labor, and foreign currency exchange rates; and
    Discount Rates When measuring a possible
    impairment, future cash flows are discounted at a rate that is
    consistent with a weighted average cost of capital for a
    potential market participant. The weighted average cost of
    capital is an estimate of the overall after-tax rate of return
    required by equity and debt holders of a business enterprise.        Nature of Estimates Required  Investments in
    Ventures.
    Assumptions and Approach Used.
  Loss
    Reserves for Self-Insured Programs
  Nature of Estimates Required.
     27




---



##### 



Assumptions and Approach Used for Self-Insured
    Risks.
  Sensitivity Analysis for Self-Insured
    Risks.
    Assumptions and Approach Used for Health and Dental
    Plans.
  Sensitivity Analysis for Self-Insured Health and Dental Plan
    Costs. self-insured
  Variable
    Interest Entities
  Nature of Estimates Required.
   28




---



##### 



Assumptions.
  Valuation
    of Deferred Tax Assets
  Nature of Estimates Required.
  Accounting for Income Taxes ,
  Assumptions and Approach Used.
    
    Nature, frequency, and severity of current and cumulative
    financial reporting losses A pattern of
    objectively measured recent financial reporting losses is a
    source of negative evidence. In certain circumstances,
    historical information may not be as relevant due to changed
    circumstances;
    Sources of future taxable income  Future
    reversals of existing temporary differences are verifiable
    positive evidence. Projections of future taxable income
    exclusive of reversing temporary differences are a source of
    positive evidence only when the projections are combined with a
    history of recent profits and can be reasonably
    estimated; and
    Tax planning strategies  If necessary and
    available, tax planning strategies would be implemented to
    accelerate taxable amounts to utilize expiring carryforwards.
    These strategies would be a source of additional positive
    evidence and, depending on their nature, could be heavily
    weighted.     29




---



##### 



Liability
    for Possible Tax Contingencies
    Evaluation and Nature of Estimates
    Required.
            Interest and Penalties.
  Assumptions.
 30




---



##### 



Accounting
    for Financial Guarantees
      Assumptions and Approach Used.
    
    Business Projections  We make assumptions
    regarding the levels of revenue from communities and services.
    We also make assumptions about our cost levels (e.g., capacity
    utilization, labor costs, etc.). Finally, we make assumptions
    about the amount of cash flows that we will receive upon a
    future sale of the communities using estimated cap rates. These
    assumptions are key inputs for developing our cash flow
    projections. These projections are derived using our internal
    business plans and budgets;
    Growth Rate  A growth rate is used to
    calculate the terminal value of the business, and is added to
    budgeted earnings before interest, taxes, depreciation and
    amortization. The growth rate is the expected rate at which
    earnings are projected to grow beyond the planning period;
    Economic Projections  Assumptions regarding
    general economic conditions are included in and affect our
    assumptions regarding pricing estimates for our communities and
    services. These macro-economic assumptions include, but are not
    limited to, industry projections, inflation, interest rates,
    price of labor, and foreign currency exchange rates; and
    Discount Rates  When measuring a possible
    loss, future cash flows are discounted at a rate that is
    consistent with a weighted average cost of capital for a
    potential market participant. The weighted average cost of
    capital is an estimate of the overall after-tax rate of return
    required by equity and debt holders of a business enterprise.   31




---



##### 



Assumptions and Approach Used in Calculating our Loss on
    Completion Guarantees
  Litigation
  and/or qui tam
  Impact of
    Changes in Accounting Standards
  Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes,
  Fair Value Measurements
  No. 06-8, Applicability of the Assessment of a Buyers
    Continuing Investment under FASB Statement No. 66,
    Accounting for Sales of Real Estate, for Sales of
    Condominiums (EITF 06-8). EITF 06-8 EITF 06-8 EITF 06-8.
  The
    Fair Value Option for Financial Assets and Liabilities
 32




---



##### 



Business Combinations
  Non-controlling Interests in
    Consolidated Financial Statements  an Amendment of
    ARB No. 51
  Impact of
    Inflation
     33




---



##### 



PageItem 8.  Financial
    Statements and Supplementary DataSunrise Senior Living, Inc.Report of Independent Registered Public Accounting Firm


35Consolidated Balance Sheets


36Consolidated Statements of Income


37Consolidated Statements of Changes in Stockholders Equity


38Consolidated Statements of Cash Flows


39Notes to Consolidated Financial Statements


40PS UK Investment (Jersey) LPReport of Independent Auditors


95Consolidated Income Statement


96Consolidated Balance Sheet


97Consolidated Statement of Changes in Partners Capital


98Consolidated Statement of Cash Flows


99Notes to Consolidated Financial Statements


100AL US Development Venture, LLCIndependent Auditors Report


121Consolidated Balance Sheets


122Consolidated Statements of Operations


123Consolidated Statements of Changes in Members Capital
    (Deficit)


124Consolidated Statements of Cash Flows


125Notes to Consolidated Financial Statements


126Sunrise First Assisted Living Holdings, LLCIndependent Auditors Report


132Consolidated Balance Sheets


133Consolidated Statements of Operations


134Consolidated Statements of Changes in Members (Deficit)
    Capital


135Consolidated Statements of Cash Flows


136Notes to Consolidated Financial Statements


137Sunrise Second Assisted Living Holdings, LLCIndependent Auditors Report


142Consolidated Balance Sheets


143Consolidated Statements of Operations


144Consolidated Statements of Changes in Members (Deficit)
    Capital


145Consolidated Statements of Cash Flows


146Notes to Consolidated Financial Statements


147Metropolitan Senior Housing, LLCReport of Independent Auditors


152Consolidated Balance Sheets


153Consolidated Statements of Operations


154Consolidated Statements of Changes in Members (Deficit)
    Capital


155Consolidated Statements of Cash Flows


156Notes to Consolidated Financial Statements


157PS Germany Investment (Jersey) LPReport of Independent Auditors


164Consolidated Income Statement


165Consolidated Balance Sheet


166Consolidated Statement of Changes in Partners Capital


167Consolidated Statement of Cash Flows


168Notes to Consolidated Financial Statements


169Sunrise Aston Gardens Venture, LLC*Sunrise IV Senior Living Holdings*     *
    
    To be filed by amendment as soon as these financial statements
    become available. See Item 1B, Unresolved Staff
    Comments. 34




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   
          Accounting for
    Uncertainty in Income Taxes Applicability of the Assessment of a Buyers Continuing
    Investment under FASB Statement No. 66, Accounting for
    Sales of Real Estate for Sales of Condominiums,
  Share-Based Payment,
      
 35




---



##### 



SUNRISE
    SENIOR LIVING, INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,(In thousands, except per share and share amounts)

2007


2006(Restated)ASSETSCurrent Assets:Cash and cash equivalents

$
138,212


$
81,990Accounts receivable, net


76,909



75,055Notes receivable






4,174Income taxes receivable


63,624



30,873Due from unconsolidated communities, net


61,854



80,729Deferred income taxes, net


33,567



29,998Restricted cash


61,999



34,293Prepaid insurance


23,720



5,485Prepaid expenses and other current assets


70,079



19,401Total current assets


529,964



361,998Property and equipment, net


656,211



609,385Property and equipment subject to a sales contract, net






193,158Property and equipment subject to financing, net


58,871



62,520Notes receivable


9,429



17,631Due from unconsolidated communities


19,555



24,959Intangible assets, net


83,769



103,771Goodwill


169,736



218,015Investments in unconsolidated communities


97,173



104,272Restricted cash


165,386



143,760Other assets, net


8,503



8,832Total assets

$
1,798,597


$
1,848,301LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt

$
122,541


$
91,923Outstanding draws on bank credit facility


100,000



50,000Accounts payable and accrued expenses


275,362



216,087Due to unconsolidated communities


37,344



5,792Deferred revenue


9,285



8,703Entrance fees


34,512



38,098Self-insurance liabilities


67,267



41,379Total current liabilities


646,311



451,982Long-term debt, less current maturities


31,347



48,682Deposits related to properties subject to a sales contract






240,367Liabilities related to properties accounted for under the
    financing method


54,317



66,283Investment accounted for under the profit-sharing method


51,377



29,148Guarantee liabilities


65,814



75,805Self-insurance liabilities


74,971



72,993Deferred gains on the sale of real estate and deferred revenues


74,367



51,958Deferred income tax liabilities


82,605



78,632Other long-term liabilities, net


133,717



85,228Total liabilities


1,214,826



1,201,078Minority interests


10,208



16,515Stockholders Equity:Preferred stock, $0.01 par value, 10,000,000 shares
    authorized, no shares issued and outstanding






Common stock, $0.01 par value, 120,000,000 shares
    authorized, 50,556,925 and 50,572,092 shares issued and
    outstanding, net of 103,696 and 27,197 treasury shares, at
    December 31, 2007 and 2006, respectively


506



506Additional paid-in capital


452,640



445,275Retained earnings


112,123



182,398Accumulated other comprehensive income


8,294



2,529Total stockholders equity


573,563



630,708Commitments and contingenciesTotal liabilities and stockholders equity

$
1,798,597


$
1,848,301    36




---



##### 



SUNRISE
    SENIOR LIVING, INC.
  CONSOLIDATED
    STATEMENTS OF INCOME
  Year Ended December 31,(In thousands, except per share amounts)

2007


2006


2005(Restated)


(Restated)Operating revenue:Management fees

$
127,830


$
117,228


$
104,823Buyout fees


1,626



134,730



83,036Professional fees from development, marketing and other


38,855



28,553



24,920Resident fees for consolidated communities


402,396



381,709



341,610Hospice and other ancillary services


125,796



76,882



44,641Reimbursed contract services


956,047



911,979



911,992Total operating revenues


1,652,550



1,651,081



1,511,022Operating expenses:Development and venture expense


79,203



69,145



41,064Community expense for consolidated communities


290,203



276,833



251,058Hospice and other ancillary services expense


134,634



74,767



45,051Community lease expense


68,994



61,991



57,946General and administrative


187,325



131,473



106,601Accounting Restatement and Special Independent Committee Inquiry


51,707



2,600



Loss on financial guarantees and other contracts


22,005



89,676



Provision for doubtful accounts


9,564



14,632



1,675Impairment of owned communities


7,641



15,730



2,472Impairment of goodwill and intangible assets


56,729







Depreciation and amortization


55,280



48,648



42,981Write-off of abandoned development projects


28,430



1,329



902Write-off of unamortized contract costs






25,359



14,609Reimbursed contract services


956,047



911,979



911,992Total operating expenses


1,947,762



1,724,162



1,476,351(Loss) income from operations


(295,212
)


(73,081
)


34,671Other non-operating income (expense):Interest income


9,894



9,577



6,231Interest expense


(6,647
)


(6,204
)


(11,882
)(Loss) gain on investments






(5,610
)


2,036Other (expense) income


(6,089
)


6,706



3,105Total other non-operating (expense) income


(2,842
)


4,469



(510
)Gain on the sale and development of real estate and equity
    interests


105,081



51,347



81,723Sunrises share of earnings and return on investment in
    unconsolidated communities


108,947



43,702



13,472Gain (loss) from investments accounted for under the
    profit-sharing method


22



(857
)


(857
)Minority interests


4,470



6,916



6,721(Loss) income before provision for income taxes


(79,534
)


32,496



135,220Benefit from (provision for) income taxes


9,259



(17,212
)


(52,156
)Net (loss) income

$
(70,275
)

$
15,284


$
83,064Earnings per share data:Basic net (loss) income per common share

$
(1.41
)

$
0.31


$
2.00Diluted net (loss) income per common share


(1.41
)


0.30



1.74    37




---



##### 



SUNRISE
    SENIOR LIVING, INC.
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
  AccumulatedShares of


Common


Additional








OtherCommon


Stock


Paid-in


Retained


Deferred


Comprehensive(In thousands)

Stock


Amount


Capital


Earnings


Compensation


Income (Loss)


TotalBalance at January 1, 2005 (As previously stated)


41,138


$
412


$
279,116


$
91,545


$
(4,535
)

$
3,165


$
369,703Effect of restatement














(7,495
)










(7,495
)Balance at January 1, 2005 (Restated)


41,138



412



279,116



84,050



(4,535
)


3,165



362,208Net income (Restated)














83,064











83,064Foreign currency translation loss, net of tax






















(3,231
)


(3,231
)Sunrises share of investees other comprehensive loss






















(503
)


(503
)Total comprehensive income (Restated)


























79,330Issuance of common stock to employees


2,248



22



31,307















31,329Repurchase of common stock


(348
)


(3
)


(8,709
)














(8,712
)Conversion of convertible debt


3







55















55Issuance of restricted stock


412



4



10,995







(10,997
)






2Amortization of restricted stock


















3,209







3,209Tax effect of stock-based compensation










13,443















13,443Balance at December 31, 2005 (Restated)


43,453



435



326,207



167,114



(12,323
)


(569
)


480,864Net income (Restated)














15,284











15,284Foreign currency translation income, net of tax






















2,205



2,205Sunrises share of investees other comprehensive
    income






















893



893Total comprehensive income (Restated)


























18,382Issuance of common stock to employees


374



3



5,161















5,164Conversion of convertible debt


6,700



67



117,917















117,984Issuance of restricted stock


45



1



532















533Forfeiture of restricted stock










(5
)














(5
)Adoption of SFAS 123R










(12,323
)






12,323







Stock-based compensation expense










5,846















5,846Tax effect of stock-based compensation










1,940















1,940Balance at December 31, 2006 (Restated)


50,572



506



445,275



182,398







2,529



630,708Net loss














(70,275
)










(70,275
)Foreign currency translation income, net of tax






















5,865



5,865Sunrises share of investees other comprehensive
    income






















(100
)


(100
)Total comprehensive loss


























(64,510
)Issuance of restricted stock


88



1



















1Forfeiture or surrender of restricted stock


(103
)


(1
)


(1,818
)














(1,819
)Stock-based compensation expense










7,020















7,020Tax effect of stock-based compensation










2,163















2,163Balance at December 31, 2007


50,557


$
506


$
452,640


$
112,123


$



$
8,294


$
573,563    38




---



##### 



SUNRISE
    SENIOR LIVING, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2007


2006


2005(In thousands)

(Restated)


(Restated)


(Restated)Operating activitiesNet (loss) income

$
(70,275
)

$
15,284


$
83,064Adjustments to reconcile net (loss) income to net cash provided
    by operating activities:Gain on sale and development of real estate and equity interests


(105,081
)


(51,347
)


(81,723
)(Gain) loss from investments accounted for under the
    profit-sharing method


(22
)


857



857Gain from application of financing method






(1,155
)


(528
)Gain on sale of investment in Sunrise REIT debentures










(2,036
)Loss on sale of investments






5,610



Impairment of goodwill and other intangible assets


56,729







Write-off of abandoned development projects


28,430



1,329



902Provision for doubtful accounts


9,564



14,632



1,675Provision for deferred income taxes


733



(3,853
)


29,357Impairment of long-lived assets


7,641



15,730



2,472Loss on financial guarantees and other contracts


22,005



89,676



Sunrises share of earnings and return on investment in
    unconsolidated communities


(108,947
)


(11,997
)


(13,073
)Distributions of earnings from unconsolidated communities


168,322



66,381



26,545Minority interest in income/loss of controlled entities


(4,470
)


(6,916
)


(6,721
)Depreciation and amortization


55,280



48,648



42,981Write-off of unamortized contract costs






25,359



14,609Amortization of financing costs


1,051



1,404



1,483Stock-based compensation


7,020



6,463



5,465Changes in operating assets and liabilities:(Increase) decrease in:Accounts receivable


(12,388
)


(23,242
)


3,850Due from unconsolidated communities


28,111



(83,451
)


(6,279
)Prepaid expenses and other current assets


(60,282
)


(4,041
)


(3,425
)Captive insurance restricted cash


(32,930
)


(48,840
)


(28,130
)Other assets


(35,666
)


6,694



(6,189
)Increase (decrease) in:Accounts payable, accrued expenses and other liabilities


140,589



22,204



68,820Entrance fees


(3,586
)


913



1,095Self-insurance liabilities


12,866



30,186



21,885Guarantee liabilities


(5,829
)






Deferred revenue and gains on the sale of real estate


29,621



983



33,034Net cash provided by operating activities


128,486



117,511



189,990Investing activitiesCapital expenditures


(245,523
)


(188,655
)


(132,857
)Acquisitions of business assets


(49,917
)


(103,491
)


(75,532
)Dispositions of property


60,387



83,290



56,246Cash obtained in acquisition of Greystone










10,922Change in restricted cash


(21,792
)


(11,428
)


(15,701
)Purchases of short-term investments


(448,900
)


(172,575
)


(62,825
)Proceeds from short-term investments


448,900



172,575



77,725Increase in investments and notes receivable


(183,314
)


(343,286
)


(158,697
)Proceeds from investments and notes receivable


220,312



376,061



187,042Investments in unconsolidated communities


(29,297
)


(77,371
)


(64,080
)Distributions of capital from unconsolidated communities


601



5,954



9,273Net cash used in investing activities


(248,543
)


(258,926
)


(168,484
)Financing activitiesNet proceeds from exercised options






4



29,065Additional borrowings of long-term debt


243,564



154,140



149,539Repayment of long-term debt


(66,105
)


(90,781
)


(137,296
)Contribution from minority interests






15,669



5,000Distributions to minority interests


(1,180
)


(630
)


(1,021
)Financing costs paid






(75
)


(2,622
)Repurchases of common stock










(8,712
)Net cash provided by financing activities


176,279



78,327



33,953Net increase (decrease) in cash and cash equivalents


56,222



(63,088
)


55,459Cash and cash equivalents at beginning of year


81,990



145,078



89,619Cash and cash equivalents at end of year

$
138,212


$
81,990


$
145,078    39




---



##### 



Sunrise
    Senior Living, Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Organization
    and Presentation  Organization
      Basis
    of Presentation
  EITF 04-5, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain Rights
    ( EITF 04-5 ) EITF 04-5 EITF 04-5.
  2.
    Significant
    Accounting Policies    Cash
    and Cash Equivalents
    Restricted
    Cash
   40




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Allowance
    for Doubtful Accounts
    Notes
    Receivable
    Due
    from Unconsolidated Communities
    Property
    and Equipment
         41




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Real
    Estate Sales
  Accounting for Sales of Real Estate
           42




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Capitalization
    of Interest Related to Development Projects
  Capitalization of Interest Cost,
    ( Capitalization of Interest Cost in
    Financial Statements That Include Investments Accounted for by
    the Equity Method
  Goodwill
    and Intangible Assets
       43




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Investments
    in Unconsolidated Communities
    Consolidation of Variable Interest Entities
  EITF 04-5 ,
    Determining Whether a General Partner, or the General Partners
    as a Group, Controls a Limited Partnership or Similar Entity
    When the Limited Partners Have Certain Rights, EITF 04-5.
  The
    Equity Method of Accounting for Investments in Common Stock No. 78-9, Accounting for Investments in Real Estate Ventures (SOP 78-9). SOP 78-9, and/or
       44




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Deferred
    Financing Costs
    Loss
    Reserves For Certain Self-Insured Programs
          Employee
    Health and Dental Benefits
   45




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Continuing
    Care Agreements
          Accounting
    for Guarantees
    Asset
    Retirement Obligations
  Accounting for Conditional Asset Retirement
    Obligations  an interpretation of FASB Statement
    No. 143, Asset Retirement Obligations
   46




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Income
    Taxes
    Revenue
    Recognition
             47




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent,
  Stock-Based
    Compensation
  Share-Based Payments Accounting for Stock-Based
    Compensation Accounting for Stock Issued to Employees,
    Foreign
    Currency Translation
  Foreign Currency Translation,
  Advertising
    Costs
    Legal
    Contingencies
   48




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Reclassifications
    New
    Accounting Standards
  Accounting for
    Uncertainty in Income Taxes Accounting for Income Taxes,
  No. 06-8, Applicability of the Assessment of a Buyers Continuing
    Investment under FASB Statement No. 66, Accounting for
    Sales of Real Estate, for Sales of Condominiums (EITF 06-8). EITF 06-8 EITF 06-8 EITF 06-8
  Future
    Adoption of Accounting Standards
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Liabilities
  Business Combinations
  Non-controlling Interests in
    Consolidated Financial Statements  an Amendment of
    ARB No. 51
 49




