TIPTREE INC. — Annual Report 2009

Jul 15, 2010

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Form 10-K/A

(Amendment No. 2)

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended
December 31,
2009
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
	For the transition period
from to

Commission File Number: 001-33549

Care Investment Trust Inc.

(Exact name of Registrant as specified in its charter)

Maryland	38-3754322
(State or other jurisdiction
of incorporation or organization)	(IRS Employer Identification Number)

505 Fifth Avenue, 6 th Floor, New York, New York 10017 (Address of Registrant’s principal executive offices) (212) 771-0505 (Registrant’s telephone number, including area code) Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last day of the registrant’s most recently completed second fiscal quarter: $65,704,642.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 1, 2010, there were 20,235,924 shares, par value $0.001, of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE None.

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EXPLANATORY NOTE

The registrant is filing this Amendment No. 2 (the “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (“Original Report”), to (i) enhance the disclosure previously included in Note 6 (“Investments in Partially Owned Entities”) to the registrant’s Consolidated Financial Statements included under Item 8 (“Financial Statements and Supplementary Data”) by providing summarized financial data for four of the eight legal entities included in the registrant’s investment in the Cambridge medical office building portfolio that contributed more than 20% to the registrant’s 2009 consolidated pre-tax loss, (ii) update the disclosure previously included in Note 16 (“Commitments and Contingencies”) to the registrant’s Consolidated Financial Statements included under Item 8 (“Financial Statements and Supplementary Data”) by providing an update to the status of litigation through July 14, 2010 and (iii) separate audited financial statements for SMC-CIT Holding Company, LLC as of and for the years ended December 31, 2009 (audited) and December 31, 2008 (unaudited).

This Amendment includes information contained in the Original Report, and we have made no attempt in the Amendment to modify or update the disclosure presented in the Original Report, except as expressly identified above. The disclosures in this Amendment speak as of the date of the Original Report, and do not reflect events occurring after the filing of the Original Report. Accordingly, this Amendment should be read in conjunction with the Original Report, and in conjunction with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Report, including any amendments to those filings.

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Item	Description
PART II
Item 8.	Financial Statements and Supplementary
Data	2
PART IV
Item 15.	Exhibits, Financial Statement Schedules	36
EX-21.1
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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ITEM 8. Financial Statements and Supplementary Data

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Care Investment Trust Inc. and subsidiaries

New York, NY

We have audited the accompanying consolidated balance sheets of Care Investment Trust Inc. and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2009 and 2008, and for the period from June 22, 2007 (commencement of operations) to December 31, 2007. Our audits also included the financial statement schedules listed in the Index at Item 15. We also have audited the Company’s internal control over financial reporting as of December 31, 2009 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedules and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Care Investment Trust and subsidiaries as of December 31, 2009 and 2008, and the

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results of their operations and their cash flows for the years ended December 31, 2009 and 2008, and for the period from June 22, 2007 (commencement of operations) to December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ DELOITTE & TOUCHE LLP

Parsippany, NJ

March 16, 2010 (July 14, 2010 as to Notes 6 and 16)

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Care Investment Trust Inc. and Subsidiaries

XBRL,bs Consolidated Balance Sheets

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	December 31, — 2009	2008
	(Dollars in thousands — except
	share and per share data)
Assets:
Real Estate:
Land	$ 5,020	$	5,020
Buildings and improvements	101,000		101,524
Less: accumulated depreciation	(4,481	)	(1,414	)
Total real estate, net	101,539		105,130
Cash and cash equivalents	122,512		31,800
Investments in loans held at LOCOM	25,325		159,916
Investments in partially-owned entities	56,078		64,890
Accrued interest receivable	177		1,045
Deferred financing costs, net of accumulated amortization of
$1,122 and $432, respectively	713		1,402
Identified intangible assets — leases in place, net	4,471		4,295
Other assets	4,617		2,428
Total Assets	$ 315,432	$	370,906
Liabilities and Stockholders’ Equity
Liabilities:
Borrowings under warehouse line of credit	$ —	$	37,781
Mortgage notes payable	81,873		82,217
Accounts payable and accrued expenses	2,245		1,625
Accrued expenses payable to related party	544		3,793
Obligation to issue operating partnership units	2,890		3,045
Other liabilities	1,087		1,313
Total Liabilities	88,639		129,774
Commitments and Contingencies (Note 16)
Stockholders’ Equity:
Common stock: $0.001 par value, 250,000,000 shares
authorized, 21,159,647 and 21,021,359 shares issued,
respectively and 20,158,894 and 20,021,359 shares
outstanding, respectively	21		21
Treasury stock	(8,334	)	(8,330	)
Additional paid-in-capital	301,926		299,656
Accumulated deficit	(66,820	)	(50,215	)
Total Stockholders’ Equity	226,793		241,132
Total Liabilities and Stockholders’ Equity	$ 315,432	$	370,906

