Brookdale Senior Living (BKD) 8-K Brookdale Announces Fourth Quarter 2011 and Full Year Results

Brookdale Senior Living Inc.

Corporate Overview - selected financial information

As of December 31, 2011

Corporate Overview

Brookdale Senior Living Inc. ("BKD") is a leading owner and operator of senior living communities throughout the United States.  The Company is committed to providing an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents.  As of December 31, 2011, the Company operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 647 communities in 36 states and the ability to serve over 67,000 residents.

Stock Listing

Common Stock

NYSE: BKD

Community Information

Ownership Type	Number of Facilities		Number of Units		Percentage of Q4 2011 Revenues			Percentage of Q4 2011 Facility Operating Income			Percentage of YTD 2011 Revenues			Percentage of YTD 2011 Facility Operating Income
Owned		200		20,807		37.1	%		39.0	%		40.8	%		41.2	%
Leased		350		27,998		49.9	%		57.4	%		52.4	%		57.1	%
Managed		97		18,302		13.0	%		3.6	%		6.8	%		1.7	%
Total		647		67,107		100.0	%		100.0	%		100.0	%		100.0	%
Operating Type
Retirement Centers		76		14,563		20.4	%		27.2	%		21.4	%		26.7	%
Assisted Living		434		21,673		40.2	%		45.7	%		43.2	%		46.2	%
CCRCs		40		12,569		26.4	%		23.5	%		28.6	%		25.4	%
Managed		97		18,302		13.0	%		3.6	%		6.8	%		1.7	%
Total		647		67,107		100.0	%		100.0	%		100.0	%		100.0	%

CFFO Per Share
($ except where indicated)	FY 2010											FY 2011
			Q1		Q2		Q3		Q4	Full Year(1)			Q1		Q2		Q3		Q4	Full Year(1)
Reported CFFO		$	0.46	$	0.48	$	0.50	$	0.58	$	2.02	$	0.51	$	0.51	$	0.49	$	0.47	$	1.98
Add: integration and transaction-related costs			-		-		-		-		-		-		0.01		0.05		0.07	$	0.13
Adjusted CFFO		$	0.46	$	0.48	$	0.50	$	0.58	$	2.02	$	0.51	$	0.52	$	0.54	$	0.54	$	2.11
Weighted average shares (000's)			119,315		119,721		120,404		120,580				120,792		121,280		121,616		120,951
Period end outstanding shares (excluding unvested restricted shares) (000's)			119,367		120,256		120,545		120,777				120,835		121,973		120,911		121,133
(1) Full year CFFO for all periods is calculated as the sum of the quarterly amounts for the year.

Investor Relations

Ross Roadman

SVP, Investor Relations

Brookdale Senior Living Inc.

111 Westwood Place, Suite 400

Brentwood, TN 37027

Phone (615) 564-8104

rroadman@brookdaleliving.com

Note:  See accompanying fourth quarter earnings release for non-GAAP financial measure definitions and reconciliations.

Page 1

Brookdale Senior Living Inc.

Operating Segment Information

As of December 31, 2011

Average Occupancy and Rates based on Average Occupied Units in the Period

	FY 2010															FY 2011
		Q1			Q2			Q3			Q4		Full Year				Q1			Q2			Q3			Q4		Full Year
Retirement Centers
Number of communities (period end)		80			80			80			78			78			75			74			76			76			76
Total average units(1)		14,737			14,737			14,734			14,594			14,700			14,104			14,050			14,131			14,468			14,188
Weighted average unit occupancy		87.0	%		87.1	%		87.4	%		87.4	%		87.2	%		87.3	%		87.3	%		88.4	%		88.9	%		88.0	%
Average monthly revenue per unit(2)	$	3,419		$	3,434		$	3,461		$	3,467		$	3,445		$	3,482		$	3,501		$	3,524		$	3,544		$	3,513
Assisted Living
Number of communities (period end)		429			429			429			427			427			428			428			433			434			434
Total average units(1)		21,152			21,115			21,114			21,056			21,109			21,295			21,145			21,265			21,589			21,323
Weighted average unit occupancy		87.6	%		88.0	%		89.0	%		89.0	%		88.4	%		88.2	%		87.4	%		88.4	%		88.7	%		88.2	%
Average monthly revenue per unit(2)	$	4,526		$	4,571		$	4,606		$	4,589		$	4,573		$	4,705		$	4,722		$	4,717		$	4,703		$	4,712
CCRCs
Number of communities (period end)		36			36			36			35			35			36			36			40			40			40
Total average units(1)		11,287			11,276			11,269			11,264			11,274			11,211			11,212			11,395			11,785			11,401
Weighted average unit occupancy		84.0	%		84.2	%		84.4	%		84.7	%		84.3	%		85.3	%		84.4	%		84.4	%		84.9	%		84.8	%
Average monthly revenue per unit(2)	$	5,421		$	5,437		$	5,509		$	5,699		$	5,517		$	5,873		$	5,874		$	5,906		$	5,705		$	5,838
Consolidated Totals
Number of communities (period end)		545			545			545			540			540			539			538			549			550			550
Total average units(1)		47,176			47,128			47,117			46,914			47,083			46,610			46,407			46,791			47,842			46,912
Weighted average unit occupancy		86.6	%		86.8	%		87.4	%		87.5	%		87.1	%		87.2	%		86.6	%		87.4	%		87.8	%		87.3	%
Average monthly revenue per unit(2)	$	4,386		$	4,415		$	4,457		$	4,498		$	4,439		$	4,609		$	4,620		$	4,632		$	4,587		$	4,612
Management Services
Number of communities (period end)		19			19			19			19			19			19			19			98			97			97
Total average units(1)		3,788			3,788			3,786			3,786			3,787			3,784			3,785			8,649			18,328			8,636
Weighted average occupancy		83.4	%		83.5	%		83.7	%		84.5	%		83.8	%		84.7	%		84.8	%		84.3	%		84.4	%		84.5	%
Average monthly revenue per unit(2)	$	3,630		$	3,609		$	3,651		$	3,762		$	3,663		$	3,778		$	3,836		$	3,484		$	3,344		$	3,480