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    3.
    Restatement
    Related to Statement of Cash Flows Classifications and
    Accounting for Lease Payments and Non-Refundable Entrance Fees
    for Two Continuing Care Retirement Communities  2007
    Statement of Cash Flows
    2007
    Consolidated Statement of Cash Flows
  (In thousands)

As Reported


As RestatedGain on sale and development of real estate and equity interests

$
(61,635
)

$
(105,081
)(Increase) decrease in:Accounts receivable


(16,536
)


(12,388
)Due from unconsolidated senior living communities


102,996



28,111Prepaid expenses and other current assets


(55,443
)


(60,282
)Other assets


(1,177
)


(35,666
)Increase (decrease) in:Accounts payable and accrued expenses


78,576



140,589Self-insurance liabilities


27,866



12,866Guarantee liabilities


(5,806
)


(5,829
)Net cash provided by operating activities


235,007



128,486Capital expenditures


(240,309
)


(245,523
)Dispositions of property


171,338



60,387Change in restricted cash


(20,579
)


(21,792
)Increase in investments and notes receivable


(181,451
)


(183,314
)Proceeds from investments and notes receivable


136,744



220,312Investments in unconsolidated communities


(51,940
)


(29,297
)Net cash used in investing activities


(235,513
)


(248,543
)Additional borrowings of long-term debt


229,688



243,564Repayment of long-term debt


(170,860
)


(66,105
)Contribution from minority interests


3,210



Distributions to minority interest


(5,310
)


(1,180
)Net cash provided by financing activities


56,728



176,279  50




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Accounting
    for Lease Payments and Non-Refundable Entrance Fees
            pre-tax Accounting Changes and Error
    Corrections.
 51




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  4.
    Allowance
    for Doubtful Accounts    AccountsReceivable


Other Assets


TotalBalance January 1, 2005 (restated)

$
1,888


$



$
1,888Provision for doubtful accounts


1,675







1,675Write-offs


(1,065
)






(1,065
)Balance December 31, 2005 (restated)


2,498







2,498Provision for doubtful accounts


6,632



8,000



14,632Write-offs


(1,626
)






(1,626
)Balance December 31, 2006 (restated)


7,504



8,000



15,504Provision for doubtful accounts


7,644



1,920



9,564Write-offs


(4,708
)






(4,708
)Balance December 31, 2007

$
10,440


$
9,920


$
20,360   5.
    Property
    and Equipment    December 31,Asset Lives


2007


2006Land and land improvements


15 years


$
77,709


$
76,456Building and building improvements


40 years



337,310



330,431Furniture and equipment


3-10 years



148,829



122,479563,848



529,366Less: Accumulated depreciation






(157,744
)


(125,315
)406,104



404,051Construction in progress






250,107



205,334Property and equipment, net





$
656,211


$
609,385        52




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  6.
    Acquisitions  Sunrise
    Connecticut Avenue Assisted Living, LLC
      Net working capital

$
0.6Property and equipment


40.3Other assets


0.1Land


8.8Less: Debt of venture assumed


(19.9
)Total purchase price (including transaction costs)

$
29.9     Raiser
    Portfolio
      Net working capital

$
0.9Land, property and equipment


17.0Entrance fee liability and future service obligations


(11.5
)Management contracts and other assets


21.0Total purchase price (including transaction costs)

$
27.4     Trinity
    Hospice, Inc.
   53




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Net working capital

$
3.7Property and equipment


1.5Intangible assets


9.7Goodwill


59.3Other assets


0.4Total purchase price (including transaction costs)

$
74.6       2005
    Acquisitions
      7.
    Sales of
    Real Estate    December 31,2007


2006


2005Properties accounted for under basis of performance of services

$
3.6


$
1.8


$
0.6Properties accounted for previously under financing method


32.8







Properties accounted for previously under deposit method


52.4



35.3



81.3Land sales


5.7



5.4



(0.2
)Sales of equity interests and other sales


10.6



8.8



Total gains on the sale and development of real estate and
    equity interests

$
105.1


$
51.3


$
81.7   Basis
    of Performance of Services
   54




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Financing
    Method
        December 31,2007


2006


2005Property and equipment subject to financing, net

$



$
62,520


$
64,174Liabilities relating to properties subject to the financing
    method






(66,283
)


(64,208
)Depreciation expense


505



1,959



363Development fees received, net of costs










1,335Management fees received


230



981



93       Deposit
    method
   55




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,2007


2006


2005Property subject to sales contract, net

$



$



$
10,142Deposits related to properties subject to a sales contract










(13,843
)Depreciation expense






296



331Development fees received, net of costs










Management fees received






198



192       December 31,2007


2006


2005Properties subject to sales contract, net

$



$
193,158


$
197,781Deposits related to properties subject to a sales contract






(240,367
)


(236,692
)Depreciation expense


4,876



8,257



7,168Development fees received, net of costs






20



1,412Management fees received


2,331



3,738



3,023   18-month
    December 31,2007


2006


2005Properties subject to sales contract, net

$



$



$
47,308Deposits related to properties subject to a sales contract










(74,247
)Depreciation expense






848



6,644Development fees received, net of costs










Management fees received






617



4,548    56




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Land
    Sales
    Sales
    of Equity Interests
  No. 98-8, Accounting for Transfers of Investments That Are in Substance
    Real Estate (EITF 98-8),
  Gain
    (Loss) from Investments Accounted for Under the Profit-Sharing
    Method, net
            Year Ended December 31,2007


2006


2005Revenue

$
23,791


$
19,902


$
11,077Expenses


(17,450
)


(16,528
)


(10,310
)Income from operations before depreciation


6,341



3,374



767Depreciation expense










1,964Distributions to other investors


(6,319
)


(4,231
)


(3,588
)Income (loss) from investments accounted for under the
    profit-sharing method

$
22


$
(857
)

$
(857
)Investments accounted for under the profit-sharing method, net

$
(51,377
)

$
(29,148
)

$
(5,106
)Amortization expense on investments accounted for under the
    profit-sharing method

$
1,800


$
1,800


$
   Condominium
    Sales
   57




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  8.
    Variable
    Interest Entities    Consolidated
    VIEs
  
    The entity that we have a management agreement with is a
    continuing care retirement community located in the
    U.S. comprised of 254 continuing care retirement community
    apartments, 32 assisted living units, 27 Alzheimer care
    apartments and 60 skilled nursing beds. We have included
    $20.1 million and $21.4 million, respectively, of net
    property and equipment related to this entity in our 2007 and
    2006 consolidated balance sheets and $24.6 million and
    $25.2 million, respectively, of debt. We guaranteed in 2007
    and 2006 $23.2 million and $23.8 million,
    respectively, of this debt. We included $1.5 million,
    $1.5 million and $1.1 million, respectively, of
    depreciation and amortization expense related to this entity in
    our 2007, 2006 and 2005 consolidated statements of income.
    Six of the seven consolidated VIEs are investment partnerships
    formed with third-party partners to invest capital in the
    pre-finance stage of certain Greystone projects. When the
    initial development services are successful and permanent
    financing for the project is obtained, the partners are repaid
    their initial invested capital plus fees generally between 50%
    and 75% of their investment. Greystone, which was acquired by us
    in May 2005, is a developer and manager of CCRCs. We have
    included $9.0 million and $13.8 million of cash
    related to these ventures in our 2007 and 2006 consolidated
    balance sheets, respectively. At December 31, 2006, six
    Greystone VIEs were consolidated. During 2007, two of these six
    ventures were no longer considered VIEs and were deconsolidated.
    Two new Greystone investment partnerships were formed to invest
    seed capital in 2007 and at December 31, 2007, six
    Greystone VIEs were consolidated.  Unconsolidated
    VIEs
  
    Sunrise At Home Senior Living Services, Inc. (Sunrise At
    Home) was a venture between Sunrise and two third parties.
    The venture offered home health services by highly trained staff
    members in customers homes and had annual revenue of
    approximately $19.0 million in 2006. In June 2007, Sunrise
    At Home was merged with Alliance Care and we received a
    preferred equity interest in Alliance Care. Alliance Care
    provides services to seniors, including physician house calls
    and mobile diagnostics, home care and private duty services
    through 24 local offices located in seven states. Additionally,
    Alliance Care operates over 125 Healthy Lifestyle Centers
    providing therapeutic rehabilitation and wellness programs in
    senior living facilities. As a result of the merger, we are no
    longer the primary beneficiary and deconsolidated Sunrise At
    Home as of the merger date. At December 31, 2007, Alliance
    Care has total assets of $41.2 million, total liabilities
    of $38.1 million, and annual revenue of $84.3 million.
    In July 2007, we formed a venture with a partner to purchase six
    communities from our first UK venture. The new venture also
    entered into a firm commitment to purchase 11 additional
    communities from the venture which are currently under
    development in the UK. At December 31, 2007, this venture
    has total assets of $562.7 million, total liabilities of
    $472.0 million, and annual revenue of $17.0 million.     58




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  9.
    Buyout of
    Management Contracts      10.
    Notes
    Receivable    December 31,Interest Rate(1)


2007


2006Note V with international venture


4.37
%

$
592


$
1,030Promissory Note XIV


Euribor + 4.25
%


8,837



4,834Promissory Note XIII


7.50
%






11,767Note VI, revolving credit agreement


10.00
%






4,1749,429



21,805Current maturities










(4,174
)$
9,429


$
17,631     (1)
    
    Interest rate at December 31, 2007      lease-up
     59




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      11.
    Intangible
    Assets and Goodwill    Estimated


December 31,Useful Life


2007


2006Management contracts less accumulated amortization of $23,084
    and $13,242


1-30 years


$
76,909


$
88,581Leaseholds less accumulated amortization of $3,577 and $3,162


10-29 years



4,307



4,721Other intangibles less accumulated amortization of $628 and
    $1,173


1-40 years



2,553



10,469$
83,769


$
103,771      60




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  12.
    Investments
    in Unconsolidated Communities    SunriseVenture

OwnershipKarrington of Findlay Ltd.


50.00
%MorSun Tenant LP


50.00
%Sunrise/Inova McLean Assisted Living, LLC


40.00
%AU-HCU Holdings, LLC(1)


30.00
%RCU Holdings, LLC(1)


30.00
%SunVest, LLC(1)


30.00
%AL One Investments, LLC


25.36
%Metropolitan Senior Housing, LLC


25.00
%Sunrise at Gardner Park, LP


25.00
%Sunrise Floral Vale Senior Living, LP


25.00
%Cheswick & Cranberry, LLC


25.00
%BG Loan Acquisition LP


25.00
%Sunrise Aston Gardens Venture, LLC


25.00
%Master MorSun, LP


20.00
%Master MetSun, LP


20.00
%Master MetSun Two, LP


20.00
%Master MetSun Three, LP


20.00
%Sunrise First Assisted Living Holdings, LLC


20.00
%Sunrise Second Assisted Living Holdings, LLC


20.00
%Sunrise Beach Cities Assisted Living, LP


20.00
%AL U.S. Development Venture, LLC


20.00
%Sunrise HBLR, LLC


20.00
%Sunrise IV Senior Living Holdings, LLC


20.00
%COPSUN Clayton MO, LLC


20.00
%Sunrise of Aurora, LP


20.00
%Sunrise of Erin Mills, LP


20.00
%Sunrise of North York, LP(2)


20.00
%PS Germany Investment (Jersey) LP


20.00
%PS UK Investment (Jersey) LP


20.00
%PS UK Investment II (Jersey) LP


20.00
%Sunrise First Euro Properties LP


20.00
%Master CNL Sun Dev I, LLC


20.00
%Sunrise Bloomfield Senior Living, LLC


20.00
%Sunrise Hillcrest Senior Living, LLC


20.00
%Sunrise New Seasons Venture, LLC


20.00
%Sunrise Rocklin Senior Living, LLC


20.00
%Sunrise Sandy Senior Living, LLC


20.00
%Sunrise Scottsdale Senior Living, LLC


20.00
%Sunrise Staten Island SL LLC


20.00
%Sunrise US UPREIT, LLC


15.40
%SunKap Coral Gables, LLC


15.00
%SunKap Boca Raton, LLC


15.00
%Santa Monica AL, LLC


15.00
%Sunrise Third Senior Living Holdings, LLC


10.00
%Cortland House, LP


10.00
%AEW/Sunrise Senior Housing Portfolio, LLC


10.00
%Dawn Limited Partnership


10.00
%     (1)
    
    Properties related to investments are accounted for under the
    profit-sharing method of accounting. See Note 7.(2)
    
    Properties related to investments are accounted for under the
    financing method of accounting. See Note 7. 61




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       December 31,2007


2006


2005Assets, principally property and equipment

$
5,183,922


$
4,370,376


$
3,283,725Long-term debt


4,075,993



2,971,318



2,076,734Liabilities, excluding long-term debt


549,628



583,008



409,986Equity


558,301



816,050



797,005Revenue


1,021,112



846,479



625,371Net income (loss)


(15,487
)


(56,968
)


24,051         December 31,2007


2006


2005Sunrises share of earnings (losses) in unconsolidated
    communities

$
60,700


$
(11,997
)

$
(13,073
)Return on investment in unconsolidated communities


72,710



55,699



26,545Impairment of equity investments


(24,463
)






$
108,947


$
43,702


$
13,472     Return
    on Investment in Unconsolidated Communities
     62




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Transactions
             63




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      13.
    Bank
    Credit Facility       64




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      
    modified to August 20, 2008 the delivery date for the
    unaudited financial statements for the quarter ended
    March 31, 2008;
    modified to September 10, 2008 the delivery date for the
    unaudited financial statements for the quarter ending
    June 30, 2008;
    temporarily (in February 2008) and then permanently (in
    July 2008) reduced the maximum principal amount available
    under the Bank Credit Facility to $160.0 million; and
    waived compliance with financial covenants in the Bank Credit
    Facility for the year ended December 31, 2007 and for the
    fiscal quarters ended March 31, 2008 and June 30,
    2008, and waived compliance with the leverage ratio and fixed
    charge coverage ratio covenants for the fiscal quarter ending
    September 30, 2008.  Form 10-K
  
    we must maintain liquidity of not less than $50.0 million,
    composed of availability under the Bank Credit Facility plus up
    to not more than $50.0 million in unrestricted cash and
    cash equivalents (tested as of the end of each calendar month),
    and any unrestricted cash and cash equivalents in excess of
    $50.0 million must be used to pay down the outstanding
    borrowings under the Bank Credit Facility;
    we are generally prohibited from declaring or making directly or
    indirectly any payment in the form of a stock repurchase or
    payment of a cash dividend or from incurring any obligation to
    do so; and
    the borrowing rate in US dollars, which was increased effective
    as of February 1, 2008, will remain LIBOR plus 2.75% or the
    Base Rate (the higher of the Federal Funds Rate plus 0.50% and
    Prime) plus 1.25% (through the end of the then-current interest
    period).         65




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          14.
    Long-Term
    Debt    December 31,2007


2006Outstanding draws on Bank Credit Facility

$
100,000


$
50,000Borrowings from Sunrise REIT






35,112Mortgages, notes payable and other


153,888



105,493253,888



190,605Current maturities


(222,541
)


(141,923
)$
31,347


$
48,682   Borrowings
    from Sunrise REIT
   66




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Other
    Mortgage and Notes Payable
                2008

$
222,5412009


2,0272010


1,1742011


1,2112012


1,263Thereafter


25,672$
253,888      67




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    15.
    Income
    Taxes    December 31,2007


2006Deferred tax assets:Sunrise operating loss carryforwards  federal

$
1,910


$
1,910Sunrise operating loss carryforwards  state


7,903



4,476Sunrise operating loss carryforwards  foreign


5,650



2,515Sunrise At Home loss carryforwards  federal and state






5,891Sunrise At Home deferred tax assets, net






1,302Financial guarantees


25,893



38,719Accrued health insurance


14,872



17,159Self-insurance liabilities


6,989



8,826Stock-based compensation


7,636



7,518Deferred development fees


29,258



5,923Allowance for doubtful accounts


6,178



6,441Tax credits


6,729



6,277Accrued expenses and reserves


20,593



8,560Entrance fees


14,228



10,661Other


1,898



11,401Gross deferred tax assets


149,737



137,579Sunrise valuation allowances


(6,165
)


(3,800
)Foreign deferred tax valuation allowance


(6,243
)


(2,071
)Sunrise At Home valuation allowance






(7,193
)Net deferred tax assets


137,329



124,515Deferred tax liabilities:Investments in ventures


(96,333
)


(80,093
)Basis difference in property and equipment and intangibles


(74,826
)


(84,599
)Prepaid expenses


(8,133
)


(5,932
)Other


(7,075
)


(2,525
)Total deferred tax liabilities


(186,367
)


(173,149
)Net deferred tax liabilities

$
(49,038
)

$
(48,634
)    68




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
           69




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Years Ended December 31,2007


2006


2005Current:Federal

$
(14,904
)

$
15,837


$
15,140State


2,814



5,202



5,563Foreign


2,098



26



2,096Total current expense


(9,992
)


21,065



22,799Deferred:Federal


121



(4,178
)


27,236State


(614
)


553



(337
)Foreign


1,226



(228
)


2,458Total deferred expense (benefit)


733



(3,853
)


29,357Total tax (benefit) expense

$
(9,259
)

$
17,212


$
52,156       Years Ended December 31,(In thousands)

2007


2006


2005(Loss) income before tax benefit (expense) taxed in the
    U.S.

