The acquisitions are currently subject to long-term, triple-net leases, and all of the properties are managed by Senior Health Management LLC. The transaction remains subject to completion of due diligence and is expected to close this quarter.

"This transaction reflects our ability to reap the benefits of our recently announced REIT election by expanding our business into complementary real estate products like sale-leasebacks," says John Delaney, CapitalSource CEO. "Our current pipeline of healthcare real estate financings is extremely strong and reflects both our market leadership position and the fact that the market is very receptive to our new products. Consequently, we anticipate significant growth in our healthcare real estate portfolio in 2006 and beyond."

James Pieczynski, co-president of Healthcare and Specialty Finance for CapitalSource, adds that the "efficiencies of the REIT structure allow us to offer more competitive products to the market." CapitalSource and Senior Health have partnered previously. Bart Wyatt, president and CFO of Senior Health, says that by "using the down-REIT structure, the sellers have the ability to defer their taxes on the transaction until such time as they choose to exchange their LLC interests for CapitalSource common stock."