(1)	Total average units operated represent the average units operated during the period, excluding equity homes.
(2)	Average monthly revenue per unit represents the average of the total monthly revenues, excluding amortization of entrance fees, divided by average occupied units.

Page 2

Brookdale Senior Living Inc.

Same Community, Capital Expenditure and ISC Information

As of December 31, 2011

Same Community Information

($ in 000s, except Avg. Mo. Revenue/Unit)

	Three Months Ended December 31,									Years Ended December 31,
	2011			2010			% Change			2011			2010			% Change
Revenue	$	542,046		$	531,187			2.0	%	$	2,165,788		$	2,099,931			3.1	%
Operating Expense		363,037			343,296			5.8	%		1,433,611			1,368,789			4.7	%
Facility Operating Income	$	179,009		$	187,891			-4.7	%	$	732,177		$	731,142			0.1	%
Facility Operating Margin		33.0	%		35.4	%		-2.3	%		33.8	%		34.8	%		-1.0	%
# Communities		531			531						531			531
Avg. Period Occupancy		88.0	%		87.8	%		0.2	%		87.4	%		87.6	%		-0.2	%
Avg. Mo. Revenue/Unit	$	4,548		$	4,470			1.7	%	$	4,574		$	4,427			3.3	%

Schedule of Capital Expenditures
($ in 000s)
	Three Months Ended December 31,
	2011			2010
Type
Recurring	$	9,486		$	7,057
Reimbursements		(825	)		(671	)
Net Recurring		8,661			6,386
Corporate (1)		10,490			4,795
EBITDA-enhancing / Major Projects (2)		14,629			10,696
Program Max / Development, net (3)		10,446			423
Net Total Capital Expenditures (4)	$	44,226		$	22,300
(1) Corporate includes home health acquisitions, capital expenditures for information technology systems and equipment and expenditures supporting the expansion of our support platform and ancillary services programs.
(2) Includes EBITDA-enhancing projects (primarily community renovations and apartment upgrades) and other major building infrastructure projects.
(3) Includes community expansions and major repositioning or upgrade projects. Also includes de novo community developments.  Amounts shown are amounts invested, net of third party lender or lessor funding received of $0.5 million and $0.1 million for the three months ended December 31, 2011 and 2010, respectively.
(4) Approximately $9.9 million and $10.0 million of expense was recognized during the three months ended December 31, 2011 and 2010, respectively, for normal repairs and maintenance and capital spend under $1,500 per invoice, except for unit turnovers.

Information on Ancillary Services
	Three Months Ended December 31,
	2011		2010
Brookdale Units Served:
Therapy		36,212		34,691
Home Health		28,924		26,449
Avg. Mo. NOI/Occupied Unit Served:
Outpatient Therapy and Home Health Only
For the three months ended March 31, 2011	$	156
For the three months ended June 30, 2011	$	154
For the three months ended September 30, 2011	$	149
For the three months ended December 31, 2011	$	136

Page 3

Brookdale Senior Living Inc.