$
(78,816
)

$
38,535


$
125,095(Loss) income before tax benefit (expense) taxed in foreign
    jurisdictions


(718
)


(6,039
)


10,125Total (loss) income before tax benefit (expense)

$
(79,534
)

$
32,496


$
135,220Tax at US federal statutory rate


(35.0
)%


35.0
%


35.0
%State taxes, net


(4.3
)%


4.2
%


3.9
%Work opportunity credits


(0.6
)%


(1.3
)%


(1.2
)%Change in valuation allowance


8.4
%


11.1
%


1.0
%Tax exempt interest


(2.2
)%


(4.5
)%


(0.1
)%Tax contingencies


2.3
%


4.4
%


(1.0
)%Write-off of non-deductible goodwill


12.1
%


0.0
%


0.0
%Foreign rate differential


(0.8
)%


0.0
%


0.0
%U.S. tax related to foreign earnings


4.3
%


0.0
%


0.0
%Other


4.2
%


4.1
%


1.0
%(11.6
)%


53.0
%


38.6
%   Accounting for Uncertainty in Income Taxes  an
    Interpretation of FASB Statement No. 109, Accounting for
    Income Taxes
 70




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      (In thousands)Unrecognized tax benefit at beginning of year (January 1,
    2007)

$
25,147Change attributable to tax positions taken during a prior period


Change attributable to tax positions taken during a current
    period


2,643Decrease attributable to settlements with taxing authorities


Decrease attributable to lapse in statute of limitations


(234
)Unrecognized tax benefit at end of year (December 31, 2007)

$
27,556     16.
    Stockholders
    Equity  Stock
    Option Plans
  Share-Based Payment Statement of Cash Flows
   71




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Twelve Months EndedDec. 31,(In thousands, except per share data)

2005(Restated)Net income

$
83,064Add: Compensation expense included in net income, net of tax


3,331Less: Total share-based employee compensation expense determined
    under fair-value method for all awards, net of tax


(9,359
)Pro forma net income

$
77,036Basic net income per share:As reported

$
2.00Pro forma

$
1.86Diluted net income per share:As reported

$
1.74Pro forma

$
1.62   Stock
    Options
        2007

2006

2005Risk free interest rate

3.6%

4.8% - 5.2%

4.3% - 4.5%Expected dividend yield





Expected term (years)

1.0

5.1 - 9.1

3.9 - 5.6Expected volatility

25.5%

56.1% - 60.7%

32.3% - 62.0%  72




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Weighted


RemainingAverage


ContractualShares


Exercise Price


TermOutstanding  beginning of year


3,767


$
14.96Granted






Exercised






Forfeited


(33
)


16.27Expired


(180
)


20.91Outstanding  end of year


3,554



14.64



3.6Vested and expected to vest  end of year


3,535



14.64



3.6Exercisable  end of year


3,502



14.56



3.5         Restricted
    Stock
   73




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Weighted AverageGrant DateShares


Fair ValueNonvested, January 1, 2005


531


$
13.18Granted


412



26.67Vested


(101
)


13.12Canceled






Nonvested, December 31, 2005


842



19.79Granted


45



35.75Vested


(37
)


24.48Canceled


(16
)


25.22Nonvested, December 31, 2006


834



20.34Granted


88



33.87Vested


(288
)


14.01Canceled


(108
)


27.38Nonvested, December 31, 2007


526



24.64         Restricted
    Stock Units
   74




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Repurchase
    of Outstanding Shares
  and/or
  Stockholder
    Rights Agreement
       75




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  17.
    Net
    (Loss) Income Per Common Share    Years Ended December 31,2007


2006


2005(Restated)


(Restated)Numerator for basic net (loss) income per share:Net (loss) income

$
(70,275
)

$
15,284


$
83,064Numerator for diluted net (loss) income per share:Net (loss) income

$
(70,275
)

$
15,284


$
83,064Assumed conversion of convertible notes, net of tax










4,376Diluted net (loss) income

$
(70,275
)

$
15,284


$
87,440Denominator:Denominator for basic net (loss) income per common
    share  weighted average shares


49,851



48,947



41,456Effect of dilutive securities:Employee stock options and restricted stock






1,775



2,234Convertible notes










6,695Denominator for diluted net (loss) income per common
    share  weighted average shares plus assumed
    conversions


49,851



50,722



50,385Basic net (loss) income per common share

$
(1.41
)

$
0.31


$
2.00Diluted net (loss) income per common share


(1.41
)


0.30



1.74     18.
    Commitments
    and Contingencies  Leases
    for Office Space
     76




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Leases
    for Operating Communities
  and/or
      2008

$
68,5322009


71,8112010


72,1852011


69,4302012


68,843Thereafter


376,972$
727,773   Letters
    of Credit
    Land
    Purchase Commitments
   77




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Guarantees
  Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  and/or
    FIN 45


FAS 5


TotalLiability


Liability


Liabilityfor Future


for Future


for FutureMaximum Potential


Fundings at


Fundings at


Fundings at


FundingsAmount of Future


December 31,


December 31,


December 31,


duringGuarantee Type

Fundings


2007


2007


2007


2007Debt repayment

$
16,832


$
785


$



$
785


$
Operating deficit


Uncapped



1,371



42,023



43,394



5,829Income support


Uncapped



960



16,525



17,485



Other










4,150



4,150



Total





$
3,116


$
62,698


$
65,814


$
5,829      78




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  The
    Fountains
    Germany
    Venture
  lease-up lease-up
  Legal
    Proceedings
  Trinity
    OIG Investigation and Qui Tam Action
    qui tam qui tam Qui tam qui tam Qui tam
 79




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  United States ex rel. Joyce Roberts, et al., v. KRG
    Capital, LLC, et al.
      IRS
    Audit
    SEC
    Investigation
    Putative
    Class Action Litigation
  United
    Food & Commercial Workers Union Local 880-Retail Food
    Employers Joint Pension Fund, et al. v. Sunrise Senior
    Living, Inc., et al. First New York Securities, L.L.C. v. Sunrise Senior
    Living, Inc., et al.
 80




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  In re Sunrise Senior Living, Inc. Securities
    Litigation No. 07-CV-00102-RBW) Rule 10b-5
  Putative
    Shareholder Derivative Litigation
  Brockton Contributory Retirement System v. Paul J.
    Klaassen, et al. Catherine Molner v. Paul J. Klaassen, et al. 1/31/2007); Robert Anderson v. Paul J. Klaassen, et al. 2/5/2007).
  Peter V. Young, et al. v. Paul J. Klaassen, et al. No. 2770-N
 81




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Nicholas Von Guggenberg v.
    Paul J. Klaassen, et al. 8/11/2006); Catherine Molner v. Paul J. Klaassen, et al. 9/6/2006). Von Guggenberg Molner Von Guggenberg Molner
  Resolved
    Litigation
    Other
    Pending Lawsuits and Claims
    19.
    Related-Party
    Transactions  Sunrise
    Senior Living Real Estate Investment Trust
     82




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  30-year
  lease-up
      Years Ended December 31,2007


2006


2005Management fees

$
5,518


$
16,448


$
11,443Reimbursed contract services


77,277



130,455



70,525Gain on sale and development of real estate


8,854



43,223



575Interest income received from Sunrise REIT convertible debentures










1,028Interest incurred on borrowings from Sunrise REIT


414



3,312



2,611Sunrises share of earnings and return on investment in
    unconsolidated communities


180



4,326



718   Sunrise
    Senior Living Foundation
  and/or son-in-law
 83




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    12-month
     84




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Fairfax
    Community Ground Lease
  99-year
  Corporate
    Use of Residence
  99-year 99-year
  Purchase
    of Condominium Unit
   85




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Service
    Evaluators Incorporated
  brother-in-law sister-in-law
  on-site on-site on-site
  Greystone
    Earnout Payments
    Unconsolidated
    Ventures
      Aetna
    Healthcare
   86




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Purchase
    of Aircraft Interest by Mr. Klaassen
    20.
    Employee
    Benefit Plans  401k
    Plan
    Sunrise
    Executive Deferred Compensation Plans
      Chief
    Executive Officer Deferred Compensation Plan
  12-year
  21.
    Fair
    Value of Financial Instruments       87




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      22.
    Information
    about Sunrises Segments      For the Year Ended and as of December 31, 2007Domestic


Greystone


International


Trinity


TotalOperating revenues

$
1,491,373


$
16,471


$
77,555


$
67,151


$
1,652,550Interest income


8,144



208



1,162



380



9,894Interest expense


5,521







1,123



3



6,647Sunrises share of earnings and return on investment in
    unconsolidated communities


31,812



1,600



75,535







108,947Depreciation and amortization


47,843



4,068



886



2,483



55,280(Loss) income before taxes


(13,433
)


(19,693
)


23,984



(70,392
)


(79,534
)Investments in unconsolidated communities


80,423







16,750







97,173Goodwill


121,828



39,025







8,883



169,736Segment assets


1,476,420



61,312



247,499



13,366



1,798,597Expenditures for long-lived assets


185,924



4,680



49,047



658



240,309Deferred gains on the sale of real estate and deferred revenues


19,793



54,574











74,367   88




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  For the Year Ended and as of December 31, 2006
    (Restated)Domestic


Greystone


International


Trinity


TotalOperating revenues

$
1,575,108


$
16,920


$
38,844


$
20,209


$
1,651,081Interest income


8,799



194



483



101



9,577Interest expense


5,732







462



10



6,204Sunrises share of earnings (losses) and return on
    investment in unconsolidated communities


54,950







(11,248
)






43,702Depreciation and amortization


44,115



3,462



240



831



48,648Income (loss) before taxes


113,619



(14,490
)


(66,768
)


135



32,496Investments in unconsolidated communities


93,327







10,945







104,272Goodwill


121,827



36,525







59,663



218,015Segment assets


1,571,769



55,206



138,091



83,235



1,848,301Expenditures for long-lived assets


137,396



714



49,120



1,425



188,655Deferred gains on the sale of real estate and deferred revenue


23,811



28,147











51,958   For the Year Ended and as of December 31, 2005
    (Restated)Domestic


Greystone


International


TotalOperating revenues

$
1,472,836


$
10,413


$
27,773


$
1,511,022Interest income


4,855



69



1,307



6,231Interest expense


9,368







2,514



11,882Sunrises share of earnings (losses) and return on
    investment in unconsolidated communities


31,919







(18,447
)


13,472Depreciation and amortization


40,791



1,992



198



42,981Income (loss) before taxes


149,543



(8,180
)


(6,143
)


135,220Investments in unconsolidated communities


52,962



150



10,228



63,340Goodwill


124,256



29,072







153,328Segment assets


1,437,365



67,076



83,344



1,587,785Expenditures for long-lived assets


112,153



1,514



19,190



132,857Deferred gains on the sale of real estate and deferred revenue


15,192



13,034







28,226      89




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            23.
    Accounts
    Payable and Accrued Expenses    December 31,2007


2006Accounts payable and accrued expenses

$
71,240


$
65,460Accrued salaries and bonuses


64,441



47,346Accrued employee health and other benefits


67,096



64,487Accrued legal, audit and professional fees


37,555



9,056Other accrued expenses


35,030



29,738$
275,362


$
216,087   24.
    Subsequent
    Events  Bank
    Credit Facility
    
    modified to August 20, 2008 the delivery date for the
    unaudited financial statements for the quarter ending
    March 31, 2008;
    modified to September 10, 2008 the delivery date for the
    unaudited financial statements for the quarter ending
    June 30, 2008; 90




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    temporarily (in February 2008) and then permanently (in
    July 2008) reduced the maximum principal amount available
    under the Bank Credit Facility to $160.0 million; and
    waived compliance with financial covenants in the Bank Credit
    Facility for the year ended December 31, 2007 and for the
    fiscal quarters ended March 31, 2008 and June 30,
    2008, and waived compliance with the leverage ratio and fixed
    charge coverage ratio covenants for the fiscal quarter ending
    September 30, 2008.  Form 10-K
  
    we must maintain liquidity of not less than $50.0 million,
    composed of availability under the Bank Credit Facility plus up
    to not more than $50.0 million in unrestricted cash and
    cash equivalents (tested as of the end of each calendar month),
    and any unrestricted cash and cash equivalents in excess of
    $50.0 million must be used to pay down the outstanding
    borrowings under the Bank Credit Facility;
    we are generally prohibited from declaring or making directly or
    indirectly any payment in the form of a stock repurchase or
    payment of a cash dividend or from incurring any obligation to
    do so; and
    the borrowing rate in US dollars, which was increased effective
    as of February 1, 2008, will remain LIBOR plus 2.75% or the
    Base Rate (the higher of the Federal Funds Rate plus 0.50% and
    Prime) plus 1.25% (through the end of the then-current interest
    period).      New
    Mortgage Debt
  30-year
   91




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      3-month
  12-months
           92




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Senior
    Living Condominium Developments
    Legal
    and Accounting Fees Related to Accounting Review, Special
    Independent Committee Inquiry and Related Matters
    Real
    Estate Gains
   93




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  25.
    Quarterly
    Results of Operations (Unaudited)    Q1


Q2


Q3


Q4(2)


Total2007Operating revenue

$
395,887


$
408,018


$
429,512


$
419,133


$
1,652,550Net income (loss)


7,480



7,992



38,230



(123,977
)


(70,275
)Basic net income (loss) per common share

$
0.15


$
0.16


$
0.77


$
(2.48
)

$
(1.41
)Diluted net income (loss) per common share


0.15



0.15



0.74



(2.48
)


(1.41
)2006 (as restated)Operating revenue

$
377,341


$
464,717


$
379,377


$
429,646


$
1,651,081Net income (loss)


901



47,071



15,120



(47,808
)


15,284Basic net income (loss) per common share

$
0.02


$
0.95


$
0.30


$
(0.96
)

$
0.31Diluted net income (loss) per common share


0.02



0.91



0.29



(0.96
)


0.302006 (as previously reported)Operating revenue

$
376,671


$
464,047


$
378,706


$
428,975


$
1,648,399Net income (loss)


2,320



48,685



16,304



(46,952
)


20,357Basic net income (loss) per common share

$
0.05


$
0.98


$
0.33


$
(0.94
)

$
0.42Diluted net income (loss) per common share


0.05



0.95



0.32



(0.94
)


0.40     (1)
    
    The sum of per share amounts for the quarters may not equal the
    per share amount for the year due to a variance in shares used
    in the calculations or rounding.(2)
    
    During the fourth quarter of 2007, we recorded an impairment
    charge of $56.7 million relating to Trinitys goodwill
    and intangible assets and a $21.6 million charge to
    write-off our investment in Aston Gardens.   94




---



##### 



REPORT OF
    INDEPENDENT AUDITORS  To the
    Partners of
          
    95




---



##### 



PS UK
    INVESTMENT (JERSEY) LIMITED PARTNERSHIP
  CONSOLIDATED
    INCOME STATEMENT
  For the Year Ended December 31,Notes


2007


2006


2005(Unaudited)


(Unaudited)Operating revenue:Resident fees





£
14,176,377


£
6,583,409


£
Total operating revenue






14,176,377



6,583,409



Operating expenses:Facility operating expenses






12,191,116



7,256,183



Facility development and pre-rental expenses






6,394,516



4,535,897



2,438,240General and administrative expenses






597,968



131,926



112,217Facility lease expenses






26,042



40,626



Management fees


6



775,441



355,960



Depreciation


3



3,324,095



2,084,776



595Total operating expenses






(23,309,178
)


(14,405,368
)


(2,551,052
)Net operating loss






(9,132,801
)


(7,821,959
)


(2,551,052
)Other income/(expense):Financial income






973,715



194,676



132,916Interest expense






(11,459,235
)


(4,425,643
)


Loss on extinguishment of debt






(238,122
)






Foreign exchange gain






5,808







Gain on sale of subsidiaries


5



114,437,152







Total other income/(expense)






103,719,318



(4,230,967
)


132,916Profit/(loss) before tax






94,586,517



(12,052,926
)


(2,418,136
)Income tax expense


9











Profit/(loss) for the year after tax


10


£
94,586,517


£
(12,052,926
)

£
(2,418,136
)    96




---



##### 



PS UK
    INVESTMENT (JERSEY) LIMITED PARTNERSHIP
  CONSOLIDATED
    BALANCE SHEET
  At December 31,Notes


2007


2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents





£
20,421,691


£
8,848,123Accounts receivable






344,149



531,713Net receivables due from affiliates


6



336,986



Prepaid expenses and other current assets






2,560,883



1,504,638Total current assets






23,663,709



10,884,474Non current assetsProperty and equipment


3



216,704,854



285,285,526Restricted cash


5



11,588,218



Total non current assets






228,293,072



285,285,526Assets held for sale


4







4,184,152Total assets





£
251,956,781


£
300,354,152LIABILITIES AND PARTNERS CAPITALCurrent liabilitiesTrade payables





£
100,018


£
328,467Accrued expenses


7



9,479,017



8,400,856Deferred revenue






309,658



220,758Net payables due to affiliates


6







4,084,417Other current liabilities


5



4,487,885



Current maturities of long-term debt


8



19,452,506



2,923,000Total current liabilities






33,829,084



15,957,498Non current liabilitiesPartner loan


6







1,275,000Long-term debt, net of finance costs


8



172,494,910



167,080,122Derivative financial instruments






529,885



173,024,795



168,355,122Partners capital


10



45,102,902



116,041,532Total non current liabilities






218,127,697



284,396,654Total liabilities and partners capital





£
251,956,781


£
300,354,152    97




---



##### 



PS UK
    INVESTMENT (JERSEY) LIMITED PARTNERSHIP
  CONSOLIDATED
    STATEMENT OF CHANGES IN PARTNERS CAPITAL
  For the Year Ended 31 December 2007Partners


Accumulated





Foreign





TotalCapital


Surplus/


Other


Currency


Distribution


PartnersContributions


(Deficit)


Reserves


Translation


to Partners


CapitalAt 1 January 2005 (unaudited)

£
20,814,613


£
(1,713,007
)

£
-


£
740


£



£
19,102,346Foreign currency translation














(919
)






(919
)Total income and expense for the year recognized directly in
    equity














(919
)






(919
)Loss for the year






(2,418,136
)














(2,418,136
)Total income and expense for the year






(2,418,136
)






(919
)






(2,419,055
)Partner contributions


20,084,077



















20,084,077At 31 December 2005 (unaudited)


40,898,690



(4,131,143
)






(179
)






36,767,368Foreign currency translation














(305
)






(305
)Revaluation of property and equipment










70,636,697











70,636,697Total income and expense for the year recognized directly in
    equity










70,636,697



(305
)






70,636,392Loss for the year






(12,052,926
)














(12,052,926
)Total income and expense for the year






(12,052,926
)


70,636,697



(305
)






58,583,466Partner contributions


20,690,698



















20,690,698At 31 December 2006 (unaudited)


61,589,388



(16,184,069
)


70,636,697



(484
)






116,041,532Cash flow hedge (note 11)










(529,885
)










(529,885
)Distribution to partners


















(159,675,550
)


(159,675,550
)Disposal of property and equipment revaluation










(70,636,697
)










(70,636,697
)Revaluation of property and equipment










39,079,729











39,079,729Total income and expense for the year recognized directly in
    equity










(32,086,853
)






(159,675,550
)


(191,762,403
)Profit for the year






94,586,517















94,586,517Total income and expense for the year






94,586,517



(32,086,853
)






(159,675,550
)


(97,175,886
)Partner contributions


26,237,256



















26,237,256At 31 December 2007

£
87,826,644


£
78,402,448


£
38,549,844


£
(484
)

£
(159,675,550
)

£
45,102,902    98




---



##### 



PS UK
    INVESTMENT (JERSEY) LIMITED PARTNERSHIP
  CONSOLIDATED
    STATEMENT OF CASH FLOWS
  For the Year Ended December 31,2007


2006


2005(Unaudited)


(Unaudited)Operating activitiesProfit/(loss) for the year before tax

£
94,586,517


£
(12,052,926
)

£
(2,418,136
)Adjustments to reconcile profit/(loss) for the year before tax
    to net cash flows from operating activities:Net finance costs


10,717,833



4,230,967



(132,916
)Depreciation


3,324,095



2,084,776



595Provision for bad debt


29,819



16,658



Gain on sale of subsidiaries


(114,437,152
)






Loss on extinguishment of debt


(238,122
)






Changes in assets and liabilities:Accounts receivable


157,745



(463,246
)


Prepaid expenses and other current assets


(1,056,246
)


(1,043,983
)


1,010,057Trade payables and accrued expenses


849,712



268,812



7,082,358Deferred revenue


88,880



220,758



Other current liabilities


4,487,885







Net cash flows (used in)/from operating activities


(1,489,034
)


(6,738,184
)


5,541,958Investing activitiesIncrease in restricted cash


(11,588,218
)






Purchase of property and equipment


(89,329,492
)


(94,680,104
)


(93,843,506
)Proceeds from sale of subsidiaries


245,381,485







Interest paid and capitalised


(4,695,605
)


(3,572,894
)


(2,219,469
)Interest received


973,715



194,676



132,916Net cash flows from/(used in) investing activities


140,741,885



(98,058,322
)


(95,930,059
)Financing activitiesContributions by partners


26,237,256



20,690,698



20,084,077Distributions to partners


(159,675,550
)






Net (repayments to)/borrowings from affiliates


(4,415,153
)


940,315



(616,500
)Net repayments to partners


(1,275,000
)






Borrowings of long-term debt


148,153,886



93,235,075



69,937,922Repayments of long-term debt


(126,918,499
)






Interest paid and expensed


(9,785,802
)


(4,279,290
)


Net cash flows (used in)/from financing activities


(127,678,862
)


110,586,798



89,405,499Net increase/(decrease) in cash and cash equivalents before
    effect of exchange rate on cash


11,573,989



5,790,292



(982,602
)Effect of exchange rate on cash


(421
)


(305
)


(919
)Net increase/(decrease) in cash and cash equivalents


11,573,568



5,789,987



(983,521
)Cash and cash equivalents at beginning of year


8,848,123



3,058,136



4,041,657Cash and cash equivalents at end of year

£
20,421,691


£
8,848,123


£
3,058,136  99




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes
    to the Consolidated Financial Statements
 At 31 December 2007
  1.
    Organization    2.1
    Basis of
    Preparation    Statement
    of Compliance
    Principles
    of Consolidation
    2.2  Changes
    in Accounting Policies
  IFRS 7
    Financial Instruments: Disclosures
    Amendment
    to IAS Presentation of Financial Statements  Capital
    Disclosures
   100




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  2.3  Significant
    Accounting Estimates
  Estimation
    Uncertainty
    Deferred
    Tax Assets
    2.4  Summary
    of Significant Accounting Policies
  Cash
    and Cash Equivalents
    Property
    and Equipment
         101