See Notes to Consolidated Financial Statements

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Care Investment Trust Inc. and Subsidiaries

XBRL,op Consolidated Statements of Operations

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					Period from
					June 22, 2007
	Year Ended		Year Ended		(Commencement
	December 31,		December 31,		of Operations) to
	2009		2008		December 31, 2007
	(Dollars in thousands — except share and per share
data)
Revenue
Rental revenue	$ 12,710		$ 6,228		$ —
Income from investments in loans	7,135		15,794		11,209
Other income	164		237		954
Total Revenue	20,009		22,259		12,163
Expenses
Management fees to related party	2,235		4,105		2,625
Marketing, general and administrative (including stock-based
compensation expense of $2,270, $1,212 and $9,459, respectively)	11,653		6,623		11,714
Depreciation and amortization	3,375		1,554		—
Realized (gain)/loss on loans sold	(1,064	)	2,662		—
Adjustment to valuation allowance on loans held at LOCOM	(4,046	)	29,327		—
Operating Expenses	12,153		44,271		14,339
Other (Income) Expense
Loss from investments in partially-owned entities	4,397		4,431		—
Unrealized (income)/loss on derivative instruments	(153	)	237		—
Interest income	(73	)	(395	)	(753	)
Interest expense, including amortization of deferred financing
costs	6,510		4,521		134
Net Loss	$ (2,826	)	$ (30,806	)	$ (1,557	)
Loss per share of common stock
Net loss, basic and diluted	$ (0.14	)	$ (1.47	)	$ (0.07	)
Weighted average common shares outstanding, basic and diluted	20,061,763		20,952,972		20,866,526

See Notes to Consolidated Financial Statements.

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Care Investment Trust Inc. and Subsidiaries

XBRL,se Consolidated Statement of Stockholders’ Equity

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Shares		$		Treasury — Stock		Additional — Paid in Capital	Deficit			Total
(Dollars in thousands, except share data)
Balance at June 22, 2007 (Commencement of Operations)	100	$	—	$ —		$ —	$	—		$ —
Proceeds from public offering of common stock	15,000,000		15	—		224,985		—		225,000
Underwriting and offering costs						(14,837	)	—		(14,837	)
Issuance of common stock for the acquisition of initial assets
from Manager	5,256,250		5	—		78,838		—		78,843
Stock-based compensation to Manager in common stock pursuant to
the Care Investment Trust, Inc. Manager equity plan	607,690		1	—		9,114		—		9,115
Stock-based compensation to non-employees in common stock
pursuant to the Care Investment Trust, Inc. Equity Plan	148,333		—	—		2,225		—		2,225
Unamortized portion of unvested common stock issued pursuant to
the Care Investment Trust Inc. Equity Plan	—		—	—		(1,943	)	—		(1,943	)
Stock-based compensation to directors for services rendered	5,215		—	—		62		—		62
Net loss for the period from June 22, 2007 (Commencement of
Operations) to December 31, 2007	—		—	—		—		(1,557	)	(1,557	)
Dividends declared and paid on common stock	—		—	—		—		(3,573	)	(3,573	)
Balance at December 31, 2007	21,017,588		21	—		298,444		(5,130	)	293,335
Treasury stock purchased	(1,000,000	)		(8,330	)	—		—		(8,330	)
Stock-based compensation, fair value net of forfeitures	(22,000	)	—	—		410		—		410
Stock-based compensation to directors for services rendered	25,771		—	—		270		—		270
Warrants granted to manager	—		—	—		532		—		532
Dividends declared and paid on common stock	—		—	—		—		(14,279	)	(14,279	)
Net loss	—		—	—		—		(30,806	)	(30,806	)
Balance, December 31, 2008	20,021,359	$	21	$ (8,330	)	$ 299,656	$	(50,215	)	$ 241,132
Treasury stock purchased	(753	)		(4	)	—		—		(4	)
Stock-based compensation fair value	90,738		—	—		1,970		—		1,970
Stock-based compensation to directors for services rendered	47,550		—	—		300		—		300
Dividends declared and paid on common stock	—		—	—		—		(13,779	)	(13,779	)
Net loss	—		—	—		—		(2,826	)	(2,826	)
Balance, December 31, 2009	20,158,894	$	21	$ (8,334	)	$ 301,926	$	(66,820	)	$ 226,793

