PHI (D.B.A. PRESBYTERIAN SENIOR LIVING) Consolidated Financial Statements December 31, 2010 (With Independent Auditors’ Report Thereon)

PRESBYTERIAN SENIOR LIVING

Table of Contents

Page Certification of Chief Executive and Chief Financial Officers

1

Independent Auditors’ Report

2

Consolidated Financial Statements: Consolidated Statement of Financial Position

3

Consolidated Statement of Operations and Change in Net Assets

5

Consolidated Statement of Cash Flows

7

Notes to Consolidated Financial Statements

8

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Independent Auditors’ Report

The Board of Trustees Presbyterian Senior Living: We have audited the accompanying consolidated statement of financial position of PHI, doing business as Presbyterian Senior Living, and affiliates (collectively the Corporation), as of December 31, 2010, and the related consolidated statement of operations and change in net assets and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We did not audit the financial statements of Geneva House, Inc., Westminster Place at Parkesburg, L.P., Westminster Place at Windy Hill, L.P., Westminster Place at Carroll Village, L.P., Schartner House Associates, L.P. and Presbyterian Apartments, Inc., affiliates of Presbyterian Senior Living. The financial statements of Geneva House, Inc., Westminster Place at Parkesburg, L.P., Schartner House Associates, L.P. and Presbyterian Apartments, Inc. were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for those financial statements is based solely on the reports of the other auditors. The financial statements for these entities reflect total assets constituting 9.79 percent and total operating revenues, gains and other support constituting 4.06 percent of the related consolidated totals. The financial statements of Westminster Place at Bloomsburg and Westminster Place at Stewartstown were unaudited. The reports for these entities have been furnished to us by other accountants, and our opinion, insofar as it relates to the amounts included for these consolidated financial statements is based solely on the reports of the other accountants. The financial statements for these entities reflect total assets constituting 1.74 percent and equity received from tax credit limited partner constituting 42.41 percent of the related consolidated totals. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the reports of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Presbyterian Senior Living as of December 31, 2010, and the change in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Carbis Walker LLP New Castle, Pennsylvania March 31, 2011

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