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Impairment
    of Assets
    Restricted
    Cash
    Revenue
    Recognition
    Operating
    Expenses
    
    Facility operating expenses including labour, food, marketing
    and other direct costs of operating the communities.
    Facility development and pre-rental expenses associated with the
    development and marketing of communities prior to opening.
    General and administrative expense related to costs of the
    Partnership itself.
    Management fees paid to subsidiaries of Sunrise for managing the
    communities (note 6).  Taxes
  Income
    and Corporation Taxes
    Sales
    Taxes
    
    where the sales tax incurred on a purchase of assets or services
    is not recoverable from the taxation authority, in which case
    the sales tax is recognised as part of the cost of acquisition
    of the asset or as part of the expense item as
    applicable; and
    receivables and payables that are stated with the amount of
    sales tax included.   102




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Deferred
    Income Tax
      
    where the deferred income tax liability arises from the initial
    recognition of goodwill or of an asset or liability in a
    transaction that is not a business combination and, at the time
    of the transaction, affects neither the accounting profit nor
    taxable profit or loss; and
    in respect of taxable temporary differences associated with
    investments in subsidiaries, associates and interests in joint
    ventures, where the timing of the reversal of the temporary
    differences can be controlled and it is probable that the
    temporary differences will not reverse in the foreseeable future.    
    where the deferred income tax asset relating to the deductible
    temporary differences arises from the initial recognition of an
    asset or liability in a transaction that is not a business
    combination and, at the time of the transaction, affects neither
    the accounting profit nor taxable profit or loss; and
    in respect of deductible temporary differences associated with
    investments in subsidiaries, associates and interests in joint
    ventures, deferred income tax assets are recognised only to the
    extent that it is probable that the temporary differences will
    reverse in the foreseeable future and taxable profit will be
    available against which the temporary differences can be
    utilized.        Derivative
    Financial Instruments and Hedging
   103




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
        
    fair value hedges when hedging the exposure to changes in the
    fair value of a recognised asset or liability or an unrecognised
    firm commitment (except for foreign currency risk); or
    cash flow hedges when hedging exposure to variability in cash
    flows that is either attributable to a particular risk
    associated with a recognised asset or liability or a highly
    probably forecast transaction or the foreign currency risk in a
    unrecognised firm commitment; or
    hedges of a net investment in a foreign operation.      Cash Flow
    Hedges
        Foreign
    Currency Translation
     104




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Borrowing
    Costs
    
    Expenditure for the asset and borrowing costs are being
    incurred; and
    Activities necessary to prepare the asset for its intended use
    are in progress.      New
    Standards and Interpretations not Applied
    IASB (IAS / IFRSs)

Effective dateIFRS 2

Amendment to IFRS 2  Vesting Conditions and
    Cancellations

1 January 2009IFRS 3

Business Combinations (revised January 2008)

1 July 2009IFRS 8

Operating Segments

1 January 2009IAS 1

Presentation of Financial Statements (revised September 2007)

1 January 2009IAS 23

Borrowing Costs (revised March 2007)

1 January 2009IAS 32

Amendment  Financial Instruments: Presentation

I January 2009IAS 27

Consolidated and Separate Financial Statements (revised January
    2008)

1 July 2009IAS 28

Amendment  Investments in Associates

1 July 2009IAS 31

Amendment  Interests in Joint Ventures

1 July 2009   IFRIC

Effective dateIFRIC 12

Service Concession Arrangements

1 January 2008IFRIC 13

Customer Loyalty Programmes

1 July 2008IFRIC 14

IAS 19  The Limit on a Defined Benefit Asset, Minimum
    Funding Requirements and their Interaction

1 January 2008IFRIC 15

Agreements for the Construction of Real Estate

1 January 2009        105




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  3.  Property
    and Equipment
    Land and


Furniture and


ConstructionBuildings


Equipment


in Progress


TotalAs at 1 January 2007, net of accumulated depreciation and
    exchange adjustment

£
191,135,829


£
7,504,926


£
86,644,771


£
285,285,526Additions, including interest capitalised


72,184,932



3,175,714



18,664,452



94,025,098Disposals, net of revaluations and accumulated depreciation


(190,318,356
)


(7,078,522
)






(197,396,878
)Revaluations


37,231,561



1,848,168







39,079,729Depreciation charge for the year


(2,337,772
)


(986,323
)






(3,324,095
)Transfer of net deferred financing costs










(964,526
)


(964,526
)As at 31 December 2007, net of accumulated depreciation and
    exchange adjustment

£
107,896,194


£
4,463,963


£
104,344,697


£
216,704,854   Land and


Furniture and


ConstructionBuildings


Equipment


in Progress


TotalAs at 1 January 2007Cost

£
192,580,010


£
8,146,986


£
86,644,771


£
287,371,767Accumulated depreciation


(1,444,181
)


(641,985
)






(2,086,166
)Exchange adjustment






(75
)






(75
)Net carrying amount

£
191,135,829


£
7,504,926


£
86,644,771


£
285,285,526As at 31 December 2007Cost or fair value


108,254,315



5,300,970



104,344,697



217,899,982Accumulated depreciation


(358,121
)


(837,007
)






(1,195,128
)Net carrying amount

£
107,896,194


£
4,463,963


£
104,344,697


£
216,704,854       Land and


Furniture andBuildings


Equipment


TotalCost

£
71,477,319


£
2,973,916


£
74,451,235Accumulated depreciation


(832,008
)


(358,120
)


(1,190,128
)Net carrying amount

£
70,645,311


£
2,615,796


£
73,261,107  106




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Land and


Furniture and


ConstructionBuildings


Equipment


in Progress


TotalAs at 1 January 2006, net of accumulated depreciation and
    exchange adjustment

£



£
1,344


£
124,087,897


£
124,089,241Additions, including interest capitalised


125,174,145



4,913,341



(31,834,492
)


98,252,994Revaluations


67,405,865



3,230,832







70,636,697Depreciation charge for the year


(1,444,181
)


(640,595
)






(2,084,776
)Transfer of assets held for sale










(4,184,152
)


(4,184,152
)Transfer of net deferred financing costs










(1,424,482
)


(1,424,482
)Exchange adjustment






4







4As at 31 December 2006, net of accumulated depreciation and
    exchange adjustment

£
191,135,829


£
7,504,926


£
86,644,771


£
285,285,526As at 1 January 2006Cost






2,813



124,087,897



124,090,710Accumulated depreciation






(1,390
)






(1,390
)Exchange adjustment






(79
)






(79
)Net carrying amount

£



£
1,344


£
124,087,897


£
124,089,241As at 31 December 2006Cost or fair value


192,580,010



8,146,986



86,644,771



287,371,767Accumulated depreciation


(1,444,181
)


(641,985
)






(2,086,166
)Exchange adjustment






(75
)






(75
)Net carrying amount

£
191,135,829


£
7,504,926


£
86,644,771


£
285,285,526      107




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Furniture and


ConstructionEquipment


in Progress


TotalAs at 1 January 2005, net of accumulated depreciation and
    exchange adjustment

£
1,999


£
28,024,862


£
28,026,861Additions, including interest capitalised






96,063,035



96,063,035Depreciation charge for the year


(595
)






(595
)Exchange adjustment


(60
)






(60
)As at 31 December 2005, net of accumulated depreciation and
    exchange adjustment

£
1,344


£
124,087,897


£
124,089,241As at 1 January 2005Cost


2,813



28,024,862



28,027,675Accumulated depreciation


(795
)






(795
)Exchange adjustment


(19
)






(19
)Net carrying amount

£
1,999


£
28,024,862


£
28,026,861As at 31 December 2005Cost


2,813



124,087,897



124,090,710Accumulated depreciation


(1,390
)






(1,390
)Exchange adjustment


(79
)






(79
)Net carrying amount

£
1,344


£
124,087,897


£
124,089,241     4.
    Assets
    Held for Sale    5.
    Sale of
    Subsidiaries   108




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
          2007


2006


2005(Unaudited)


(Unaudited)Revenue

£
18,561,984


£
13,739,973


£
Expenses


(19,321,416
)


(19,465,988
)


(2,183,985
)Net operating loss


(759,432
)


(5,726,015
)


(2,183,985
)Other (expense)/income


(7,137,281
)


(4,343,129
)


65,147Book loss before taxes


(7,896,713
)


(10,069,144
)


(2,118,838
)Taxes payable related to book income:Related to pre-tax profit/(loss)(1)










Related to gain on disposal(2)










Total taxes on book income for the subsidiaries sold

£



£



£
     (1)
    
    No taxes are due on operations, as the subsidiaries are in a tax
    loss position, and there is a net operating loss carry-forward
    of £13,717,412.(2)
    
    Note that the gain on disposal of the subsidiaries was
    recognized at the level of PS UK Sarl, and no Luxembourg tax was
    due on that gain.    2007


2006


2005(Unaudited)


(Unaudited)Operating

£
(1,182,337
)

£
(8,235,124
)

£
4,915,227Investing


146,018,109



(28,283,577
)


(72,225,290
)Financing


(149,412,223
)


40,585,176



64,396,505Net cash (outflow)/inflow

£
(4,576,451
)

£
4,066,475


£
(2,913,558
)  109




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  6.
    Affiliate
    Transactions    Country of

% Equity InterestName

Incorporation

2007


2006(Unaudited)PS UK Sarl

Luxembourg


100



100Property Companies:Sunrise of Fleet Limited

Jersey


0



100Sunrise of Cardiff Limited

Jersey


100



100Sunrise of Guildford Limited

Jersey


0



100Sunrise of Westbourne Limited

Jersey


0



100Sunrise of Edgbaston Limited

Jersey


0



100Sunrise of Bassett Limited

Jersey


0



100Sunrise of Mobberley Limited

Jersey


0



100Sunrise of Esher Limited

Jersey


0



100Sunrise of Solihull Limited

Jersey


100



100Sunrise of Chorleywood Limited

Jersey


100



100Sunrise of Weybridge Limited

Jersey


100



100Sunrise of Bristol Leigh Woods Limited

Jersey


100



100Sunrise of Brooklands Limited

Jersey


100



100Sunrise of Tettenhall Limited

Jersey


100



100Sunrise of Chichester Limited

Jersey


100



100Sunrise of Morningside Limited

Jersey


100



100Sunrise of Sonning Limited

Jersey


100



100Sunrise of Sevenoaks Limited

Jersey


100



100Sunrise of Southbourne Limited

Jersey


100



100Sunrise of Eastbourne Limited

Jersey


100



100Sunrise of Haywards Heath Limited

Jersey


0



100Sunrise of Surbiton Limited

Jersey


100



100Sunrise of Winchester Limited

Jersey


100



100Sunrise of Bramhall II Limited

Jersey


100



100Sunrise of Beaconsfield Limited

Jersey


100



100Sunrise of Bagshot II Limited

Jersey


100



0Sunrise of Brighton Limited

Jersey


100



0Operating Companies:Sunrise Operations Fleet Limited

England and Wales


0



100Sunrise Operations Cardiff Limited

England and Wales


100



100Sunrise Operations Guildford Limited

England and Wales


0



100Sunrise Operations Westbourne Limited

England and Wales


0



100Sunrise Operations Edgbaston Limited

England and Wales


0



100Sunrise Operations Bassett Limited

England and Wales


0



100Sunrise Operations Mobberley Limited

England and Wales


0



100Sunrise Operations Esher Limited

England and Wales


0



100Sunrise Operations Solihull Limited

England and Wales


100



100Sunrise Operations Chorleywood Limited

England and Wales


100



100Sunrise Operations Weybridge Limited

England and Wales


100



0Sunrise Operations Tettenhall Limited

England and Wales


100



100Sunrise Operations Southbourne Limited

England and Wales


100



100Sunrise Operations Eastbourne Limited

England and Wales


100



0Sunrise Operations Morningside Limited

England and Wales


100



0Sunrise Operations Bramhall II Limited

England and Wales


100



0Sunrise Operations Sonning Limited

England and Wales


100



0Sunrise Operations Beaconsfield Limited

England and Wales


100



0    110




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Other
    Related Parties
    2007


2006(Unaudited)Amounts due (from)/to other related partiesSunrise and its wholly owned subsidiaries

£
(372,366
)

£
3,964,787General Partner


(40,801
)


(40,801
)Home Help Companies:Sunrise Home Help Fleet Limited






24,894Sunrise Home Help Westbourne Limited






23,315Sunrise Home Help Guildford Limited






(24,987
)Sunrise Home Help Edgbaston Limited






23,457Sunrise Home Help Bassett Limited






32,149Sunrise Home Help Mobberley Limited






27,354Sunrise Home Help Esher Limited






54,249Sunrise Home Help Cardiff Limited


(5,275
)


Sunrise Home Help Tettenhall Limited


14,447



Sunrise Home Help Solihull Limited


46,199



Sunrise Home Help Chorleywood Limited


20,810



£
(336,986
)

£
4,084,417   Sunrise
    and its Wholly Owned Subsidiaries
         111




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  General
    Partner
    Home
    Help Companies
    Partner
    Loan
    7.
    Accrued
    Expenses    2007


2006(Unaudited)Contractor accruals including retainage

£
7,411,190


£
8,050,741Interest payable on mortgage debt


1,369,186



Other accrued expenses


698,641



350,115£
9,479,017


£
8,400,856   8.
    Long-Term
    Debt and Commitments   112




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Current

Effective Interest Rate %


Maturity


2007


2006(Unaudited)£1,862,000 bank loan


LIBOR + 2.00



2007


£



£
1,862,000£12,195,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007







221,000£15,200,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007







250,000£18,536,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007







295,000£16,298,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007







295,000£63,945,752 bank loan


7.87 to 8.25



2008



19,227,570



£19,500,000 bank loan


LIBOR + 1.75



2008



224,936



£
19,452,506


£
2,923,000Non-current£12,195,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007 - 2011







11,859,467£15,200,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007 - 2011







14,803,173£18,536,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007 - 2011







18,059,257£16,298,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2007 - 2012







15,797,234£63,945,752 bank loan


7.87 to 8.25



2008 - 2010



32,456,816



£19,500,000 bank loan


LIBOR + 1.75



2008 - 2011



17,216,880



12,378,738£20,346,000 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2008 - 2012







17,164,974£15,300,000 bank loan


LIBOR + 1.25 to LIBOR + 2.50



2009 - 2010



15,152,016



12,002,214£18,451,680 bank loan


LIBOR + 1.25 to LIBOR + 1.75



2009 - 2011



13,313,696



3,040,186£19,677,500 bank loan


LIBOR + 1.25 to LIBOR + 2.50



2009 - 2011



17,642,085



4,198,000£21,034,664 bank loan


LIBOR + 1.25 to LIBOR + 1.75



2009 - 2012



10,051,651



£15,320,712 bank loan


LIBOR + 1.25 to LIBOR + 2.25



2009 - 2013



15,090,332



6,401,440£15,953,000 bank loan


LIBOR + 1.35 to LIBOR + 1.75



2010







15,482,341£17,157,644 bank loan


LIBOR + 2.15



2010







15,299,298£19,472,082 bank loan


LIBOR + 0.85 to LIBOR + 1.50



2010



6,109,329



£21,428,205 bank loan


LIBOR + 0.85 to LIBOR + 1.50



2010



7,952,225



£16,729,000 bank loan


LIBOR + 1.35 to LIBOR + 1.75



2011



16,253,740



11,321,900£22,252,592 bank loan


LIBOR + 1.35 to LIBOR + 1.75



2011



19,487,621



9,271,900£20,664,096 bank loan


LIBOR + 1.25 to LIBOR + 1.50



2012



1,768,519



£
172,494,910


£
167,080,122           113




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
                                           114




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
            Commitments
    9.
    Income
    Taxes      2007


2006


2005(Unaudited)


(Unaudited)Partnership income

£
88,569,571


£
436,676


£
236,951Operating and property company profit/(loss)


6,016,946



(12,489,602
)


(2,655,087
)Consolidated net profit/(loss)

£
94,586,517


£
(12,052,926
)

£
(2,418,136
)     2007


2006(Unaudited)Deferred tax assetsNet operating losses for Operating and Property Companies

£
3,768,480


£
4,306,775Pre-rental expense carry-forward


397



327,584Total deferred tax assets


3,768,877



4,634,359Deferred tax liabilities Capital allowances


(88,563
)


(158,710
)Total deferred tax liabilities


(88,563
)


(158,710
)Net deferred tax asset

£
3,680,314


£
4,475,649      115




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
            10.
    Partners
    Capital       116




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Sunrise LP


SHIP


SunCo


TotalBalance at 1 January 2005  unaudited

£
3,820,468


£
15,281,877


£
1


£
19,102,346Contributions


4,016,816



16,067,261







20,084,077Net loss for the year


(483,627
)


(1,934,509
)






(2,418,136
)Foreign currency translation adjustment


(184
)


(735
)






(919
)Balance at 1 January 2006  unaudited


7,353,473



29,413,894



1



36,767,368Contributions


4,138,139



16,552,559







20,690,698Net loss for the year


(2,410,585
)


(9,642,341
)






(12,052,926
)Other reserves


14,127,339



56,509,358







70,636,697Foreign currency translation adjustment


(61
)


(244
)






(305
)Balance at 31 December 2006  unaudited


23,208,305



92,833,226



1



116,041,532Contributions


5,247,452



20,989,804







26,237,256Net profit for the year


18,917,303



75,669,214







94,586,517Other reserves


(6,417,371
)


(25,669,482
)






(32,086,853
)Distributions


(37,638,798
)


(113,064,757
)


(8,971,995
)


(159,675,550
)At 31 December 2007

£
3,316,891


£
50,758,005


£
(8,971,994
)

£
45,102,902   11.
    Financial
    Risk Management Objectives and Policies  Interest
    Rate Risk
  lease-up
       117




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Year
    Ended 31 December 2007
  On


Less Than


Three to


One to


More ThanDemand


Three Months


Twelve Months


Five Years


Five Years


TotalInterest bearing loans and borrowings

£



£
2,417,845


£
28,363,541


£
186,260,389


£
13,093,982


£
230,135,757Trade payables


100,018



















100,018Accrued expenses






6,929,574



1,131,609



1,417,834







9,479,017£
100,018


£
9,347,419


£
29,495,150


£
187,678,223


£
13,093,982


£
239,714,792   Year
    Ended 31 December 2006
  On


Less Than


Three to


One to


More ThanDemand


Three Months


Twelve Months


Five Years


Five Years


TotalInterest bearing loans and borrowings

£



£
1,905,293


£
10,507,059


£
175,256,666


£
34,273,990


£
221,943,008Trade payables


328,467



















328,467Accrued expenses






5,564,572



753,532



2,082,752







8,400,856Partner loan


















1,275,000



1,275,000£
328,467


£
7,469,865


£
11,260,591


£
177,339,418


£
35,548,990


£
231,947,331   Hedging
    Activities
  Cash Flow
    Hedges
    3-month
  Credit
    Risk
    Capital
    Management
     118




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
      2007


2006(Unaudited)General partnership expenses

£
45,546


£
116,892Initial site investigation costsInitial investment approved projects:Sunrise of Bath Limited


(11,065
)


194,197Sunrise of Bristol Leigh Woods Limited


(2,263,093
)


471,056Sunrise of Brooklands Limited


306,301



238,208Sunrise of Chichester Limited


135,485



144,514Sunrise of Haywards Heath Limited


123,493



226,891Sunrise of High Wycombe Limited


(1,828
)


(118,501
)Sunrise of Morningside Limited


(42,397
)


201,473Sunrise of Murrayfield Limited






(291,500
)Sunrise of Sevenoaks Limited


302,030



819,800Sunrise of Surbiton Limited


387,664



380,637Sunrise of Winchester Limited


270,544



316,843Final investment approved projects:Sunrise of Bagshot II Limited


5,166,024



Sunrise of Beaconsfield Limited


5,078,287



278,764Sunrise of Bramhall II Limited


4,810,438



448,228Sunrise of Cardiff Limited






683,924Sunrise of Chorleywood Limited






2,297,153Sunrise of Eastbourne Limited


3,021,973



1,590,947Sunrise of Mobberley Limited






1,015,867Sunrise of Sonning Limited


4,481,506



386,514Sunrise of Solihull Limited






2,108,214Sunrise of Southborne Limited


2,025,701



2,893,676Sunrise of Tettenhall Limited


386,011



3,140,666Sunrise of Weybridge Limited


2,014,636



3,146,235£
26,237,256


£
20,690,698   12.
    Pensions
    and Other Post-Employment Benefit Plans   119