See Notes to Consolidated Financial Statements

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Care Investment Trust Inc. and Subsidiaries

XBRL,cf Consolidated Statement of Cash Flows

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	For the Year		For the Year		For the Period — June 22, 2007
	Ended		Ended		(Commencement
	December 31,		December 31,		of Operations) to
	2009		2008		December 31, 2007
	(Dollars in thousands)
Cash Flow From Operating Activities
Net loss	$ (2,826	)	$ (30,806	)	$ (1,557	)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Increase in deferred rent receivable	(2,411	)	(1,218	)	—
Realized (gain)/loss on sale of loans	(1,064	)	2,662		(833	)
Loss from investments in partially-owned entities	4,397		4,431		—
Distribution of income from partially-owned entities	6,867		3,358		—
Amortization of loan premium paid on investment in loans	1,530		1,927		507
Amortization and write off of deferred financing cost	689		367		69
Amortization of deferred loan fees	(247	)	(380	)	149
Stock-based compensation to manager	—		—		9,115
Stock-based non-employee compensation	2,270		1,212		344
Depreciation and amortization on real estate, including
intangible assets	3,415		1,554		—
Unrealized (gain)/loss on derivative instruments	(153	)	237		—
Adjustment to valuation allowance on loans at LOCOM	(4,046	)	29,327		—
Changes in operating assets and liabilities:
Accrued interest receivable	868		854		(1,899	)
Other assets	220		(14	)	(1,237	)
Accounts payable and accrued expenses	620		116		4,628
Other liabilities including payable to related party	(3,475	)	(598	)	2,585
Net cash provided by operating activities	6,654		13,029		11,871
Cash Flow From Investing Activities
Purchase of initial assets from Manager	—		—		(204,272	)
Sale of loans to Manager	42,249		—		—
Sale of loans to third parties	55,790		—		—
Loan repayments	40,379		54,245		64,264
Loan investments	—		(10,864	)	(17,805	)
Investments in partially-owned entities	(2,452	)	(326	)	(69,503	)
Investments in real estate	—		(110,980	)	—
Net cash provided by (used in) investing activities	135,966		(67,925	)	(227,316	)
Cash Flow From Financing Activities
Proceeds from sale of common stock	—		—		225,000
Underwriting and offering costs	—		—		(14,837	)
Borrowing under mortgage notes payable	—		82,227		—
Principal payments under mortgage notes payable	(344	)	—		—
Borrowings under warehouse line of credit	—		13,601		25,000
Principal payments under warehouse line of credit	(37,781	)	(830	)	—
Treasury stock purchases	(4	)	(8,330	)	—
Payment of deferred financing costs			(1,012	)	(826	)
Dividends paid	( 13,779	)	( 14,279	)	( 3,573	)
Net cash (used in) provided by financing activities	(51,908	)	71,377		230,764
Net increase in cash and cash equivalents	90,712		16,481		15,319
Cash and cash equivalents, beginning of period	31,800		15,319		—
Cash and cash equivalents, end of period	$ 122,512		$ 31,800		$ 15,319
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$ 5,834		$ 4,181		$ 0.1
Issuance of Common Stock to Manager to purchase initial assets	$ —		$ —		$ 78,843
Obligation to issue operating partnership units in connection
with the Cambridge Investment	$ —		$ —		$ 2,850

See Notes to Consolidated Financial Statements

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Care Investment Trust Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2009, December 31, 2008 and for the Period from June 22, 2007 (Commencement of Operations) to December 31, 2007

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Note 1 — Organization

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Care Investment Trust Inc. (together with its subsidiaries, the “Company” or “Care” unless otherwise indicated or except where the context otherwise requires, “we”, “us” or “our”) is a real estate investment trust (“REIT”) with a geographically diverse portfolio of senior housing and healthcare-related assets in the United States. Care is externally managed and advised by CIT Healthcare LLC (“Manager”). As of December 31, 2009, this portfolio of assets consisted of real estate and mortgage related assets for senior housing facilities, skilled nursing facilities, medical office properties and first mortgage liens on healthcare related assets. Our owned senior housing facilities are leased, under “triple-net” leases, which require the tenants to pay all property-related expenses.

