DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)   245 FISCHER AVENUE, D-1 COSTA MESA, CA (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

33-0160968 (I.R.S. EMPLOYER IDENTIFICATION NO.)     92626 (ZIP CODE)

		JUNE 30, 2002				DECEMBER 31, 2001
Current assets:
Cash and cash equivalents		$	13,688			$	13,234
Accounts receivable and amounts due from affiliates, net			1,182				744
Prepaids and other current assets			4,545				3,701
Impounds			3,451				3,779
Property held for sale, net			—				763
Total current assets			22,866				22,221
Property, furniture and equipment, net			115,544				116,929
Goodwill, net			18,354				18,354
Operating lease security deposits			9,244				9,414
Other non-current assets, net			15,033				10,259
		$	181,041			$	177,177
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,998			$	2,212
Accrued payroll costs			4,567				4,055
Other accrued liabilities			5,900				6,659
Notes payable, current portion			3,704				7,269
Accrued interest payable			843				823
Total current liabilities			17,012				21,018
Notes payable, less current portion			113,410				105,062
Lease liabilities			2,052				1,995
Other non-current liabilities			568				641
			133,042				128,716
Minority interest in majority owned entities			134				621
Shareholders’ equity:
Series A Preferred stock, $0.01 par value, convertible and redeemable; 2,000 shares authorized, none issued or outstanding at June 30, 2002 and December 31, 2001			—				—
Preferred stock, no par value; 8,000 shares authorized, none issued and outstanding			—				—
Common stock, $0.01 par value; 100,000 shares authorized, 17,460 shares issued and outstanding at June 30, 2002 and December 31, 2001			175				175
Additional paid in capital			145,337				145,337
Accumulated deficit			(97,647	)			(97,672	)
Total shareholders’ equity			47,865				47,840
Commitments and contingencies		$	181,041			$	177,177

		THREE MONTHS ENDED JUNE 30,								SIX MONTHS ENDED JUNE 30,
		2002				2001				2002				2001
Revenue:
Assisted living community revenue:
Rental revenue		$	31,569			$	28,889			$	63,573			$	57,557
Assisted living and other services			7,084				6,079				13,825				11,984
Skilled nursing facility revenue			831				644				1,594				1,195
Management fees			259				240				529				559
Total revenue			39,743				35,852				79,521				71,295
Operating expenses:
Assisted living community operating expense			23,732				21,441				47,356				43,088
Skilled nursing facility expenses			743				613				1,499				1,184
Community lease expense			8,003				7,671				16,025				15,379
General and administrative			2,610				2,592				5,291				5,261
Depreciation and amortization			1,929				1,976				3,828				3,988
Total operating expenses			37,017				34,293				73,999				68,900
Income from operations			2,726				1,559				5,522				2,395
Other income (expense):
Interest income			109				318				160				752
Other income (expense), net			43				(100	)			2				(65	)
Equity in loss of partnerships			(255	)			—				(626	)			—
Gain on sale of properties and partnership interests			54				—				54				2,887
Interest expense			(2,345	)			(2,299	)			(4,654	)			(4,617	)
Total other expense			(2,394	)			(2,081	)			(5,064	)			(1,043	)
Income (loss) before income tax expense, minority interest in income of majority owned entities and extraordinary item			332				(522	)			458				1,352
Income tax expense			(17	)			(15	)			(20	)			(38	)
Minority interest in income of majority owned entities			(145	)			(272	)			(413	)			(402	)
Income (loss) before extraordinary item			170				(809	)			25				912
Extraordinary gain from early extinguishment of debt, net of income tax			—				1,606				—				1,550
Net income		$	170			$	797			$	25			$	2,462
Basic and diluted income (loss) per common share:
Income (loss) before extraordinary item		$	0.01			$	(0.05	)		$	0.00			$	0.05
Extraordinary gain from early extinguishment of debt, net of income tax			—				0.10				—				0.09
Net income		$	0.01			$	0.05			$	0.00			$	0.14
Weighted average common shares outstanding			17,460				17,460				17,460				17,460

		SIX MONTHS ENDED JUNE 30,
		2002				2001
Net cash provided by (used in) operating activities:		$	3,400			$	(1,425	)
Cash flows provided by (used in) investing act