---



##### 



PS UK
    Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  13.
    Subsequent
    Events   120




---



##### 



INDEPENDENT
    AUDITORS REPORT               121




---



##### 



AL U.S.
    DEVELOPMENT VENTURE, LLC
  CONSOLIDATED
    BALANCE SHEETS
  As of December 31,2007


2006


2005(Unaudited)


(Unaudited)ASSETSProperty and Equipment:Land and land improvements

$
47,836,752


$
47,800,833


$
40,931,428Building and building improvements


179,175,098



178,962,371



153,486,626Furniture and equipment


13,302,079



13,107,160



11,230,326Construction in progress






19,135



31,197,641240,313,929



239,889,499



236,846,021Less accumulated depreciation


(23,501,494
)


(16,610,470
)


(14,658,439
)Property and equipment  net


216,812,435



223,279,029



222,187,582Cash and Cash Equivalents


7,547,327



6,539,184



Cash Held by AEW Member






3,416,771



11,094,765Restricted Cash


6,000,000







Accounts Receivable  Less allowance for doubtful
    accounts of $383,057, $243,343, and $175,571, respectively


1,079,174



1,224,655



875,388Prepaid Expenses and Other Current Assets


564,679



761,107



641,110Deferred Financing Costs  Less accumulated
    amortization of $529,572, $2,359,258, and $1,489,611,
    respectively


4,085,851



1,572,757



2,243,958Total

$
236,089,466


$
236,793,503


$
237,042,803LIABILITIES AND MEMBERS (DEFICIT) CAPITALLiabilities:Long-term debt

$
370,500,000


$
202,313,581


$
185,425,293Derivative liability


17,039,343







Notes payable to affiliate






4,173,724



2,338,490Accounts payable and accrued expenses


2,728,431



2,973,211



5,857,310Payables to affiliates


3,197,737



9,145,059



4,829,679Deferred revenue


3,953,863



3,250,730



3,114,810Security and reservation deposits


44,301



85,341



91,645Accrued interest


1,270,845



630,337



37,843Total liabilities


398,734,520



222,571,983



201,695,070Members (Deficit) Capital


(162,645,054
)


14,221,520



35,347,733Total

$
236,089,466


$
236,793,503


$
237,042,803    122




---



##### 



AL U.S.
    DEVELOPMENT VENTURE, LLC
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years Ended December 31,2007


2006


2005(Unaudited)


(Unaudited)Operating revenue:Resident fees

$
76,325,155


$
64,822,893


$
51,029,044Other income


379,149



226,946



137,805Total operating revenue


76,704,304



65,049,839



51,166,849Operating expenses:Labor


27,361,910



25,044,073



19,529,473Depreciation and amortization


6,766,201



6,431,137



7,801,309Management fees


5,198,041



4,418,473



3,461,584General and administrative


4,647,867



3,646,605



2,729,632Insurance


2,526,045



4,066,943



2,812,243Food


2,722,483



2,334,825



1,746,597Taxes and license fees


2,701,310



1,878,673



1,391,581Utilities


2,006,454



1,960,423



1,595,469Repairs and maintenance


1,996,821



1,277,319



938,150Advertising and marketing


994,128



1,117,188



594,066Ancillary expenses


535,929



386,746



332,132Bad debt


163,929



96,053



134,009Total operating expenses


57,621,118



52,658,458



43,066,245Income from operations


19,083,186



12,391,381



8,100,604Other income (expense):Amortization of financing cost


(914,656
)


(869,647
)


(738,748
)Loss on extinguishment of debt


(1,188,688
)






Prepayment penalty


(4,154,962
)






Change in fair value of interest rate hedge instruments


(17,039,343
)






Interest expense


(20,637,838
)


(12,739,257
)


(9,033,706
)Interest income


331,620



232,701



13,631Total other expense


(43,603,867
)


(13,376,203
)


(9,758,823
)Net loss

$
(24,520,681
)

$
(984,822
)

$
(1,658,219
)    123




---



##### 



AL U.S.
    DEVELOPMENT VENTURE, LLC
  CONSOLIDATED
    STATEMENTS OF CHANGES IN MEMBERS CAPITAL
    (DEFICIT)
  For the Years Ended December 31MS SeniorSSLII


AEW Member


Living, LLC


TotalMembers capital  December 31, 2004
    (unaudited)

$
11,341,244


$
32,059,380


$



$
43,400,624Cash contributions


653,703



2,673,560







3,327,263Non-cash contribution adjustment


(35,062
)


(140,247
)






(175,309
)Cash distributions


(512,414
)


(7,884,476
)






(8,396,890
)Non-cash distributions


(229,947
)


(919,789
)






(1,149,736
)Net loss


(331,644
)


(1,326,575
)






(1,658,219
)Members capital  December 31, 2005
    (unaudited)


10,885,880



24,461,853







35,347,733Distributions


(8,030,842
)


(12,110,549
)






(20,141,391
)Net loss


(196,964
)


(787,858
)






(984,822
)Members capital  December 31, 2006
    (unaudited)


2,658,074



11,563,446







14,221,520Contributions


1,200,000







4,800,000



6,000,000Distributions


(30,746,046
)


856,509



(128,456,356
)


(158,345,893
)Transfer of equity






(12,584,916
)


12,584,916



Net loss


(4,904,136
)


164,961



(19,781,506
)


(24,520,681
)Members deficit  December 31, 2007

$
(31,792,108
)

$



$
(130,852,946
)

$
(162,645,054
)    124




---



##### 



AL U.S.
    DEVELOPMENT VENTURE, LLC
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,2007


2006


2005(Unaudited)


(Unaudited)Cash flows from operating activities:Net loss

$
(24,520,681
)

$
(984,822
)

$
(1,658,219
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization


6,766,201



6,431,137



7,801,309Amortization and loss on extinguishment of debt


2,103,344



869,647



738,748Provision for bad debts


163,929



96,053



134,009Changes in assets and liabilities:Change in fair value of interest rate hedge instruments


17,039,343







Cash held by AEW Member


3,416,771



7,677,994



(6,355,684
)Accounts receivable


(18,448
)


(445,320
)


(497,767
)Prepaid expenses and other current assets


196,428



(119,997
)


(214,635
)Accounts payable and accrued expenses


(244,780
)


(2,884,099
)


460,871Payable to affiliates  net


(5,947,322
)


4,315,380



2,489,875Accrued interest


640,508



592,494



37,843Deferred revenue


703,133



135,920



790,935Security and reservation deposits


(41,040
)


(6,304
)


(9,995
)Net cash provided by operating activities


257,386



15,678,083



3,717,290Cash flows from investing activities:Restricted cash


(6,000,000
)






9,652,233Investment in property and equipment


(299,607
)


(7,522,584
)


(32,264,573
)Net cash used in investing activities


(6,299,607
)


(7,522,584
)


(22,612,340
)Cash flows from financing activities:Payment of financing costs


(4,616,438
)


(198,446
)


(33,493
)Proceeds from note to affiliate


47,708



4,859,176



17,751,344Repayment of note to affiliate


(4,221,432
)


(3,023,942
)


(24,565,140
)Proceeds from long-term debt


371,330,817



17,032,214



30,808,064Payment on long-term debt


(203,144,398
)


(143,926
)


Contributions


6,000,000







3,327,263Distributions


(158,345,893
)


(20,141,391
)


(8,396,890
)Net cash provided by (used in) financing activities


7,050,364



(1,616,315
)


18,891,148Net increase (decrease) in cash and cash equivalents


1,008,143



6,539,184



(3,902
)Cash and cash equivalents  Beginning of year


6,539,184







3,902Cash and cash equivalents  End of year

$
7,547,327


$
6,539,184



Supplemental disclosure of non-cash flow information Change in derivative valuation

$
17,039,343


$



$
SSLII capital contribution accrued but unpaid in 2004










(175,309
)Capital distributions accrued but unpaid










(1,149,736
)$
17,039,343


$



$
(1,325,045
)Supplemental disclosure of cash flow information Cash paid for interest

$
19,997,330


$
12,146,763


$
9,032,386    125




---



##### 



AL U.S.
    Development Venture, LLCNotes to Consolidated Financial Statements
    As of and for the Years Ended December 31, 2007, 2006
    (Unaudited), and 2005
    (Unaudited)
  1.
    Organization        Operator Entity

Location

Date OpenedAL US/Bonita Senior Housing, LP

San Diego (Bonita), California

April 2003Boulder Assisted Living, LLC

Boulder, Colorado

May 2003AL US/Huntington Beach Senior Housing, LP

Huntington Beach, California

February 2004AL US/La Jolla Senior Housing, LP

Chula Vista (La Jolla/Pacific Beach), California

May 2003AL US/La Palma Senior Housing, LP

La Palma, California

July 2003Newtown Square Assisted Living, LLC

Newton Square, Pennsylvania

March 2004AL US/Sacramento Senior Housing, LP

Sacramento, California

December 2003AL US/Seal Beach Senior Housing, LP

Seal Beach, California

February 2004AL US/Studio City Senior Housing, LP

Los Angeles (Studio City), California

June 2004Wilmington Assisted Living, LLC

Wilmington, Delaware

December 2003AL US/Woodland Hills Senior Housing, LP

Woodland Hills, California

May 2005AL US/Playa Vista Senior Housing, LP

La Playa Vista, California

June 2006GP Woods Assisted Living, LLC

Grosse Point Woods, Michigan

January 2005AL US/GP Woods II Senior Housing, LLC

Grosse Point Woods II, Michigan

June 2006AL/US San Gabriel Senior Housing, LP

San Gabriel, California

February 2005     2.
    Summary
    of Significant Accounting Policies  Basis of Accounting
 126




---



##### 



AL U.S.
    Development Venture, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Use of Estimates
  Property and Equipment
  Land improvements


10-15 yearsBuilding and improvements


40 yearsFurniture, fixtures, and equipment


3-10 years     Cash and Cash Equivalents
  Restricted Cash
  Allowance for Doubtful Accounts
  Deferred Financing Costs
  Revenue Recognition and Deferred Revenue
 127




---



##### 



AL U.S.
    Development Venture, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Income Taxes
  Accounting for Derivatives for Derivative Instruments and
    Hedging Activity
    Fair Value of Financial Instruments and/or
    3.
    Transactions
    with Affiliates       128




---



##### 



AL U.S.
    Development Venture, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
            4.
    Concentrations
    of Credit Risk    5.
    Long-Term
    Debt       129




---



##### 



AL U.S.
    Development Venture, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
                  6.
    Contingencies    7.
    New
    Accounting Pronouncements  Fair Value Measurements
 130




---



##### 



AL U.S.
    Development Venture, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    The
    Fair Value Option for Financial Assets and Financial
    Liabilities-Including an amendment of FASB Statement
    No. 115,
   131




---



##### 



INDEPENDENT
    AUDITORS REPORT            Beers &
    Cutler PLLC
   132




---



##### 



SUNRISE
    FIRST ASSISTED LIVING HOLDINGS, LLC
 CONSOLIDATED
    BALANCE SHEETS  December 31,2007


2006(Unaudited)ASSETSReal Estate, net

$
120,940,028


$
123,270,368Other AssetsCash and cash equivalents


2,156,679



1,946,157Accounts receivable, less allowance for doubtful accounts of
    $453,319 and $577,928, respectively


964,924



1,125,070Due from affiliates, net


335,603



1,660,615Other assets


98,878



154,136Restricted cash


663,165



634,013Deferred financing costs, less accumulated amortization of
    $1,670,886 and $1,080,266, respectively


3,288,135



3,887,248Total other assets


7,507,384



9,407,239Total assets

$
128,447,412


$
132,677,607LIABILITIES AND MEMBERS DEFICITMortgages Payable

$
172,184,680


$
175,254,051Other LiabilitiesAccounts payable and accrued expenses


3,161,632



2,871,358Due to affiliates, net






Deferred revenue


2,817,290



2,367,289Note payable to affiliate






Deferred rent


1,421,489



1,225,126Total other liabilities


7,400,411



6,463,773Total liabilities


179,585,091



181,717,824Members Deficit


(51,137,679
)


(49,040,217
)Total liabilities and members deficit

$
128,447,412


$
132,677,607    133




---



##### 



SUNRISE
    FIRST ASSISTED LIVING HOLDINGS, LLC
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended December 31,2007


2006


2005(Unaudited)





(Unaudited)Operating Revenue

$
57,847,414


$
58,308,339


$
55,833,049Operating expenses Labor


21,333,957



20,672,041



19,699,558Food


2,442,164



2,379,689



2,239,177General and administrative


6,823,926



7,357,504



6,652,993Insurance


1,879,108



2,148,863



2,131,013Utilities


1,733,849



1,901,748



1,744,987Repair and maintenance


1,886,579



2,036,785



1,656,012Management fees


3,462,404



3,911,592



3,964,787Depreciation


3,991,506



3,849,154



3,717,927Lease expense


414,592



409,294



412,178Total operating expenses


43,968,085



44,666,670



42,218,632Income from Operations


13,879,329



13,641,669



13,614,417Other (expense) incomeInterest income


187,126



150,191



105,477Interest expense


(11,143,048
)


(14,510,145
)


(9,487,888
)Total other expense


(10,955,922
)


(14,359,954
)


(9,382,411
)Net income (loss)

$
2,923,407


$
(718,285
)

$
4,232,006    134




---



##### 



SUNRISE
    FIRST ASSISTED LIVING HOLDINGS, LLCCONSOLIDATED STATEMENTS OF CHANGES IN
    MEMBERS (DEFICIT) CAPITAL Years
    Ended December 31, 2007, 2006 and 2005
  Balance, January 1, 2005 (unaudited)

$
(1,443,308
)Distributions (unaudited)


(6,497,297
)Net Income (unaudited)


4,232,006Balance, December 31, 2005 (unaudited)


(3,708,599
)Distributions


(44,613,333
)Net Loss


(718,285
)Balance, December 31, 2006


(49,040,217
)Distributions (unaudited)


(5,020,869
)Net Income (unaudited)


2,923,407Balance, December 31, 2007 (unaudited)

$
(51,137,679
)    135




---



##### 



SUNRISE
    FIRST ASSISTED LIVING HOLDINGS, LLC
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2007


2006


2005(Unaudited)





(Unaudited)Cash flows from operating activitiesNet income (loss)

$
2,923,407


$
(718,285
)

$
4,232,006Reconciling adjustments:(Recovery of) provision for bad debts


(124,610
)


210,741



(12,112
)Depreciation


3,991,506



3,849,154



3,717,927Amortization of financing costs


590,620



757,512



286,999Changes in:Accounts receivable


284,756



(268,861
)


(163,036
)Other assets


55,258



290,614



(18,456
)Accounts payable and accrued expenses


290,274



958,976



279,142Due from/to affiliates


1,325,012



(2,299,973
)


383,224Deferred revenue


450,001



63,958



(279,620
)Deferred rent


196,363



280,314



246,564Net cash provided by operating activities


9,982,587



3,124,150



8,672,638Cash flows from investing activitiesIncrease (decrease) in restricted cash


(29,152
)


1,064,600



(389,203
)Investment in property and equipment


(1,661,166
)


(856,456
)


(917,792
)Net cash (used in) provided by investing activities


(1,690,318
)


208,144



(1,306,995
)Cash flows from financing activitiesFinancing costs refunded (paid)


8,493



(3,564,619
)


(46,779
)Borrowing of long-term debt






175,977,070



Repayments of long-term debt


(3,069,371
)


(129,114,479
)


(2,463,233
)Repayments of note payable to affiliate






(2,576,062
)


(53,957
)Distributions to members


(5,020,869
)


(44,613,333
)


(6,224,676
)Net cash used in financing activities


(8,081,747
)


(3,891,423
)


(8,788,645
)Net increase (decrease) in cash and cash equivalents


210,522



(559,129
)


(1,423,002
)Cash and cash equivalents, beginning of year


1,946,157



2,505,286



3,928,288Cash and cash equivalents, end of year

$
2,156,679


$
1,946,157


$
2,505,286Supplemental disclosure of cash flow informationCash paid for interest

$
10,546,056


$
13,504,120


$
9,200,890    136




---



##### 



Sunrise
    First Assisted Living Holdings, LLC



Notes to
    the Consolidated Financial Statements

December 31,
    2007, 2006 and 2005  Note 1 
    Organization          Note 2 
    Summary
    of Significant Accounting Policies  Principles of Consolidation
    Use of Estimates
  Cash and Cash Equivalents
 137




---



##### 



Sunrise
    First Assisted Living Holdings, LLC
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Restricted Cash
  Allowance for Doubtful Accounts
  Real Estate
  Deferred Financing Costs
  EITF 96-19, Debtors Accounting for a Modification or Exchange of
    Debt Instruments,
  Revenue Recognition and Deferred Revenue
  Advertising Costs
  Income Taxes
 138




---



##### 



Sunrise
    First Assisted Living Holdings, LLC
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Note 3 
    Real
    Estate    Asset Lives


2007


2006(Unaudited)Land and land improvements


10-15 years


$
27,696,898


$
28,450,690Building and building improvements


40 years



103,978,777



102,127,099Furniture and equipment


3-10 years



10,711,310



10,148,030142,386,985



140,725,819Less accumulated depreciation






(21,446,957
)


(17,455,451
)$
120,940,028


$
123,270,368   Note 4 
    Affiliate
    Transactions  Management Services
          2007

2006(Unaudited)Receivable from:SSLI and its subsidiaries

$
335,603


$
1,660,615      139




---



##### 



Sunrise
    First Assisted Living Holdings, LLC
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Note Payable to Affiliate 30-day
  Note 5 
    Mortgages
    Payable    2007


2006(Unaudited)Notes payable to a finance institution, due in monthly
    installments, with the remaining balance of the notes maturing
    October 1, 2016. The notes bear interest at
    6.05 percent

$
49,842,557


$
50,756,905Notes payable to a finance institution, due in monthly
    installments, with the remaining balance of the notes maturing
    October 1, 2013. The notes bear interest at
    5.99 percent


122,342,123



124,497,146Long-term debt

$
172,184,680


$
175,254,051   Note 6 
    Mortgage
    Note Payable    Year ending December 31, 2008

$
3,264,9132009


3,468,4962010


3,684,7732011


3,914,5362012


4,158,627Thereafter


153,693,335$
172,184,680   Note 7 
    Members
    Capital        Note 8 
    Fair
    Value of Financial Instruments   140




---



##### 



Note 9 
    Commitments      Year ending December 31, 2008

$
165,0002009


165,0002010


173,2502011


181,5002012


181,500Thereafter


35,506,755$
36,373,005   Note 10 
    Contingencies      Note 11 
    New
    Accounting Pronouncements  , Fair Value
    Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities-Including an amendment of FASB Statement
    No. 115
 141




---



##### 



INDEPENDENT
    AUDITORS REPORT  To the
    Members of
          Beers &
    Cutler PLLC
   142




---



##### 



SUNRISE
    SECOND ASSISTED LIVING HOLDINGS, LLC
 CONSOLIDATED
    BALANCE SHEETS  December 31,2007


2006(Unaudited)ASSETSReal Estate, net

$
116,089,085


$
117,998,402Other AssetsCash and cash equivalents


3,468,337



4,722,364Accounts receivable, less allowance for doubtful accounts of
    $182,406 and $268,733, respectively


665,602



1,159,789Due from affiliates, net


531,219



Insurance claims receivable






Other assets


15



42,814Prepaid rent


2,174,755



2,202,696Restricted cash






Deferred financing costs, less accumulated amortization of
    $1,167,926 and $719,756, respectively


3,922,447



4,373,953Total other assets


10,762,375



12,501,616Total assets

$
126,851,460


$
130,500,018LIABILITIES AND MEMBERS DEFICITMortgages Payable

$
166,728,174


$
169,786,761Other LiabilitiesAccounts payable and accrued expenses


3,039,355



2,660,135Due to affiliates, net






1,007,323Deferred revenue


3,271,406



2,344,826Deferred rent






Total other liabilities


6,310,761



6,012,284Total liabilities


173,038,935



175,799,045Members Deficit


(46,187,475
)