Capital Structure - selected financial information

As of December 31, 2011

($ in 000s)

Debt Maturities and Scheduled Principal Repayments

	Initial Maturities
	Mortgage		weighted			Line of		weighted			Mort. Debt		weighted			Capital		weighted			Total
	Debt (1)		rate (2)			Credit		rate (2)			& Line		rate (2)			Leases		rate (2)			Debt
2012	$	21,853		4.11	%	$	-		-		$	21,853		4.11	%	$	25,801		8.39	%	$	47,654
2013		571,531		3.87	%		-		-			571,531		3.87	%		29,199		8.40	%		600,730
2014		146,560		5.74	%		-		-			146,560		5.74	%		30,991		8.44	%		177,551
2015		36,032		5.74	%		-		-			36,032		5.74	%		32,888		8.48	%		68,920
2016		31,071		5.25	%		65,000		6.50	%		96,071		6.10	%		30,308		8.60	%		126,379
Thereafter		1,243,383		4.27	%		-		-			1,243,383		4.27	%		199,008		8.72	%		1,442,391
Total	$	2,050,430		4.30	%	$	65,000		6.50	%	$	2,115,430		4.37	%	$	348,195		8.61	%	$	2,463,625

	Final Maturities (3)
	Mortgage		weighted			Line of		weighted			Mort. Debt		weighted			Capital		weighted			Total
	Debt (1)		rate (2)			Credit		rate (2)			& Line		rate (2)			Leases		rate (2)			Debt
2012	$	21,853		4.11	%	$	-		-		$	21,853		4.11	%	$	25,801		8.39	%	$	47,654
2013		365,471		3.65	%		-		-			365,471		3.65	%		29,199		8.40	%		394,670
2014		7,505		4.88	%		-		-			7,505		4.88	%		30,991		8.44	%		38,496
2015		177,357		5.79	%		-		-			177,357		5.79	%		32,888		8.48	%		210,245
2016		32,462		5.17	%		65,000		6.50	%		97,462		6.06	%		30,308		8.60	%		127,770
Thereafter		1,445,782		4.26	%		-		-			1,445,782		4.26	%		199,008		8.72	%		1,644,790
Total	$	2,050,430		4.30	%	$	65,000		6.50	%	$	2,115,430		4.37	%	$	348,195		8.61	%	$	2,463,625

Coverage Ratios

	Twelve months ended December 31, 2011
							Interest/Cash Lease
	Units		FOI		Adj. FOI **		Payments		Coverage
Owned communities		20,807		328,296		270,840		93,229		2.9	x
Leased communities *		27,998		454,891		380,677		302,239		1.3	x

*  The leased communities include the capital leases.

**  Adjusted for 5% management fee and capital expenditures @ $350/unit.

Debt Amortization

	Year ended December 31,
	2011		2010
Scheduled debt amortization	$	20,796	$	9,202
Lease financing debt amortization - FMV or no purchase option(4)		10,465		8,972
Lease financing debt amortization - bargain purchase option		12,460		11,350
Total debt amortization	$	43,721	$	29,524

Line Availability

($000s)	09/30/10		12/31/10		03/31/11		06/30/11		09/30/11		12/31/11
Total line commitment	$	120,000	$	120,000	$	230,000	$	230,000	$	230,000	$	230,000
Line availability (7)	$	117,881	$	113,025	$	182,053	$	172,105	$	162,057	$	194,165
Ending line balance		-		-		-		-		35,000		65,000
Available to draw	$	117,881	$	113,025	$	182,053	$	172,105	$	127,057	$	129,165
Cash and cash equivalents		68,961		81,827		36,732		40,126		39,195		30,836
Total liquidity (available to draw + cash)	$	186,842	$	194,852	$	218,785	$	212,231	$	166,252	$	160,001
Total letters of credit outstanding	$	72,690	$	72,012	$	71,878	$	72,051	$	71,785	$	78,104

Leverage Ratios
				Annualized
	Balance			Leverage
Debt (1)	$	2,050,430
Capital leases		348,195
Total Debt	$	2,398,625			6.0	x
Plus: Line of credit (cash borrowings)		65,000
Less: Unrestricted cash		(30,836	)
Less: Cash held as collateral against existing debt		(3,975	)
Subtotal	$	2,428,814			6.0	x
2011 YTD Adjusted EBITDA	$	402,665
Annual cash lease expense multiplied by 8		2,164,984
Total adjusted debt	$	4,593,798			6.8	x
2011 YTD Adjusted EBITDAR	$	673,288
Debt Structure
				weighted
	Balance			rate (2)
Fixed rate debt (1)	$	1,413,676			4.99	%
Variable rate debt (1)		636,754			2.52	%
Capital leases		348,195			8.61	%
Line of credit (cash borrowings)		65,000			6.50	%
Total debt	$	2,463,625
	Balance			% of total
Variable rate debt with interest rate swaps (1) (5)	$	176,357			27.7	%
Variable rate debt with interest rate caps (1) (6)		243,534			38.2	%
Variable rate debt - unhedged (1)		216,863			34.1	%
Total variable rate debt (1)	$	636,754			100.0	%

(1) Includes mortgage debt, bond and discount mortgage backed security financing and convertible notes, but excludes capital leases and line of credit.