Care elected to be taxed as a REIT under the Internal Revenue Code commencing with our taxable year ended December 31, 2007. To maintain our tax status as a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders. At present, Care does not have any taxable REIT subsidiaries (“TRS”), but in the normal course of business expects to form such subsidiaries as necessary.

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Note 2 — Basis of Presentation and Significant Accounting Policies

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Basis of Presentation

On December 10, 2009, our Board of Directors approved a plan of liquidation and recommended that our shareholders approve the plan of liquidation. On January 28, 2010, our shareholders approved the plan of liquidation. Under the plan of liquidation, the Board of Directors reserves the right to continue to solicit and entertain proposals from third parties to acquire all or substantially all of the company’s outstanding common stock, prior to and after approval of the plan of liquidation by our shareholders. We have entered into a material definitive agreement for a sale of control of the Company and have not pursued the plan of liquidation. Since it is not probable that the Company would liquidate, the Company has presented its financial statements on a going concern basis. See Note 19.

Accounting Standards Codification (“ASC”)

In June 2009, the Financial Accounting Standards Board (“FASB”) issued a pronouncement establishing the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with GAAP. The standard explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for SEC registrants. This standard is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009. The Company adopted this standard in the third quarter of 2009.

Consolidation

The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. All significant intercompany balances and transactions have been eliminated.

Investments in partially-owned entities where the Company exercises significant influence over operating and financial policies of the subsidiary, but does not control the subsidiary, are reported under the equity method of accounting. Generally under the equity method of accounting, the Company’s share of the investee’s earnings or loss is included in the Company’s operating results.

Accounting Standards Codification 810 Consolidation (“ASC 810”) , requires a company to identify investments in other entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and to determine which business enterprise is the primary beneficiary of the VIE. A variable interest entity is broadly defined as an entity where either the equity investors as a group, if any, do not have a controlling financial interest or the equity investment at risk is insufficient to finance that entity’s activities without

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Care Investment Trust Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

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additional subordinated financial support. The Company consolidates investments in VIEs when it is determined that the Company is the primary beneficiary of the VIE at either the creation or the variable interest entity or upon the occurrence of a reconsideration event. The Company has concluded that neither of its partially-owned entities are VIEs.

Segment Reporting

Accounting Standards Codification 280 Segment Reporting (“ASC 280”) establishes standards for the way that public entities report information about operating segments in the financial statements. We are a REIT focused on originating and acquiring healthcare-related real estate and commercial mortgage debt and currently operate in only one reportable segment.

Cash and Cash Equivalents

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Included in cash and cash equivalents at December 31, 2009 and 2008, are approximately $1.1 million and $1.3 million, respectively in customer deposits maintained in an unrestricted account.

Real Estate and Identified Intangible Assets

Real estate and identified intangible assets are carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the acquisition, improvement and leasing of real estate are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is provided on a straight-line basis over the assets’ estimated useful lives which range from 7 to 40 years.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, and identified intangible assets such as above and below market leases and acquired in-place leases and customer relationships) and acquired liabilities in accordance Accounting Standards Codification 805 Business Combinations (“ASC 805”) , and Accounting Standards Codification 350-30 Intangibles — Goodwill and other (“ASC 350-30”) , and we allocate purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

Our properties, including any related intangible assets, are reviewed for impairment under ACS 360-10-35-15, Impairment or Disposal of Long-Lived Assets , (“ASC 360-10-35-15”) if events or circumstances change indicating that the carrying amount of the assets may not be recoverable. Impairment exists when the carrying amount of an asset exceeds its fair value. An impairment loss is measured based on the excess of the carrying amount over the fair value. We have determined fair value by using a discounted cash flow model and an appropriate discount rate. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. If our anticipated holding periods change or estimated cash flows decline based on market conditions or otherwise, an impairment loss may be recognized. As of December 31, 2009, we have not recognized an impairment loss.