(45,299,027
)Total liabilities and members deficit

$
126,851,460


$
130,500,018    143




---



##### 



SUNRISE
    SECOND ASSISTED LIVING HOLDINGS, LLC
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended December 31,2007


2006


2005(Unaudited)





(Unaudited)Operating Revenue

$
61,838,255


$
58,683,362


$
56,993,261Operating expensesLabor


22,920,882



21,444,384



22,425,562Food


2,503,202



2,442,275



2,348,003General and administrative


5,686,159



5,472,770



5,239,771Insurance


1,877,288



1,837,703



2,492,301Utilities


2,054,908



2,118,585



1,967,640Repair and maintenance


1,923,713



1,692,775



1,430,900Management fees


3,714,168



3,808,151



3,846,488Depreciation


3,674,177



3,968,698



3,931,837Impairment loss on property and equipment










3,587,827Gain on insurance recovery










(3,587,827
)Total operating expenses


44,354,497



42,785,341



43,682,502Income from Operations


17,483,758



15,898,021



13,310,759Other (expense) incomeInterest income


196,052



167,624



99,223Interest expense


(10,582,682
)


(8,992,769
)


(7,855,583
)Total other expense


(10,386,630
)


(8,825,145
)


(7,756,360
)Net income

$
7,097,128


$
7,072,876


$
5,554,399    144




---



##### 



SUNRISE
    SECOND ASSISTED LIVING HOLDINGS, LLC
 CONSOLIDATED
    STATEMENTS OF CHANGES IN MEMBERS (DEFICIT) CAPITAL
    Years Ended December 31, 2007, 2006 and 2005  Balance, January 1, 2005 (unaudited)

$
9,359,855Distributions (unaudited)


(6,812,082
)Net Income (unaudited)


5,554,399Balance, December 31, 2005 (unaudited)


8,102,172Distributions


(60,474,075
)Net Income


7,072,876Balance December 31, 2006


(45,299,027
)Contributions (unaudited)


227,712Distributions (unaudited)


(8,213,288
)Net Income (unaudited)


7,097,128Balance December 31, 2007 (unaudited)

$
(46,187,475
)    145




---



##### 



SUNRISE
    SECOND ASSISTED LIVING HOLDINGS, LLC
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2007


2006


2005(Unaudited)





(Unaudited)Cash flows from operating activitiesNet income

$
7,097,128


$
7,072,876


$
5,554,399Reconciling adjustments:Provision for bad debts


202,006



27,710



(6,093
)Depreciation


3,674,177



3,968,698



3,931,837Amortization of prepaid rent






27,941



27,941Amortization of financing costs


448,170



315,148



163,446Impairment loss on property and equipment










3,587,827Gain on insurance recovery










(3,587,827
)Changes in:Accounts receivable


292,182



(259,610
)


(165,700
)Insurance claims receivable






51,386



(45,000
)Other assets


70,740



210,001



(4,754
)Accounts payable and accrued expenses


379,220



31,934



634,732Due to (from) affiliates


(1,538,542
)


1,688,996



(558,123
)Deferred revenue


926,579



190,456



(872,068
)Deferred rent






(457,325
)


149,464Net cash provided by operating activities


11,551,660



12,868,211



8,810,081Cash flows from investing activitiesIncrease (decrease) in restricted cash






851,913



(625,943
)Investment in property and equipment


(1,764,860
)


(527,876
)


(534,584
)Net cash (used in) provided by investing activities


(1,764,860
)


324,037



(1,160,527
)Cash flows from financing activitiesFinancing costs refunded (paid)


3,336



(4,227,644
)


4,395Borrowing of long-term debt






170,523,000



Repayments of long-term debt


(3,058,587
)


(124,470,089
)


(2,563,252
)Contributions from members


227,712







Distributions to members


(8,213,288
)


(52,329,245
)


(7,573,684
)Net cash used in financing activities


(11,040,827
)


(10,503,978
)


(10,132,541
)Net (decrease) increase in cash and cash equivalents


(1,254,027
)


2,688,270



(2,482,987
)Cash and cash equivalents, beginning of year


4,722,364



2,034,094



4,517,081Cash and cash equivalents, end of year

$
3,468,337


$
4,722,364


$
2,034,094Supplemental disclosure of cash flow information Cash paid for
    interest

$
10,188,449


$
8,994,268


$
7,698,584Non-cash financing activitiesDistribution of property

$



$
8,144,830


$
    146




---



##### 



Sunrise
    Second Assisted Living Holdings, LLC
  Notes
    to the Consolidated Financial Statements
 December 31, 2007, 2006 and 2005
  Note 1 
    Organization          Note 2 
    Summary
    of Significant Accounting Policies  Principles of Consolidation
    Use of Estimates
  Cash and Cash Equivalents
 147




---



##### 



Sunrise
    Second Assisted Living Holdings, LLC
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Restricted Cash
  Allowance for Doubtful Accounts
  Real Estate
  Deferred Financing Costs
  EITF 96-19, Debtors Accounting for a Modification or Exchange of
    Debt Instruments,
  Revenue Recognition
  Advertising Costs
  Income Taxes
 148




---



##### 



Sunrise
    Second Assisted Living Holdings, LLC
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Note 3 
    Real
    Estate    Asset Lives


2007


2006(Unaudited)Land and land improvements


10-15 years


$
21,566,550


$
21,496,934Building and building improvements


40 years



102,079,276



100,901,038Furniture and equipment


3-10 years



10,850,553



10,333,547134,496,379



132,731,519Less accumulated depreciation






(18,407,294
)


(14,733,117
)$
116,089,085


$
117,998,402   Note 4 
    Affiliate
    Transactions  Management Services
          2007


2006(Unaudited)Receivable from (payable to):SSLI and its subsidiaries

$
531,219


$
(1,007,323
)    149




---



##### 



Sunrise
    Second Assisted Living Holdings, LLC
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Note 5 
    Mortgages
    Payable        Year ending December 31, 2008

$
3,248,8502009


3,450,9482010


3,665,6182011


3,893,6422012


4,135,851Thereafter


148,333,265$
166,728,174   Note 6 
    Members
    Capital        Note 7 
    Fair
    Value of Financial Instruments        Note 8 
    Commitments   150




---



##### 



Sunrise
    Second Assisted Living Holdings, LLC
  Notes to
    the Consolidated Financial
    Statements  (Continued)
      Note 9 
    Contingencies      Note 10 
    Bayou St. John Facility
      Note 11 
    New
    Accounting Pronouncements  , Fair Value
    Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities-Including an amendment of FASB Statement
    No. 115
 151




---



##### 



REPORT OF
    INDEPENDENT AUDITORS       
   152




---



##### 



METROPOLITAN
    SENIOR HOUSING, LLC
  CONSOLIDATED
    BALANCE SHEETS
  As of December 31,2007


2006(Not covered byauditors report)ASSETSLand and land improvements

$
35,955,737


$
35,662,196Building and building improvements


124,115,007



123,431,038Furniture and equipment


19,027,991



18,352,996179,098,735



177,446,230Less accumulated depreciation


(38,056,349
)


(32,672,264
)Rental property, net


141,042,386



144,773,966Cash


303,511



2,205,398Receivable from affiliates


1,745,806



1,454,864Prepaid expenses and other current assets


99,316



92,809Restricted cash


955,856



1,216,530Deferred financing costs, less accumulated amortization of
    $917,555 and $359,098, respectively


3,351,195



3,882,647Total assets

$
147,498,070


$
153,626,214LIABILITIES AND MEMBERS DEFICITNotes payable

$
190,000,000


$
190,000,000Accounts payable and accrued expenses


118,956



261,355Total liabilities


190,118,956



190,261,355Members deficit


(42,620,886
)


(36,635,141
)Total liabilities and members deficit

$
147,498,070


$
153,626,214    153




---



##### 



METROPOLITAN
    SENIOR HOUSING, LLC
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years Ended December 31,2007


2006


2005(Not covered





(Not coveredby auditors





by auditorsreport)





report)Operating revenueLease income from affiliates

$
19,981,144


$
18,193,626


$
21,466,735Operating expensesTaxes and insurance


2,104,522



1,831,921



1,708,480General and administrative


80,296



337,205



65,396Depreciation


5,384,085



5,347,188



5,359,582Bad debt expense






6,728,816



474,7637,568,903



14,245,130



7,608,221Other income (expense)Interest income


74,927



44,928



8,380Interest expense


(12,112,773
)


(8,552,697
)


(8,455,779
)Net income (loss)

$
374,395


$
(4,559,273
)

$
5,411,115    154




---



##### 



METROPOLITAN
    SENIOR HOUSING, LLCCONSOLIDATED STATEMENTS OF CHANGES IN
    MEMBERS (DEFICIT) CAPITAL
    (Information as of December 31, 2007 and for the years
    ended December 31, 2007 and 2005 not
    covered by auditors report included herein)
  For the Years Ended December 31, 2007, 2006, and 2005Sunrise SeniorLiving


Federal Street


HVP SunInvestments, Inc.


Operating, LLC


Investing, LLC


TotalMembers capital at December 31, 2004

$
23,870,162


$
29,739,772


$



$
53,609,934Distributions


(2,691,852
)


(3,826,116
)






(6,517,968
)Net income


2,218,557



3,192,558







5,411,115Members capital at December 31, 2005


23,396,867



29,106,214







52,503,081Contributions


432,355



1,297,069







1,729,424Distributions


(2,548,424
)


(3,627,303
)






(6,175,727
)Net loss through December 12, 2006


(1,766,435
)


(2,541,941
)






(4,308,376
)Transfer of members interest






(24,234,039
)


24,234,039



Distributions


(29,956,969
)






(50,175,677
)


(80,132,646
)Net loss from December 12, 2006 through December 31,
    2006


(62,724
)






(188,173
)


(250,897
)Members deficit at December 31, 2006


(10,505,330
)






(26,129,811
)


(36,635,141
)Distributions


(1,590,035
)






(4,770,105
)


(6,360,140
)Net income


93,599







280,796



374,395Members deficit at December 31, 2007

$
(12,001,766
)

$



$
(30,619,120
)

$
(42,620,886
)    155




---



##### 



METROPOLITAN
    SENIOR HOUSING, LLC
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,2007


2006


2005(Not covered





(Not coveredby auditors





by auditorsreport)





report)Operating activitiesNet income (loss)

$
374,395


$
(4,559,273
)

$
5,411,115Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation


5,384,085



5,347,188



5,359,582Amortization of financing costs


558,457



285,856



232,854Provision for bad debts






6,728,816



474,763Changes in assets and liabilities:Receivable from affiliates


(290,942
)


(385,801
)


(869,056
)Prepaid expenses and other current assets


(6,507
)


118,606



41,620Restricted cash


260,674



(688,518
)


(27,419
)Deferred rent receivable






2,156,571



5,862Accounts payable and accrued expenses


(142,399
)


154,737



23,520Payables to affiliates






(804,399
)


(1,474,319
)Net cash provided by operating activities


6,137,763



8,353,783



9,178,522Investing activitiesInvestment in leased property


(1,652,505
)


(1,056,679
)


(1,045,999
)Net cash used in investing activities


(1,652,505
)


(1,056,679
)


(1,045,999
)Financing activitiesFinancing costs paid


(27,005
)


(3,457,078
)


Proceeds from notes payable






190,000,000



Repayment of notes payable






(107,215,679
)


(2,097,770
)Contributions from members






1,729,424



Distributions to members


(6,360,140
)


(86,308,373
)


(5,974,804
)Net cash used in financing activities


(6,387,145
)


(5,251,706
)


(8,072,574
)Net (decrease) increase in cash


(1,901,887
)


2,045,398



59,949Cash at beginning of year


2,205,398



160,000



100,051Cash at end of year

$
303,511


$
2,205,398


$
160,000Supplemental disclosures of cash flow information:Cash paid for interest

$
11,554,317


$
7,629,491


$
8,222,925Accrued distribution to members

$



$



$
543,164    156




---



##### 



Metropolitan
    Senior Housing, LLCNotes to Consolidated Financial Statements
    December 31, 2006 (Information as of December 31, 2007
    and for the
    years ended December 31, 2007 and 2005 not covered by
    auditors report included herein)
  1.
    Organization        Owner Entity

Location

Date PurchasedMetropolitan/Hunter Mill Senior Housing, LLC

Oakton, Virginia

6/29/2000Metropolitan/West Essex Senior Housing, LLC

Fairfield, New Jersey

6/29/2000Metropolitan/Wayland Senior Housing, LLC

Wayland, Massachusetts

6/29/2000Metropolitan/Bellevue Senior Housing, LLC

Bellevue, Washington

9/29/2000Metropolitan/Cohasset Senior Housing, LLC

Cohasset, Massachusetts

9/29/2000Metropolitan/Decatur Senior Housing, LLC

Decatur, Georgia

9/29/2000Metropolitan/Glen Cove Senior Housing, LLC

Glen Cove, New York

9/29/2000Sunrise LaFayette Hills Assisted Living Limited Partnership

Whitemarsh, Pennsylvania

9/29/2000Sunrise Paoli Assisted Living Limited Partnership

Malvern, Pennsylvania

9/29/2000Metropolitan/Paramus Senior Housing, LLC

Paramus, New Jersey

9/29/2000Metropolitan/Walnut Creek Senior Housing, LLC

Walnut Creek, California

9/29/2000Sunrise Oakland Assisted Living Limited Partnership

Oakland Hills, California

10/30/2001     2.
    Significant
    Accounting Policies  Basis
    of Accounting
     157




---



##### 



Metropolitan
    Senior Housing, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Use of
    Estimates
    Rental
    Property
      Building and building improvements


40 yearsLand and land improvements


10-15 yearsFurniture and equipment


3-10 years   Cash
    and Cash Equivalents
    Allowance
    for Doubtful Accounts
    Deferred
    Financing Costs
   158




---



##### 



Metropolitan
    Senior Housing, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Revenue
    Recognition
    Income
    Taxes
    Fair
    Value of Financial Instruments
        3.
    Affiliate
    Transactions  Operating
    Lease Agreements
       159




---



##### 



Metropolitan
    Senior Housing, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008

$
20,046,0922009


20,046,092$
40,092,184   Receivable
    and Payable to Affiliates
    2007


2006(Not covered byauditors report)Receivable (payable) from affiliatesOperator

$
1,952,286


$
1,384,050SSLI and its subsidiaries


(206,480
)


70,814$
1,745,806


$
1,454,864         4.
    Debt     160




---



##### 



Metropolitan
    Senior Housing, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    PrincipalBorrower

BalanceMetropolitan/Cohasset Senior Housing, LLC

$
12,200,000Metropolitan/Glen Cove Senior Housing, LLC


25,750,000Metropolitan/Paramus Senior Housing, LLC


15,510,000Sunrise Lafayette Hills Assisted Living Limited Partnership


12,800,000Sunrise Paoli Assisted Living Limited Partnership


12,888,000Metropolitan/Decatur Senior Housing, LLC


13,810,000Metropolitan/Bellevue Senior Housing, LLC


18,200,000Metropolitan/Walnut Creek Senior Housing, LLC


13,500,000Metropolitan/West Essex Senior Housing, LLC


20,200,000Metropolitan/Hunter Mill Senior Housing, LLC


13,226,000Sunrise Oakland Assisted Living Partnership


26,400,000Metropolitan/Wayland Senior Housing, LLC


5,516,000$
190,000,000        161




---



##### 



Metropolitan
    Senior Housing, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008

$
2009


2,173,1752010


2,309,1262011


2,453,5802012


2,563,212Thereafter


180,500,907$
190,000,000   5.
    Members
    Deficit (Information as of and for the years ended
    December 31, 2007 and 2005 not covered by auditors
    report included herein)               162




---



##### 



Metropolitan
    Senior Housing, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      6.
    Contingencies    7.
    New
    Accounting Pronouncements     163




---



##### 



REPORT OF
    INDEPENDENT AUDITORS               164




---



##### 



PS
    GERMANY INVESTMENT (JERSEY) LIMITED PARTNERSHIP
 CONSOLIDATED
    INCOME STATEMENT  Years Ended 31 December2007


2006


2005Notes








UnauditedOperating revenue:Resident fees






6,321,192



2,803,890



810,892Rental income


5



4,673,335



2,394,728



1,013,166Total operating revenue






10,994,527



5,198,618



1,824,058Operating expenses:Facility operating expenses






13,860,525



7,128,251



2,501,520Facility development and pre-rental expenses


5



2,707,130



4,790,673



2,130,542General and administrative expenses






209,777



247,551



286,405Management fees


5



313,560



139,708



43,073Depreciation


4



4,560,805



2,168,000



947,257Negative fair value movement on property and equipment


4



63,613,081



10,739,995



Total operating expenses






85,264,878



25,214,178



5,908,797Net operating loss






(74,270,351
)


(20,015,560
)


(4,084,739
)Other income/(expenses):Interest income






2,999



40,566



40,801Interest expense






(11,265,789
)


(3,927,736
)


(1,455,990
)Foreign exchange loss






(712
)






Total other income/(expenses)






(11,263,502
)


(3,887,170
)


(1,415,189
)Loss before tax and minority interests






(85,533,853
)


(23,902,730
)


(5,499,928
)Income tax expense


8











Loss for the year after tax before minority interests






(85,533,853
)


(23,902,730
)


(5,499,928
)Minority interests






1,544,885



770,254



237,324Net loss for the year after minority interests


9



(83,988,968
)


(23,132,476
)


(5,262,604
)    165




---



##### 



PS
    GERMANY INVESTMENT (JERSEY) LIMITED PARTNERSHIP
  CONSOLIDATED
    BALANCE SHEET
  At 31 December2007


2006Notes





AssetsCurrent assets:Cash and cash equivalents


3



1,526,263



1,014,584Accounts receivable






645,584



316,516Prepaid expenses and other current assets






180,943



253,991Receivables due from affiliates


5



4,391,014



1,504,691Total current assets






6,743,804



3,089,782Non current assetsProperty and equipment


4



124,295,892



148,973,764Restricted cash


7



5,737,273



Rent receivable


5



4,454,895



2,298,322Participation rights


5



900,000



800,000Total non current assets






135,388,060



152,072,086Total assets






142,131,864



155,161,868Liabilities and partners capitalCurrent liabilitiesTrade payables






442,405



268,607Accrued expenses


6



1,701,471



1,059,034Payables due to affiliates


5



16,430,307



16,809,312Current maturities of long-term debt


7



3,718,340



1,592,090Total current liabilities






22,292,523



19,729,043Non current liabilitiesPartner loan


5



2,010,000



2,010,000Notes payable to affiliates


5



10,469,296



3,661,206Long-term debt, net of finance costs


7



172,379,204



108,701,520Total non current liabilities






184,858,500



114,372,726Minority interest






466,788



2,065,673Partners capital


9



(65,485,947
)


18,994,426Total partners capital






(65,019,159
)


21,060,099Total liabilities and partners capital






142,131,864



155,161,868    166




---



##### 



PS
    GERMANY INVESTMENT (JERSEY) LIMITED PARTNERSHIP
  CONSOLIDATED
    STATEMENT OF CHANGES IN PARTNERS CAPITAL
  Years Ended 31 DecemberPartners





Asset


Foreign








TotalCapital


Accumulated


Revaluation


Currency


Partners


Minority


PartnersContributions


Deficit


Reserve


Translation


Capital


Interests


Capital

















At 1 January 2005 (unaudited)


20,857,904



(3,019,667
)










17,838,237



1,226,393



19,064,630Revaluation of property and equipment










5,888,024







5,888,024







5,888,024Total income and expense for the year recognised directly in
    equity










5,888,024







5,888,024







5,888,024Loss for the year






(5,262,604
)










(5,262,604
)


(237,324
)


(5,499,928
)Total income and expense for the year






(5,262,604
)


5,888,024







625,420



(237,324
)


388,096Partner contributions


15,511,189















15,511,189



952,290



16,463,479At 31 December 2005 (unaudited)


36,369,093



(8,282,271
)


5,888,024







33,974,846



1,941,359



35,916,205Revaluation of property and equipment










(5,888,024
)