(2) Pertaining to variable rate debt, reflects a) market rates for stated reporting period and b) applicable swap rates / cap rates for hedged debt.

(3) Assumes extension options are exercised.

(4) Payments are included in CFFO.

(5) Weighted swap rate for stated reporting period is 1.59%.

(6) Weighted cap rate for stated reporting period of 5.74% is materially above current market rates, therefore caps have no impact on consolidated interest expense for given period.

(7) The actual amount available to borrow under the line may vary from time to time as it is based on borrowing base calculations related to the value and performance of the communities securing the facility.

Page 4

 Brookdale Senior Living Inc.

 Selected Data - 2011 Convertible Debt Issuance

 As of December 31, 2011

 ($ in 000's)

Issuance Proceeds:
Face Amount of Notes	316,250
Total Issuance Costs	(7,949	)	See detail below.
Purchase of Hedge	(77,007	)	The net cost of the bond hedge is $31,941.
Sale of Warrants	45,066		This net amount will reduce equity resulting from the issuance.
Net Cash Proceeds	276,360
Issuance Costs:
Notes Payable	5,944
Equity Component	2,005
	7,949
Initial GAAP Recording:
Cash Proceeds	276,360
Deferred Financing Costs	5,944
	282,304
Notes Payable	237,444			Face amount discounted using effective 7.5% interest rate.
Paid In Capital	44,860			See detail below.
	282,304
Change In Equity:
Imbedded Conversion Option	78,806
Purchase of Hedge	(77,007	)
Sale of Warrants	45,066
Equity Issuance Costs	(2,005	)
	44,860

Balance Sheet Balances				Interest Expense Amounts
	Notes		Deferred	Period	GAAP		Cash
As of	Liability		Fin. Costs	Ending	Interest		Interest
Closing		237,444	5,944
31-Dec-2011		241,899	5,519	6 Mo. 12/2011		9,214	4,759
31-Dec-2012		251,314	4,670	Year 12/2012		18,112	8,697
31-Dec-2013		261,445	3,821	Year 12/2013		18,828	8,697
31-Dec-2014		272,347	2,972	Year 12/2014		19,599	8,697
31-Dec-2015		284,079	2,123	Year 12/2015		20,429	8,697
31-Dec-2016		296,704	1,274	Year 12/2016		21,322	8,697
31-Dec-2017		310,290	424	Year 12/2017		22,283	8,697
15-Jun-2018		316,250	-	6 Mo. 6/2018		9,946	3,986

Page 5

Brookdale Senior Living Inc.

CFFO Reconciliation

As of December 31, 2011

CFFO Calculation

($ in 000s)
	Three Months Ended December 31,
	2011			2010
Net cash provided by operating activities (includes non-refundable entrance fees)	$	56,425		$	49,089
Changes in operating assets and liabilities (eliminates cash flow effect)		13,545			27,851
Add: Refundable entrance fees received		11,017			9,117
Less: First generation entrance fees received		(5,440	)		(4,060	)
Less: Entrance fee refunds disbursed		(8,107	)		(4,954	)
Less: Recurring capital expenditures, net		(8,661	)		(6,386	)
Less: Lease financing debt amortization with fair market value or no purchase options		(2,700	)		(2,313	)
Less: Facilitiy lease termination gain		-			(8	)
Less: Distributions from unconsolidated ventures from cumulative share of net earnings		(582	)		(775	)
Add: CFFO from unconsolidated ventures		1,249			2,050
Cash From Facility Operations	$	56,746		$	69,611
Add: Integration and transaction-related costs		8,026			-
Adjusted Cash From Facility Operations	$	64,772		$	69,611