(5,888,024
)






(5,888,024
)Total income and expense for the year recognised directly in
    equity










(5,888,024
)






(5,888,024
)






(5,888,024
)Loss for the year






(23,132,476
)










(23,132,476
)


(770,254
)


(23,902,730
)Total income and expense for the year






(23,132,476
)


(5,888,024
)






(29,020,500
)


(770,254
)


(29,790,754
)Partner contributions


14,040,080















14,040,080



894,568



14,934,648At 31 December 2006


50,409,173



(31,414,747
)










18,994,426



2,065,673



21,060,099Foreign currency translation














(545,405
)


(545,405
)






(545,405
)Total income and expense for the year recognised directly in
    equity














(545,405
)


(545,405
)






(545,405
)Loss for the year






(83,988,968
)










(83,988,968
)


(1,544,885
)


(85,533,853
)Total income and expense for the year






(83,988,968
)






(545,405
)


(84,534,373
)


(1,544,885
)


(86,079,258
)Partner contributions


54,000















54,000



(54,000
)


At 31 December 2007


50,463,173



(115,403,715
)






(545,405
)


(65,485,947
)


466,788



(65,019,159
)    167




---



##### 



PS
    GERMANY INVESTMENT (JERSEY) LIMITED PARTNERSHIP



CONSOLIDATED
    STATEMENT OF CASH FLOWS  Years Ended 31 December2007


2006


2005Notes








UnauditedOperating activitiesLoss for the year before tax






(85,533,853
)


(23,902,730
)


(5,499,928
)Adjustments to reconcile loss for the year before tax to net
    cash flows from operating activities:Net finance costs






11,263,502



3,887,170



1,415,189Negative fair value movement on property and equipment






63,613,081



10,739,995



Depreciation






4,560,805



2,168,000



947,257Provision for bad debt






31,583



2,932



Changes in assets and liabilities:Accounts receivable






(360,651
)


(195,473
)


(123,973
)Prepaid expenses and other current assets






73,048



(226,362
)


1,252,470Trade payables and accrued expenses






130,707



814,658



(2,916
)Rent receivable






(2,156,573
)


(1,421,933
)


(876,389
)Net cash flows used in operating activities






(8,378,351
)


(8,133,743
)


(2,888,290
)Investing activitiesIncrease in restricted cash






(5,737,273
)






Purchase of property and equipment






(43,755,464
)


(68,429,779
)


(52,109,887
)Interest paid and capitalised






(1,235,851
)


(1,077,332
)


(461,152
)Purchase of participation rights






(100,000
)


(300,000
)


(500,000
)Interest received






2,999



40,566



40,801Net cash flows used in investing activities






(50,825,589
)


(69,766,545
)


(53,030,238
)Financing activitiesContributions by partners






54,000



14,040,080



15,511,189Contributions by minority interests






(54,000
)


894,568



952,290Financing cost paid






(430,159
)






Net (repayments to)/borrowings from affiliates






(3,810,859
)


8,170,511



(1,478,263
)Notes payable to affiliates






6,808,090



1,885,470



1,775,736Borrowings of long-term debt






143,550,913



58,899,239



46,806,715Repayments of long-term debt






(77,713,608
)


(6,797,160
)


(5,200,000
)Interest paid and expensed






(8,688,172
)


(3,347,577
)


(1,100,353
)Net cash flows from financing activities






59,716,205



73,745,131



57,267,314Net increase/(decrease) in cash and cash equivalents before
    effect of exchange rate on cash






512,265



(4,155,157
)


1,348,786Effect of exchange rate on cash






(586
)






Net increase/(decrease) in cash and cash equivalents






511,679



(4,155,157
)


1,348,786Cash and cash equivalents at beginning of year






1,014,584



5,169,741



3,820,955Cash and cash equivalents at end of year


3



1,526,263



1,014,584



5,169,741    168




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes
    to the Consolidated Financial Statements
 for the
    years ended 31 December 2007, 2006 and 2005
  1.
    Organization    2.1  Basis
    of preparation
    Going
    concern
    Statement
    of compliance
    Principles
    of consolidation
   169




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    2.2  Changes
    in accounting policies
  IFRS 7
    Financial Instruments: Disclosures
    Amendment
    to IAS Presentation of Financial Statements  Capital
    Disclosures
    2.3  Significant
    accounting judgement and estimates
  Judgements
    Operating
    lease commitments  partnership as
    lessor
    Estimation
    uncertainty
    Deferred
    tax assets
    2.4  Summary
    of significant accounting policies
  Cash
    and cash equivalents
   170




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Property
    and equipment
              Impairment
    of non-financial assets
    Restricted
    cash
    Leases
    Revenue
    recognition
   171




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
      Operating
    expenses
    
    Facility operating expenses including labour, food, marketing
    and other direct costs of operating the communities.
    Facility development and pre-rental expenses associated with the
    development and marketing of communities prior to opening.
    General and administrative expenses related to costs of the
    Partnership itself.
    Management fees paid to a subsidiary of Sunrise for managing the
    communities (note 5).  Taxes
  Income
    and corporation taxes
    Sales
    taxes
    
    where the sales tax incurred on a purchase of assets or services
    is not recoverable from the taxation authority, in which case
    the sales tax is recognised as part of the cost of acquisition
    of the asset or as part of the expense item as
    applicable; and
    receivables and payables that are stated with the amount of
    sales tax included.    Deferred
    income tax
      
    where the deferred income tax liability arises from the initial
    recognition of goodwill or of an asset or liability in a
    transaction that is not a business combination and, at the time
    of the transaction, affects neither the accounting profit nor
    taxable profit or loss; and 172




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
   
    in respect of taxable temporary differences associated with
    investments in subsidiaries, associates and interests in joint
    ventures, where the timing of the reversal of the temporary
    differences can be controlled and it is probable that the
    temporary differences will not reverse in the foreseeable future.    
    where the deferred income tax asset relating to the deductible
    temporary differences arises from the initial recognition of an
    asset or liability in a transaction that is not a business
    combination and, at the time of the transaction, affects neither
    the accounting profit nor taxable profit or loss; and
    in respect of deductible temporary differences associated with
    investments in subsidiaries, associates and interests in joint
    ventures, deferred income tax assets are recognised only to the
    extent that it is probable that the temporary differences will
    reverse in the foreseeable future and taxable profit will be
    available against which the temporary differences can be
    utilised.          Foreign
    currency translation
    Borrowing
    costs
    
    Expenditure for the asset and borrowing costs are being
    incurred; and
    Activities necessary to prepare the asset for its intended use
    are in progress.     173




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  New
    standards and interpretations not applied
    IASB (IAS
    / IFRSs)
    Effective date  IFRS 2 Amendment to IFRS 2  Vesting Conditions and
    Cancellations

1 January 2009IFRS 3 Business Combinations (revised January 2008)

1 July 2009IFRS 5 Non current assets held for sale and discontinued
    operations

1 July 2009IFRS 8 Operating Segments

1 January 2009IAS 1 Presentation of Financial Statements (revised September
    2007)

1 January 2009IAS 16 Amendment  Property, Plant and Equipment

1 January 2009IAS 19 Amendment  Employee Benefits

1 January 2009IAS 23 Borrowing Costs (revised March 2007)

1 January 2009IAS 27 Consolidated and Separate Financial Statements (revised
    January 2008)

1 July 2009IAS 28 Amendment  Investments in Associates

1 July 2009IAS 31 Amendment  Interests in Joint Ventures

1 July 2009IAS 32 Amendment  Financial Instruments
    Presentation

1 January 2009IFRIC

Effective dateIFRIC 12 Service Concession Arrangements

1 January 2008IFRIC 13 Customer Loyalty Programmes

1 July 2008IFRIC 14 IAS 19  The Limit on a Defined Benefit
    Asset, Minimum Funding Requirements and their Interaction

1 January 2008IFRIC 15 Agreements for the Construction of Real Estate

1 January 2009         3.
    Cash and
    cash equivalents    2007

2006

Cash at banks and on hand


1,526,263



1,014,5841,526,263



1,014,584    174




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  4.
    Property
    and equipment    FurnitureLand and


and


ConstructionBuildings


Equipment


in Progress


Total








As at 1 January 2007, net of accumulated depreciation


85,589,031



6,622,089



56,762,644



148,973,764Additions, including interest capitalised


68,688,800



5,844,216



(29,541,701
)


44,991,315Revaluations


(60,014,126
)


(3,598,955
)






(63,613,081
)Depreciation charge for the year


(2,952,157
)


(1,608,648
)






(4,560,805
)Transfer of net deferred financing costs










(1,495,301
)


(1,495,301
)As at 31 December 2007, net of accumulated depreciation


91,311,548



7,258,702



25,725,642



124,295,892As at 1 January 2007 Cost or fair value


87,589,868



7,737,634



56,762,644



152,090,146Accumulated depreciation


(2,000,837
)


(1,115,545
)






(3,116,382
)Net carrying amount


85,589,031



6,622,089



56,762,644



148,973,764As at 31 December 2007 Cost or fair value


96,264,542



9,982,895



25,725,642



131,973,079Accumulated depreciation


(4,952,994
)


(2,724,193
)






(7,677,187
)Net carrying amount


91,311,548



7,258,702



25,725,642



124,295,892         FurnitureLand and


and


ConstructionBuildings


Equipment


in Progress


Total








Cost


166,951,743



13,498,770



25,875,642



206,326,155Accumulated depreciation


(4,952,994
)


(2,724,193
)






(7,677,187
)Net carrying amount


161,998,749



10,774,577



25,875,642



198,648,968  175




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
      FurnitureLand and


and


ConstructionBuildings


Equipment


in Progress


Total








As at 1 January 2006, net of accumulated depreciation


40,368,862



3,463,127



57,881,908



101,713,897Additions, including interestcapitalised


62,427,109



4,598,041



206,961



67,232,111Revaluations


(15,800,920
)


(677,099
)


(150,000
)


(16,628,019
)Depreciation charge for the year


(1,406,020
)


(761,980
)






(2,168,000
)Transfer of net deferred financing costs










(1,176,225
)


(1,176,225
)As at 31 December 2006, net of accumulated depreciation


85,589,031



6,622,089



56,762,644



148,973,764As at 1 January 2006 Cost or fair value


40,963,679



3,816,692



57,881,908



102,662,279Accumulated depreciation


(594,817
)


(353,565
)






(948,382
)Net carrying amount


40,368,862



3,463,127



57,881,908



101,713,897As at 31 December 2006 Cost or fair value


87,589,868



7,737,634



56,762,644



152,090,146Accumulated depreciation


(2,000,837
)


(1,115,545
)






(3,116,382
)Net carrying amount


85,589,031



6,622,089



56,762,644



148,973,764        176




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    FurnitureLand and


and


Constructionbuildings


equipment


in progress


Total








Cost


98,262,942



7,654,555



56,912,644



162,830,141Accumulated depreciation


(2,000,837
)


(1,115,544
)






(3,116,381
)Net carrying amount


96,262,105



6,539,011



56,912,644



159,713,760   unaudited
  FurnitureLand and


and


Constructionbuildings


equipment


in progress


Total








As at 1 January 2005, net of accumulated depreciation






2,859



43,483,479



43,486,338Additions, including interest capitalised


35,835,832



3,052,531



15,957,676



54,846,039Revaluations


5,127,847



760,177







5,888,024Depreciation charge for the year


(594,817
)


(352,440
)






(947,257
)Transfer of net deferred financing costs










(1,559,247
)


(1,559,247
)As at 31 December 2005, net of accumulated depreciation


40,368,862



3,463,127



57,881,908



101,713,897As at 1 January 2005Cost






3,984



43,483,479



43,487,463Accumulated depreciation






(1,125
)






(1,125
)Net carrying amount






2,859



43,483,479



43,486,338As at 31 December 2005 Cost or fair value


40,963,679



3,816,692



57,881,908



102,662,279Accumulated depreciation


(594,817
)


(353,565
)






(948,382
)Net carrying amount


40,368,862



3,463,127



57,881,908



101,713,897      177




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  5.
    Affiliate
    transactions    Country of

% equity InterestName

Incorporation

2007


2006PS Assisted Living SARL

Luxembourg


100



100Sunrise Properties Germany GmbH

Germany


100



100PSRZ (Germany) GP GmbH

Germany


100



100General Partners:PSRZ Klein Flottbek GmbH

Germany


100



100PSRZ Reinbek GmbH

Germany


100



100PSRZ Villa Camphausen GmbH

Germany


100



100PSRZ Frankfurt-Westend GmbH

Germany


100



100PSRZ Oberursel GmbH

Germany


100



100PSRZ Wiesbaden GmbH

Germany


100



100PSRZ Hannover GmbH

Germany


100



100PSRZ Munchen-Thalkirchen GmbH

Germany


100



100PSRZ Konigstein GmbH

Germany


100



100PSRZ Meerbusch GmbH

Germany


100



100PSRZ Ratingen-Hosel GmbH

Germany


100



100PSRZ Bad Soden GmbH

Germany


100



100Property Companies:Sunrise Klein Flottbek Senior Living GmbH & Co. KG

Germany


94



94Sunrise Reinbek Senior Living GmbH & Co. KG

Germany


94



94Sunrise Villa Camphausen Senior Living GmbH & Co. KG

Germany


94



94Sunrise Frankfurt-Westend Senior Living GmbH & Co. KG

Germany


94



94Sunrise Oberursel Senior Living GmbH & Co. KG

Germany


94



94Sunrise Wiesbaden Senior Living GmbH & Co. KG

Germany


94



94Sunrise Hannover Senior Living GmbH & Co. KG

Germany


94



94Sunrise Munchen-Thalkirchen Senior Living GmbH & Co. KG

Germany


94



94Sunrise Konigstein Senior Living GmbH & Co. KG

Germany


94



94Sunrise Meerbusch Senior Living GmbH & Co. KG

Germany


94



94Sunrise Ratingen-Hosel Senior Living GmbH & Co. KG

Germany


94



94Sunrise Bad Soden Senior Living GmbH & Co. KG

Germany


94



94Operating Companies:Sunrise Klein Flottbek GmbH

Germany


100



100Sunrise Reinbek GmbH

Germany


100



100Sunrise Villa Camphausen GmbH

Germany


100



100Sunrise Frankfurt-Westend GmbH

Germany


100



100Sunrise Oberursel GmbH

Germany


100



100Sunrise Wiesbaden GmbH

Germany


100



100Sunrise Hannover GmbH

Germany


100



100Sunrise Munchen-Thalkirchen GmbH

Germany


100



100Sunrise Konigstein GmbH

Germany


100



100    178




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Other
    related parties
    2007


2006


Amounts due from other related partiesGeneral PartnerPS Germany (Jersey) GP Limited


40,853



40,853Care Companies:Sunrise Reinbek Pflege GmbH


1,388,936



577,028Sunrise Klein Flottbek Pflege GmbH


984,301



787,799Sunrise Villa Camphausen Pflege GmbH


704,803



41,927Sunrise Frankfurt-Westend Pflege GmbH


630,165



8,399Sunrise Oberursel Pflege GmbH


375,574



48,685Sunrise Wiesbaden Pflege GmbH


136,448



Sunrise Munchen-Thalkirchen Pflege GmbH


105,661



Sunrise Hannover Pflege GmbH


24,273



4,391,014



1,504,691Amounts due to other related parties Sunrise and its wholly
    owned subsidiaries


16,430,307



16,809,31216,430,307



16,809,312   Sunrise
    and its wholly owned subsidiaries
          General
    Partner
   179




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Care
    Companies
    Rent
    receivable and rental income
      2008


5,417,7342009


5,417,7342010


5,417,7342011


5,417,7342012


5,417,734Thereafter


100,239,754127,328,424     Participation
    rights
    Partner
    loan
   180




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Notes
    payable to affiliates
    Key
    management personnel
    6.
    Accrued
    expenses    2007


2006


Contractor accruals


24,734



126,386Professional fee accruals


806,486



553,374Interest payable on mortgage debt


467,263



79,005Other accrued expenses


402,988



300,2691,701,471



1,059,034  181




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  7.
    Long-term
    debt and commitments      2007


2006Current

Effective Interest Rate%


Maturity





1,202,500 bank loan


2.25 + EURIBOR



2008



1,202,500



1,189,0902,358,100 bank loan


3.25 + EURIBOR



2008



515,840



403,00013,761,900 bank loan


3.25 + EURIBOR



2008



2,000,000



3,718,340



1,592,090Non-current17,304,415 bank loan


2.25 + EURIBOR



2009







16,322,0652,440,000 bank loan


2.25 + EURIBOR



2010







2,312,7382,535,304 bank loan


2.25 + EURIBOR



2010







2,688,4532,786,390 bank loan


2.50 + EURIBOR



2010







2,167,8962,926,074 bank loan


2.50 + EURIBOR



2010







2,632,43718,494,696 bank loan


2.25 + EURIBOR



2010







15,899,50819,575,100 bank loan


2.50 + EURIBOR



2010







14,716,98019,969,848 bank loan


2.50 + EURIBOR



2010







16,333,7682,358,100 bank loan


3.25 + EURIBOR



2008 - 2011



1,036,260



1,552,1003,317,603 bank loan


1.125 - 2.00 + EURIBOR



2011



2,472,894



420,7143,380,292 bank loan


1.125 - 2.00 + EURIBOR



2011



2,565,010



424,98913,761,900 bank loan


3.25 + EURIBOR



2008 - 2011



10,340,239



13,210,49716,899,403 bank loan


1.125 - 2.00 + EURIBOR



2011



15,125,874



4,502,55421,062,550 bank loan


1.125 - 2.00 + EURIBOR



2011



18,574,495



7,474,48621,613,301 bank loan


1.35 - 2.25 + EURIBOR



2011



18,957,299



8,042,3352,992,567 bank loan


1.35 - 2.25 + EURIBOR



2012



1,730,797



3,961,848 bank loan


2.75 + EURIBOR



2012



3,944,845



4,230,775 bank loan


2.75 + EURIBOR



2012



4,212,618



4,239,762 bank loan


2.75 + EURIBOR



2012



4,221,566



4,289,330 bank loan


1.125 - 2.00 + EURIBOR



2012



1,327,079



4,520,586 bank loan


2.75 + EURIBOR



2012



4,455,250



15,223,829 bank loan


2.75 + EURIBOR



2012



15,204,428



16,799,225 bank loan


2.75 + EURIBOR



2012



16,727,128



17,032,444 bank loan


1.125 - 2.00 + EURIBOR



2012



14,586,650



18,399,642 bank loan


2.75 + EURIBOR



2012



18,320,677



18,656,160 bank loan


2.75 + EURIBOR



2012



18,576,095



172,379,204



108,701,520  182




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
                                    183




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
                                                184




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Debt
    Service Reserve
    Commitments
        8.
    Income
    taxes      2007


2006


2005





UnauditedPartnership income


4,819,612



3,805,979



2,402,331Operating and property company loss


(88,808,580
)


(26,938,455
)


(7,664,935
)Consolidated net loss


(83,988,968
)


(23,132,476
)


(5,262,604
)  185




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    2007


2006


Deferred tax assetsNet operating losses for Operating and Property Companies


18,392,000



13,441,272Negative fair value movement on property and equipment


19,629,212



2,835,359Total deferred tax assets


38,021,212



16,276,631Deferred tax liabilitiesProperty and equipment


(517,682
)


(338,970
)Rent abatement


(1,183,018
)


(606,757
)Facility development and operating expense


(4,691,445
)


(3,846,626
)Deferred finance cost


(680,290
)


(180,778
)Total deferred tax liabilities


(7,072,435
)


(4,973,131
)Net deferred tax asset


30,948,777



11,303,500               9.
    Partners
    capital   186




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
          Sunrise LP


SHIP


SunCo


Total








Balance at 1 January 2005  unaudited


2,586,532



15,251,704



1



17,838,237Contributions


2,415,761



13,095,428







15,511,189Net loss for the year


(862,662
)


(4,399,942
)






(5,262,604
)Asset revaluation reserve


1,177,605



4,710,419







5,888,024Balance at 31 December 2005  unaudited


5,317,236



28,657,609



1



33,974,846Contributions


2,017,006



12,023,074







14,040,080Net loss for the year


(4,010,292
)