Revenue Reconciliation (1)
($ in 000s except average monthly revenue per quarter)
	FY 2010															FY 2011
		Q1			Q2			Q3			Q4		Full Year				Q1			Q2			Q3			Q4		Full Year
Revenue reconciliation excl. entrance fee amortization
Average monthly revenue per quarter		4,386			4,415			4,457			4,498			4,439			4,609			4,620			4,632			4,587			4,612
Average monthly units (excluding equity homes) available		47,179			47,119			47,106			46,897			47,057			46,634			46,433			46,822			47,848			46,908
Average occupancy for the quarter		86.6	%		86.8	%		87.4	%		87.5	%		87.1	%		87.2	%		86.6	%		87.4	%		87.8	%		87.3	%
Resident fee revenue	$	537,290		$	541,773		$	550,491		$	553,722		$	2,183,276		$	562,273		$	557,319		$	568,660		$	578,104		$	2,266,356
Add:  management fee revenue		1,395			1,412			1,339			1,445			5,591			1,405			1,505			3,336			7,349			13,595
Total revenues excluding entrance fee amortization	$	538,685		$	543,185		$	551,830		$	555,167		$	2,188,867		$	563,678		$	558,824		$	571,996		$	585,453		$	2,279,951
CFFO Reconciliation to the Income Statement
Resident and management fee revenue	$	544,424		$	548,972		$	558,464		$	561,404		$	2,213,264		$	569,440		$	565,428		$	578,495		$	591,989		$	2,305,352
Less: Entrance fee amortization		(5,739	)		(5,787	)		(6,634	)		(6,237	)		(24,397	)		(5,762	)		(6,604	)		(6,499	)		(6,536	)		(25,401	)
Adjusted revenues		538,685			543,185			551,830			555,167			2,188,867			563,678			558,824			571,996			585,453			2,279,951
Less: Facility operating expenses		(355,324	)		(353,051	)		(368,936	)		(357,321	)		(1,434,632	)		(370,954	)		(366,242	)		(381,414	)		(389,961	)		(1,508,571	)
Add:  Gain on sale of communities, net		-			-			-			(3,298	)		(3,298	)		-			-			-			-			-
Add:  Change in future service obligation		-			(1,064	)		-			-			(1,064	)		-			-			-			-			-
		(355,324	)		(354,115	)		(368,936	)		(360,619	)		(1,438,994	)		(370,954	)		(366,242	)		(381,414	)		(389,961	)		(1,508,571	)
Less: G&A including non-cash stock-based compensation expense		(31,952	)		(31,834	)		(33,231	)		(34,692	)		(131,709	)		(33,543	)		(33,681	)		(38,711	)		(42,392	)		(148,327	)
Add:  G&A non-cash stock-based compensation expense		4,871			5,105			5,823			4,960			20,759			4,540			4,555			5,221			5,540			19,856
Net G&A		(27,081	)		(26,729	)		(27,408	)		(29,732	)		(110,950	)		(29,003	)		(29,126	)		(33,490	)		(36,852	)		(128,471	)
Less: Facility lease expense		(68,249	)		(67,175	)		(72,706	)		(67,383	)		(275,513	)		(66,315	)		(66,065	)		(68,314	)		(74,164	)		(274,858	)
Add:  Facility lease termination expense (gain)		-			-			4,616			(8	)		4,608			-			-			-			-			-
Add:  Straight-line lease expense		3,136			2,161			2,812			2,412			10,521			1,726			1,456			1,834			3,592			8,608
Less: Amortization of deferred gain		(1,086	)		(1,086	)		(1,086	)		(1,085	)		(4,343	)		(1,093	)		(1,093	)		(1,094	)		(1,093	)		(4,373	)
Net lease expense		(66,199	)		(66,100	)		(66,364	)		(66,064	)		(264,727	)		(65,682	)		(65,702	)		(67,574	)		(71,665	)		(270,623	)
Add:  Entrance fee receipts		12,021			9,377			19,133			14,827			55,358			9,712			12,454			15,726			17,480			55,372
Less: Entrance fee disbursements		(5,762	)		(5,360	)		(4,984	)		(4,954	)		(21,060	)		(4,930	)		(6,481	)		(5,475	)		(8,107	)		(24,993	)
Net entrance fees		6,259			4,017			14,149			9,873			34,298			4,782			5,973			10,251			9,373			30,379
Adjusted EBITDA		96,340			100,258			103,271			108,625			408,494			102,821			103,727			99,769			96,348			402,665
Less: Recurring capital expenditures, net		(6,441	)		(7,570	)		(7,572	)		(6,386	)		(27,969	)		(7,057	)		(9,268	)		(8,675	)		(8,661	)		(33,661	)
Less: Interest expense, net		(32,653	)		(33,450	)		(32,916	)		(31,384	)		(130,403	)		(30,936	)		(29,900	)		(29,262	)		(31,237	)		(121,335	)
Less: Lease financing debt amortization with fair market value or no purchase options		(2,171	)		(2,221	)		(2,267	)		(2,313	)		(8,972	)		(2,533	)		(2,587	)		(2,645	)		(2,700	)		(10,465	)
Less: Distributions from unconsolidated ventures from cumulative share of net earnings		-			-			-			(775	)		(775	)		-			-			-			(582	)		(582	)
Add:  CFFO from unconsolidated ventures		-			-			-			2,050			2,050			641			661			738			1,249			3,289
Less: Other		(678	)		(39	)		(830	)		(206	)		(1,753	)		(1,185	)		(1,328	)		196			2,329			12
Reported CFFO	$	54,397		$	56,978		$	59,686		$	69,611		$	240,672		$	61,751		$	61,305		$	60,121		$	56,746		$	239,923
Add:  integration and transaction-related costs		-			-			-			-			-			-			894			5,468			8,026			14,388
Adjusted CFFO	$	54,397		$	56,978		$	59,686		$	69,611		$	240,672		$	61,751		$	62,199		$	65,589		$	64,772		$	254,311
CFFO Per Share
($ except where indicated)	FY 2010															FY 2011
		Q1			Q2			Q3			Q4		Full Year(2)				Q1			Q2			Q3			Q4		Full Year(2)
Reported CFFO	$	0.46		$	0.48		$	0.50		$	0.58		$	2.02		$	0.51		$	0.51		$	0.49		$	0.47		$	1.98
Add:  integration and transaction-related costs		-			-			-			-			-			-			0.01			0.05			0.07		$	0.13
Adjusted CFFO	$	0.46		$	0.48		$	0.50		$	0.58		$	2.02		$	0.51		$	0.52		$	0.54		$	0.54		$	2.11
Shares used in calculation of CFFO (000's)		119,315			119,721			120,404			120,580						120,792			121,280			121,616			120,951

(1) Revenue excludes reimbursed costs incurred on behalf of managed communities.

(2) Full year CFFO for all periods is calculated as the sum of the quarterly amounts for the year.

Note:  CFFO is a measurement of liquidity that is not calculated in accordance with GAAP and should not be considered in isolation as a substitute for any GAAP financial measure.  CFFO is not a measure of financial performance under GAAP.  We strongly urge you to review the reconciliation of CFFO to GAAP net cash provided by operating activities, along with our consolidated financial statements, included in the accompanying earnings release.

Page 6

Brookdale Senior Living Inc.

Quarterly Entry Fee Information

As of December 31, 2011

	Q1 10	Q2 10	Q3 10	Q4 10	Q1 11	Q2 11	Q3 11	Q4 11
Occupancy	81.8%	81.3%	81.3%	82.0%	82.6%	82.3%	82.0%	82.9%
Ending # EF Vacant Units	547	569	594	588	594	620	621	616
# Closings	67	59	87	73	53	73	88	85
# of Refunds	80	67	81	82	69	72	73	75
Cash Basis ($ in 000's except average resale and refund)
Resale Receipts:
Proceeds from non-refundable entrance fees (1)(2)	6,883	5,566	8,098	6,709	4,918	8,305	9,360	8,387
Proceeds from refundable entrance fees (2)(3)	5,138	3,811	11,035	8,118	4,794	4,149	6,366	9,093
Total Cash Proceeds	12,021	9,377	19,133	14,827	9,712	12,454	15,726	17,480
Refunds of entrance fees (4)(5)	(5,762)	(5,360)	(4,984)	(4,954)	(4,930)	(6,481)	(5,475)	(8,107)
Net Resale Cash Flow	6,259	4,017	14,149	9,873	4,782	5,973	10,251	9,373
My Choice proceeds included in refundable resale receipts above	132	206	6,463	3,789	1,144	1,591	2,264	3,994
Average Resale $ (excluding My Choice proceeds)	177,448	155,441	145,632	151,205	161,660	148,808	152,977	158,659
Average Refund $ (excluding My Choice refunds)	(68,375)	(78,209)	(61,383)	(55,378)	(70,058)	(81,681)	(71,863)	(98,040)
Value of Unsold Inventory ($ in 000's except average resale price)
Gross Value @ Average Resale Price of $155,000 (2)								104,720
Refund Attachments								(11,308)
Net Cash Value								93,412
Income Statement Impact ($ in 000's)
On BKD's income statement, non-refundable entrance fees are amortized into revenue based on the unamortized balance per contract divided by the actuarial life of the resident. The following are the non-cash amortized non-refundable entrance fees for each quarter:
	Q1 10	Q2 10	Q3 10	Q4 10	Q1 11	Q2 11	Q3 11	Q4 11
Amortization of entrance fees (incl. gains on terminations) (6)	(5,426)	(5,404)	(6,173)	(5,765)	(5,204)	(6,022)	(5,890)	(5,869)

Principles of Entry Fee Accounting

Certain of BKD's communities have residency agreements which require the resident to pay an upfront fee prior to occupying the community and in return for a reduced monthly service fee and certain healthcare benefits.  BKD has a number of options for residents that give a choice of the amount of refundability of the upfront fee, the amount of entry fee for the unit and the amount of health care benefit in the community’s various levels of care.  The non-refundable portion of the entrance fee is recorded as deferred revenue and amortized over the estimated stay of the resident based on an actuarial valuation.  The refundable portion of a resident’s entrance fee is generally refundable within a certain time period following  contract termination or in certain agreements, upon the resale of a comparable unit or 12 months after the resident vacates the unit and is not amortized.