(19,122,184
)






(23,132,476
)Asset revaluation reserve


(1,177,605
)


(4,710,419
)






(5,888,024
)Balance at 31 December 2006


2,146,345



16,848,080



1



18,994,426Contributions


54,000











54,000Net loss for the year


(15,561,886
)


(68,427,082
)






(83,988,968
)Foreign currency translation


(109,081
)


(436,324
)






(545,405
)At 31 December 2007


(13,470,622
)


(52,015,326
)


1



(65,485,947
)   10.
    Financial
    risk management objectives and policies  Interest
    rate risk
  lease-up
     187




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
      Year Ended 31 December 2007Less


ThreeOn


Than Three


to Twelve


One to


More ThanDemand


Months


Months


Five Years


Five Years


Total














Interest bearing loans and borrowings






3,183,097



10,751,790



214,889,168







228,824,055Trade payables


442,405



















442,405Accrued expenses






1,701,471















1,701,471Partner loan














2,010,000







2,010,000442,405



4,884,568



10,751,790



216,899,168







232,977,931   Year Ended 31 December 2006Less


ThreeOn


Than Three


to Twelve


One to


More ThanDemand


Months


Months


Five Years


Five Years


Total














Interest bearing loans and borrowings






1,724,330



6,362,080



130,190,926







138,277,336Trade payables


268,607



















268,607Accrued expenses






1,059,034















1,059,034Partner loan














2,010,000







2,010,000268,607



2,783,364



6,362,080



132,200,926







141,614,977   Credit
    risk
    Capital
    management
     188




---



##### 



PS
    Germany Investment (Jersey) Limited Partnership
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    2007


2006


General partnership expenses






25,184Initial investment approved projects:Sunrise Meerbusch Senior Living GmbH & Co. KG






(75,000
)Sunrise Ratingen-Hosel Senior Living GmbH & Co. KG






75,000Final investment approved projects:Sunrise Frankfurt-Westend Senior Living GmbH & Co. KG


6,000



Sunrise Hannover Senior Living GmbH & Co. KG


6,000



2,429,197Sunrise Klein Flottbek Senior Living GmbH & Co. KG


6,000



Sunrise Konigstein Senior Living GmbH & Co. KG


6,000



4,338,537Sunrise Munchen-Thalkirchen Senior Living GmbH & Co. KG


6,000



2,994,568Sunrise Oberursel Senior Living GmbH & Co. KG


6,000



Sunrise Reinbek Senior Living GmbH & Co. KG


6,000



Sunrise Villa Camphausen Senior Living GmbH & Co. KG


6,000



Sunrise Wiesbaden Senior Living GmbH & Co. KG


6,000



4,252,59454,000



14,040,080   11.
    Events
    after the balance sheet date   189




---



##### 



Part IV
  Item 15.
    Exhibits
    and Financial Statement Schedules (As Amended)  Form 10-K:
    PageSunrise Senior Living, Inc.Report of Independent Registered Public Accounting Firm


35Consolidated Balance Sheets


36Consolidated Statements of Income


37Consolidated Statements of Changes in Stockholders Equity


38Consolidated Statements of Cash Flows


39Notes to Consolidated Financial Statements


40PS UK Investment (Jersey) LPReport of Independent Auditors


94Consolidated Income Statement


95Consolidated Balance Sheet


96Consolidated Statement of Changes in Partners Capital


97Consolidated Statement of Cash Flows


98Notes to Consolidated Financial Statements


99AL US Development Venture, LLCIndependent Auditors Report


120Consolidated Balance Sheets


121Consolidated Statements of Operations


122Consolidated Statements of Changes in Members Capital
    (Deficit)


123Consolidated Statements of Cash Flows


124Notes to Consolidated Financial Statements


125Sunrise First Assisted Living Holdings, LLCIndependent Auditors Report


131Consolidated Balance Sheets


132Consolidated Statements of Operations


133Consolidated Statements of Changes in Members (Deficit)
    Capital


134Consolidated Statements of Cash Flows


135Notes to Consolidated Financial Statements


136Sunrise Second Assisted Living Holdings, LLCIndependent Auditors Report


141Consolidated Balance Sheets


142Consolidated Statements of Operations


143Consolidated Statements of Changes in Members (Deficit)
    Capital


144Consolidated Statements of Cash Flows


145Notes to Consolidated Financial Statements


146Metropolitan Senior Housing, LLCReport of Independent Auditors


151Consolidated Balance Sheets


152Consolidated Statements of Operations


153Consolidated Statements of Changes in Members (Deficit)
    Capital


154Consolidated Statements of Cash Flows


155Notes to Consolidated Financial Statements


156PS Germany Investment (Jersey) LPReport of Independent Auditors


163Consolidated Income Statement


164Consolidated Balance Sheet


165Consolidated Statements of Changes in Partners Capital


166Consolidated Statements of Cash Flows


167Notes to Consolidated Financial Statements


168Sunrise Aston Gardens Venture, LLC*Sunrise IV Senior Living Holdings*     *
    
    To be filed by amendment as soon as these financial statements
    become available. See Item 1B, Unresolved Staff
    Comments. 190




---



##### 



Form 10-K
 191




---



##### 



SIGNATURES
  th
    By:
    /s/Richard
    J. Nadeau    192




---



##### 



EXHIBIT INDEX
  INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number2
.1

Stock Purchase Agreement dated as of December 30, 2002 by and
    among Marriott International, Inc., Marriott Senior Holding Co.,
    Marriott Magenta Holding Company, Inc. and Sunrise Assisted
    Living, Inc.

10-K

March 27, 2003


2
.32
.2

Amendment No. 1 to Stock Purchase Agreement, dated as of March
    28, 2003, by and among Marriott International, Inc., Marriott
    Senior Holding Co., Marriott Magenta Holding Company, Inc. and
    Sunrise Assisted Living, Inc.

8-K

April 9, 2003


2
.22
.3

Master Agreement (CNL Q3 2003 Transaction) dated as of the
    30th day of September, 2003 by and among (i) Sunrise
    Development, Inc., (ii) Sunrise Senior Living Management, Inc.,
    (iii) Twenty Pack Management Corp., Sunrise Madison Senior
    Living, L.L.C. and Sunrise Development, Inc. (collectively, as
    the Tenant), (iv) CNL Retirement Sun1 Cresskill NJ, LP, CNL
    Retirement Edmonds WA, LP, CNL Retirement Sun1 Lilburn GA, LP
    and CNL Retirement Sun1 Madison NJ LP, and (v) Sunrise Senior
    Living, Inc.

8-K

October 15, 2003


2
.42
.4

Securities Purchase Agreement by and among Sunrise Senior
    Living, Inc., Greystone Partners, Ltd., Concorde Senior Living,
    LLC, Mahalo Limited, Westport Advisors, Ltd., Greystone
    Development Company, LLC, Michael B. Lanahan, Paul F. Steinhoff,
    Jr., Mark P. Andrews and John C. Spooner, dated as of May 2,
    2005.

10-Q

August 9, 2005


2
.12
.5

Asset Purchase Agreement by and among Sunrise Senior Living
    Investments, Inc., Fountains Continuum of Care Inc. and various
    of its subsidiaries and affiliates, and George B. Kaiser, dated
    as of January 19, 2005.

10-Q

May 10, 2005


10
.12
.6

Facilities Purchase and Sale Agreement by and among Sunrise
    Senior Living Investments, Inc., and Fountains Charitable Income
    Trust and various of its subsidiaries and affiliates, dated as
    of January 19, 2005.

10-Q

May 10, 2005


10
.22
.7

Purchaser Replacement and Release Agreement by and among Sunrise
    Senior Living, Inc. and various of its subsidiaries and
    affiliates and Fountains Charitable Income Trust and various of
    its subsidiaries and affiliates, dated as of February 18, 2005.

10-Q

May 10, 2005


10
.32
.8

Agreement and Plan of Merger, dated as of August 2, 2006, by and
    among Sunrise Senior Living, Inc., a newly-formed indirect
    wholly owned subsidiary of Sunrise and Trinity Hospice, Inc.,
    American Capital Strategies, Ltd. and certain affiliates of KRG
    Capital Partners, LLC, as the principal stockholders of Trinity
    Hospice, Inc.

10-K

March 24, 2008


2
.83
.1

Restated Certificate of Incorporation of Sunrise.

S-1

October 8, 1996


3
.1 193




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number3
.2

Certificate of Amendment to Restated Certificate of
    Incorporation of Sunrise regarding name change.

10-Q

August 13, 2003


3
.13
.3

Certification of Elimination of the Series C Junior
    Participation Preferred Stock of Sunrise Senior Living, Inc.

8-K

April 27, 2006


3
.13
.4

Certification of Designation of the Series D Junior
    Participating Preferred Stock.

8-K

April 21, 2006


3
.13
.5

Certificate of Amendment to Restated Certificate of
    Incorporation of Sunrise regarding increase in authorized shares
    of common stock.

10-K

July 31, 2008


3
.53
.6

Amended and Restated Bylaws of Sunrise, as amended.

8-K

March 18, 2008


3
.14
.1

Form of Common Stock Certificate.

10-K

March 24, 2008


4
.14
.2

Rights Agreement between Sunrise Senior Living, Inc. and
    American Stock Transfer & Trust Company, as Rights Agent
    dated April 24, 2006.

8-K

April 21, 2006


4
.110
.1

1995 Stock Option Plan, as amended.+

10-K

March 31, 1998


10
.2010
.2

1996 Directors Stock Option Plan, as amended.+

10-K

March 31, 1999


10
.3610
.3

1996 Non-Incentive Stock Option Plan, as amended.+

10-Q

May 15, 2000


10
.810
.4

1997 Stock Option Plan, as amended.+

10-K

March 31, 1998


10
.2510
.5

1998 Stock Option Plan.+

10-K

March 31, 1999


10
.4110
.6

1999 Stock Option Plan.+

10-Q

May 13, 1999


10
.110
.7

2000 Stock Option Plan.+

10-K

March 12, 2004


10
.410
.8

2001 Stock Option Plan.+

10-Q

August 14, 2001


10
.1510
.9

2002 Stock Option and Restricted Stock Plan.+

10-Q

August 14, 2002


10
.110
.10

2003 Stock Option and Restricted Stock Plan.+

10-Q

August 13, 2002


10
.110
.11

Forms of equity plan amendment adopted on March 19, 2008
    regarding determination of option exercise price.+

10-K

July 31, 2008


10
.1110
.12

Form of Executive Restricted Stock Agreement.+

10-Q

May 10, 2005


10
.410
.13

Form of Restricted Stock Unit Agreement.+

8-K

March 14, 2006


10
.110
.14

Form of Director Stock Option Agreement.+

8-K

September 14, 2005


10
.210
.15

Form of Stock Option Certificate.+

10-K

March 24, 2008


10
.1410
.16

Restricted Stock Agreement by and between Sunrise Senior Living,
    Inc. and Michael B. Lanahan, dated as of May 10, 2005.+

10-Q

August 9, 2005


10
.2 194




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.17

Form of Sunrise Assisted Living Holdings, L.P. Class A Limited
    Partner Unit Agreement.+

10-K

March 29, 2002


10
.8910
.18

Sunrise Employee Stock Purchase Plan, as amended.+

Def 14A

April 7, 2005


B10
.19

Sunrise Executive Deferred Compensation Plan, effective June 1,
    2001.+

10-Q

August 14, 2001


10
.1410
.20

Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-Q

August 13, 2003


10
.210
.21

Second Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.2010
.22

Third Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.2110
.23

Fourth Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.2210
.24

Fifth Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.2310
.25

Greystone Communities Nonqualified Deferred Compensation Plan.+

10-K

July 31, 2008


10
.2510
.26

Bonus Deferral Programs for Certain Executive Officers.+

8-K

March 14, 2006


10
.210
.27

Sunrise Assisted Living, Inc. Long Term Incentive Cash Bonus
    Plan effective August 23, 2002.+

10-Q

November 13, 2002


10
.110
.28

Amendment 1 to the Sunrise Assisted Living, Inc. Long Term
    Incentive Cash Bonus Plan.+

10-K

March 16, 2005


10
.3210
.29

Sunrise Senior Living, Inc. Senior Executive Severance Plan.+

10-K

March 16, 2006


10
.5310
.30

Form of Indemnification Agreement.+

10-K

March 16, 2006


10
.5410
.31

Amended and Restated Employment Agreement dated as of November
    13, 2003 by and between Sunrise and Paul J. Klaassen.+

10-K

March 12, 2004


10
.110
.32

Amendment No. 1 to Amended and Restated Employment Agreement by
    and between Sunrise and Paul J. Klaassen.+

10-K

March 24, 2008


10
.3010
.33

Employment Agreement by and between Sunrise Senior Living, Inc.
    and Michael B. Lanahan, dated as of May 10, 2005.+

10-Q

August 9, 2005


10
.110
.34

2007 Non-Employee Director Fees and Other Compensation.+

10-K

July 31, 2008


10
.3410
.35

2007 Summary of Certain Compensation Arrangements for Named
    Executive Officers.+

10-K

July 31,2008


10
.35 195




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.36

Master Credit Facility Agreement by and between Sunrise
    Riverside Assisted Living, L.P., Sunrise Parma Assisted Living,
    L.L.C., Sunrise Wilton Assisted Living, L.L.C., Sunrise Wall
    Assisted Living, L.L.C., Sunrise Weston Assisted Living, Limited
    Partnership and Glaser Financial Group, Inc. dated as of
    November 29, 2001, as amended.

10-Q

May 14, 2002


10
.610
.37

Credit Agreement by and among Sunrise Senior Living, Inc. and
    certain subsidiaries, as the Borrowers, the subsidiaries of the
    Borrower as identified therein, as the Guarantors, Bank of
    America, N.A., as the Administrative Agent, Swing Line Lender
    and L/C Issuer, Wachovia Bank, National Association, as
    Syndication Agent, and other lender parties thereto, dated as of
    December 2, 2005.

8-K

December 8, 2005


10
.110
.38

Pledge, Assignment and Security Agreement between Sunrise Senior
    Living, Inc. and Bank of America, N.A., as Administrative Agent,
    dated as of December 2, 2005.

10-K

March 24, 2008


10
.4110
.39

First Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of March 6, 2006.

10-K

March 24, 2008


10
.4210
.40

Second Amendment to the Credit Agreement by and among Sunrise
    Senior Living, Inc. and certain subsidiaries, as the Borrowers,
    the subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of January 31, 2007.

10-K

March 24, 2008


10
.4310
.41

Third Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of June 27, 2007.

10-K

March 24, 2008


10
.4410
.42

Fourth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of September 17, 2007.

10-K

March 24, 2008


10
.45 196




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.43

Fifth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of January 31, 2008.

10-K

March 24, 2008


10
.4610
.44

Sixth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of February 19, 2008.

10-K

March 24, 2008


10
.4710
.45

Pledge, Assignment and Security Agreement between Sunrise Senior
    Living, Inc. and Bank of America, N.A., as Administrative Agent,
    dated as of February 19, 2008.

10-K

March 24, 2008


10
.4810
.46

Seventh Amendment to Credit Agreement by and among Sunrise
    Senior Living, Inc. and certain subsidiaries, as the Borrowers,
    the subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of March 13, 2008.

10-K

March 24, 2008


10
.4910
.47

Security Agreement by and among Sunrise Senior Living, Inc. and
    certain subsidiaries, as the Loan Parties, and Bank of America,
    N.A., as the Administrative Agent, Swing Line Lender and L/C
    Issuer, and other lender parties thereto, dated as of March 13,
    2008.

10-K

March 24, 2008


10
.5010
.48

Eighth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of July 23, 2008.

10-K

July 31,2008


10
.4810
.49

Second Amended and Restated Operating Agreement of Sunrise
    Second Assisted Living Holdings, LLC dated as of December 20,
    2002 by and between Sunrise Assisted Living Investments, Inc.
    and US Assisted Living Facilities II, Inc.

10-K

March 27, 2003


10
.10010
.50

Amended and Restated Master Owner/Manager Agreement dated as of
    December 20, 2002 by and between Sunrise Second Assisted Living
    Holdings, LLC, together with its subsidiaries, and Sunrise
    Assisted Living Management, Inc.

10-K

March 27, 2003


10
.103 197




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.51

Limited Liability Agreement of AL U.S. Development Venture, LLC
    dated as of December 23, 2002 by and between Sunrise Assisted
    Living Investments, Inc. and AEW Senior Housing Company, LLC.

10-K

March 27, 2003


10
.9810
.52

ROFO Agreement dated as of December 23, 2002 by and between AEW
    Capital Management, L.P., Sunrise Assisted Living, Inc., Sunrise
    Assisted Living Investments, Inc., Sunrise Assisted Living
    Management, Inc., and Sunrise Development, Inc.

10-K

March 27, 2003


10
.9910
.53

Development Agreement dated as of December 23, 2002 by and
    between Sunrise Development, Inc. and certain Sunrise affiliates.

10-K

March 27, 2003


10
.10210
.54

Operating Deficit Loan Agreement dated as of December 23, 2002
    by and between Sunrise Assisted Living Management, Inc. and
    certain Sunrise affiliates.

10-K

March 27, 2003


10
.10410
.55

Pre-Opening Services and Management Agreement dated as of
    December 23, 2002 by and between Sunrise Assisted Living
    Management, Inc. and certain Sunrise affiliates.

10-K

March 27, 2003


10
.10510
.56

Assumption and Reimbursement Agreement made effective as of
    March 28, 2003, by and among Marriott International, Inc.,
    Sunrise Assisted Living, Inc., Marriott Senior Living Services,
    Inc. and Marriott Continuing Care, LLC.

10-Q

May 15, 2003


10
.410
.57

Assumption and Reimbursement Agreement (CNL) made effective as
    of March 28, 2003, by and among Marriott International, Inc.,
    Marriott Continuing Care, LLC, CNL Retirement Properties, Inc.,
    CNL Retirement MA3 Pennsylvania, LP, and CNL Retirement MA3
    Virginia, LP.

10-Q

May 15, 2003


10
.510
.58

Ground Lease, dated June 7, 1994, by and between Sunrise
    Assisted Living Limited Partnership and Paul J. Klaassen and
    Teresa M. Klaassen.

S-1

March 20, 1996


10
.1610
.59

Termination of Lease Agreement by and between Sunrise Assisted
    Living Limited Partnership and Paul J. Klaassen and Teresa M.
    Klaassen, dated as of December 13, 2007.

10-K

March 24, 2008


10
.6110
.60

Amended and Restated Ground Lease, dated August 29, 2003, by and
    between Sunrise Fairfax Assisted Living, L.L.C. and Paul J.
    Klaassen and Teresa M. Klaassen.

10-K

March 24, 2008


10
.6210
.61

Stipulated Final Order of the Delaware Court of Chancery, dated
    September 5, 2007, settling the litigation previously filed by
    Millenco, L.L.C. seeking an order from the Court of Chancery of
    the State of Delaware pursuant to Section 211 of the Delaware
    General Corporation Law.

8-K

September 10, 2007


10
.1 198




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.62

Stipulated Final Order of the Delaware Court of Chancery, dated
    October 10, 2007, settling certain litigation filed by SEIU
    Master Trust regarding Sunrise Senior Living Inc.s 2007
    annual meeting of stockholders.

8-K

October 12, 2007


10
.110
.63

Letter dated March 16, 2008 regarding surrender of bonus
    compensation.+

10-K

March 24, 2008


10
.6510
.64

Multifamily Mortgage, Assignment of Rents and Security Agreement.

8-K

May 12, 2008


10
.110
.65

Discount MBS Multifamily Note.

8-K

May 12, 2008


10
.121


Subsidiaries of the Registrant.

10-K

July 31,2008


2131
.1

Certification of Chief Executive Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.

10-K

July 31,2008


31
.131
.2

Certification of Chief Financial Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.

10-K

July 31,2008


31
.231
.3

Certification of Chief Executive Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A31
.4

Certification of Chief Financial Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A32
.1

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.

10-K

July 31,2008


32
.132
.2

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.

10-K

July 31,2008


32
.232
.3

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A32
.4

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A    +
    
    Represents management contract or compensatory plan or
    arrangement.*
    
    Filed herewith. 199