Notes:

(1) From Statement of Cash Flows (Operating Activities section) with line description: Proceeds from deferred entrance fee revenue.

(2) Excludes first generation entrance fees received from the sale of units at a recently opened entrance fee CCRC.

(3) From Statement of Cash Flows (Financing Activities section) with line description: Proceeds from refundable entrance fees (which includes My Choice proceeds).

(4) From Statement of Cash Flows (Financing Activities section) with line description: Refunds of entrance fees.

(5) Excludes first generation entrance fee refunds not replaced by second generation entrance fee receipts at a recently opened entrance fee CCRC ($0.8 million for the three months ended December 31, 2011).

(6) Excludes first generation entrance fee amortization.

Page 7

Brookdale Senior Living Inc.

Quarterly Cash Flow Statements

As of December 31, 2011

($ in 000s)

Cash Flow Statements
		Q1 2010			Q2 2010			Q3 2010			Q4 2010		FY 2010				Q1 2011			Q2 2011			Q3 2011			Q4 2011		FY 2011
Cash Flows from Operating Activities
Net loss	$	(14,295	)	$	(9,557	)	$	(16,913	)	$	(8,136	)	$	(48,901	)	$	(12,305	)	$	(33,959	)	$	(7,036	)	$	(14,875	)		(68,175	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on extinguishment of debt		19			682			856			-			1,557			2,894			15,254			715			-			18,863
Depreciation and amortization		75,657			75,578			77,195			72,874			301,304			74,486			72,587			68,381			66,479			281,933
Asset impairment		-			-			-			13,075			13,075			14,846			-			-			2,046			16,892
Loss (gain) on sale of assets and unconsolidated ventures		144			-			1,404			(4,057	)		(2,509	)		(1,315	)		-			135			-			(1,180	)
Equity in (earnings) loss of unconsolidated ventures		(397	)		(119	)		(272	)		620			(168	)		(266	)		(146	)		117			(1,137	)		(1,432	)
Distributions from unconsolidated ventures from cumulative share of net earnings		-			375			-			400			775			-			-			700			582			1,282
Amortization of deferred gain		(1,086	)		(1,086	)		(1,086	)		(1,085	)		(4,343	)		(1,093	)		(1,093	)		(1,094	)		(1,093	)		(4,373	)
Amortization of entrance fees		(5,739	)		(5,787	)		(6,634	)		(6,237	)		(24,397	)		(5,762	)		(6,604	)		(6,499	)		(6,536	)		(25,401	)
Proceeds from deferred entrance fee revenue		9,550			8,354			9,812			9,770			37,486			6,361			9,299			10,815			11,903			38,378
Deferred income tax (benefit) provision		(8,200	)		(5,743	)		(12,601	)		(6,751	)		(33,295	)		(11,841	)		11,841			-			943			943
Change in deferred lease liability		3,136			2,161			2,812			2,412			10,521			1,726			1,456			1,824			3,602			8,608
Change in fair value of derivatives and amortization		2,640			2,207			176			(905	)		4,118			8			2,635			1,508			(273	)		3,878
(Gain) loss on acquisition		-			-			-			-			-			-			-			(3,520	)		1,538			(1,982	)
Lessor cash reimbursement for tenant incentive		-			-			-			-			-			-			-			-			1,251			1,251
Change in future service obligation		-			(1,064	)		-			-			(1,064	)		-			-			-			-			-
Non-cash stock-based compensation		4,871			5,105			5,823			4,960			20,759			4,540			4,555			5,221			5,540			19,856
Changes in operating assets and liabilities:
Accounts receivable, net		(5,242	)		4,367			(5,605	)		(1,476	)		(7,956	)		(105	)		1,728			(3,998	)		(2,992	)		(5,367	)
Prepaid expenses and other assets, net		(9,171	)		(5,160	)		(1,008	)		(6,711	)		(22,050	)		460			1,477			(11,425	)		(13,446	)		(22,934	)
Accounts payable and accrued expenses		(11,825	)		2,035			15,511			(17,496	)		(11,775	)		8,453			(7,136	)		1,509			10,895			13,721
Tenant refundable fees and security deposits		(1,298	)		(971	)		(451	)		(438	)		(3,158	)		310			(287	)		(1,964	)		(245	)		(2,186	)
Deferred revenue		8,365			(3,735	)		(4,635	)		(1,730	)		(1,735	)		11,269			(6,921	)		(739	)		(7,757	)		(4,148	)
Net cash provided by operating activities		47,129			67,642			64,384			49,089			228,244			92,666			64,686			54,650			56,425			268,427
Cash Flows from Investing Activities
Decrease (increase) in lease security deposits and lease acquisition deposits, net		801			-			1,266			(4,242	)		(2,175	)		941			(1,313	)		(1,219	)		(1,497	)		(3,088	)
(Increase) decrease in cash and escrow deposits — restricted		(30,556	)		(5,804	)		33,793			7,272			4,705			54,455			3,841			(2,052	)		(68	)		56,176
Net proceeds from the sale of assets		1,487			-			-			10,592			12,079			23,147			5,885			1,785			-			30,817
Additions to property, plant, and equipment and leasehold intangibles, net of related payables		(23,102	)		(22,408	)		(25,094	)		(23,077	)		(93,681	)		(28,589	)		(39,340	)		(46,659	)		(45,543	)		(160,131	)
Purchase of marketable securities — restricted		-			-			-			-			-			(26,409	)		(6,315	)		-			-			(32,724	)
Sale of marketable securities — restricted		-			-			-			-			-			809			608			(2	)		16			1,431
Acquisition of assets, net of related payables and cash received		-			(21,809	)		(4,307	)		(31,832	)		(57,948	)		(51,330	)		(3,178	)		(89	)		(34,085	)		(88,682	)
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired		-			-			-			-			-			-			-			5,516			-			5,516
Payment on (issuance of) notes receivable, net		512			(343	)		844			66			1,079			403			-			1,271			(190	)		1,484
Investment in unconsolidated ventures		(848	)		(205	)		394			(1	)		(660	)		-			-			(13,711	)		(279	)		(13,990	)
Distributions received from unconsolidated ventures		47			-			30			20			97			60			56			40			50			206
Proceeds from sale of unconsolidated venture		-			-			675			-			675			-			-			-			-			-
Other		(316	)		-			(322	)		(38	)		(676	)		(164	)		(304	)		(353	)		(93	)		(914	)
Net cash (used in) provided by investing activities		(51,975	)		(50,569	)		7,279			(41,240	)		(136,505	)		(26,677	)		(40,060	)		(55,473	)		(81,689	)		(203,899	)
Cash Flows from Financing Activities
Proceeds from debt		49,108			119,576			213,392			32,719			414,795			28,000			2,417			447,108			5,144			482,669
Proceeds from issuance of convertible notes, net		-			-			-			-			-			-			308,335			(102	)		(21	)		308,212
Issuance of warrants		-			-			-			-			-			-			45,066			-			-			45,066
Purchase of bond hedge		-			-			-			-			-			-			(77,007	)		-			-			(77,007	)
Repayment of debt and capital lease obligations		(58,923	)		(134,031	)		(251,986	)		(31,587	)		(476,527	)		(134,550	)		(283,626	)		(461,397	)		(18,992	)		(898,565	)
Proceeds from line of credit		45,000			15,000			-			-			60,000			40,000			15,000			65,000			105,000			225,000
Repayment of line of credit		(30,000	)		(30,000	)		-			-			(60,000	)		(40,000	)		(15,000	)		(30,000	)		(75,000	)		(160,000	)
Payment of financing costs, net of related payables		(2,776	)		(3,268	)		(2,392	)		(105	)		(8,541	)		(2,575	)		(910	)		(4,685	)		(542	)		(8,712	)
Other		(181	)		137			(546	)		(173	)		(763	)		(184	)		(148	)		(122	)		(833	)		(1,287	)
Refundable entrance fees:
Proceeds from refundable entrance fees		8,442			6,619			12,242			9,117			36,420			6,080			5,310			7,204			11,017			29,611
Refunds of entrance fees		(5,762	)		(5,360	)		(4,984	)		(4,954	)		(21,060	)		(4,930	)		(6,481	)		(5,475	)		(8,868	)		(25,754	)
Cash portion of loss on extinguishment of debt		(179	)		-			-			-			(179	)		(2,861	)		(14,153	)		(26	)		-			(17,040	)
Recouponing and payment of swap termination		(640	)		(14	)		(19,773	)		-			(20,427	)		(64	)		(35	)		-			-			(99	)
Purchase of treasury stock		-			-			-			-			-			-			-			(17,613	)		-			(17,613	)
Net cash provided by (used in) financing activities		4,089			(31,341	)		(54,047	)		5,017			(76,282	)		(111,084	)		(21,232	)		(108	)		16,905			(115,519	)
Net (decrease) increase in cash and cash equivalents		(757	)		(14,268	)		17,616			12,866			15,457			(45,095	)		3,394			(931	)		(8,359	)		(50,991	)
Cash and cash equivalents at beginning of period		66,370			65,613			51,345			68,961			66,370			81,827			36,732			40,126			39,195			81,827
Cash and cash equivalents at end of period	$	65,613		$	51,345		$	68,961		$	81,827		$	81,827		$	36,732		$	40,126		$	39,195		$	30,836		$	30,836

Page 8