Loans Held at LOCOM

Valuation Allowance on Loans Held at LOCOM

Investments in loans amounted to $25.3 million at December 31, 2009. We account for our investment in loans in accordance with Accounting Standards Codification 948 Financial Services — Mortgage Banking (“ASC 948”), which codified the FASB’s Accounting for Certain Mortgage Banking Activities . Under ASC 948, loans expected to be held for the foreseeable future or to maturity should be held at amortized cost, and all other loans should be held at the lower of cost or market (LOCOM), measured on an individual basis. In accordance with ASC 820 Fair Value

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Care Investment Trust Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

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Measurements and Disclosures (“ASC 820”), the Company includes nonperformance risk in calculating fair value adjustments. As specified in ASC 820, the framework for measuring fair value is based on independent observable inputs of market data and follows the following hierarchy:

Level 1 — Quoted prices in active markets for identical assets and liabilities.

Level 2 — Significant observable inputs based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations for which all significant assumptions are observable.

Level 3 — Significant unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.

At December 31, 2008, in connection with our decision to reposition ourselves from a mortgage REIT to a traditional direct property ownership REIT (referred to as an equity REIT, see Notes 2, 4, and 5) and as a result of existing market conditions, we transferred our portfolio of mortgage loans to LOCOM because we are no longer certain that we will hold the portfolio of loans either until maturity or for the foreseeable future. Until December 31, 2008, we held our loans until maturity, and therefore the loans had been carried at amortized cost, net of unamortized loan fees, acquisition and origination costs, unless the loans were impaired. In connection with the transfer, we recorded an initial valuation allowance of approximately $29.3 million representing the difference between our carrying amount of the loans and their estimated fair value at December 31, 2008. Interim assessments were made of carrying values of the loan based on available data, including sale and repayments on a quarterly basis during 2009. Gains or losses on sales are determined by comparing proceeds to carrying values based on interim assessments. At December 31, 2009, the valuation allowance was reduced to $8.4 million representing the difference between the carrying amounts and estimated fair value of the Company’s three remaining loans.

Coupon interest on the loans is recognized as revenue when earned. Receivables are evaluated for collectibility if a loan becomes more than 90 days past due. If fair value is lower than amortized cost, changes in fair value (gains and losses) are reported through our consolidated statement of operations through a valuation allowance on loans held at LOCOM. Loans previously written down may be written up based upon subsequent recoveries in value, but not above their cost basis.

Expense for credit losses in connection with loan investments is a charge to earnings to increase the allowance for credit losses to the level that management estimates to be adequate to cover probable losses considering delinquencies, loss experience and collateral quality. Impairment losses are taken for impaired loans based on the fair value of collateral on an individual loan basis. The fair value of the collateral may be determined by an evaluation of operating cash flow from the property during the projected holding period, and/or estimated sales value computed by applying an expected capitalization rate to the stabilized net operating income of the specific property, less selling costs. Whichever method is used, other factors considered relate to geographic trends and project diversification, the size of the portfolio and current economic conditions. Based upon these factors, we will establish an allowance for credit losses when appropriate. When it is probable that we will be unable to collect all amounts contractually due, the loan is considered impaired.

Investment in Partially-Owned Entities

We invest in preferred equity interests that allow us to participate in a percentage of the underlying property’s cash flows from operations and proceeds from a sale or refinancing. At the inception of the investment, we must determine whether such investment should be accounted for as a loan, joint venture or as real estate. Care invested in two equity investments as of December 31, 2009 and accounts for such investments as a joint venture.

The Company assesses whether there are indicators that the value of its partially owned entities may be impaired. An investment’s value is impaired if the Company determines that a decline in the value of the investment below its carrying value is other than temporary. To the extent impairment has occurred, the loss shall be measured

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as the excess of the carrying amount of the investment over the estimated value of the investment. As of December 31, 2009, the Company has not recognized any impairment on our partially owned entities.

Comprehensive Income

The Company has no items of other comprehensive income, and accordingly net loss is equal to comprehensive loss for all periods presented.

Revenue Recognition

Interest income on investments in loans is recognized over the life of the investment on the accrual basis. Fees received in connection with loans are recognized over the term of the loan as an adjustment to yield. Anticipated exit fees whose collection is expected will also be recognized over the term of the loan as an adjustment to yield. Unamortized fees are recognized when the associated loan investment is repaid before maturity on the date of such repayment. Premium and discount on purchased loans are amortized or accreted on the effective yield method over the remaining terms of the loans.

Income recognition will generally be suspended for loan investments at the earlier of the date at which payments become 90 days past due or when, in our opinion, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. For the years ended December 31, 2009 and 2008, we have no loans for which income recognition has been suspended.

The Company recognizes rental revenue in accordance with Accounting Standards Codification 840 Leases (“ASC 840”). ASC 840 requires that revenue be recognized on a straight-line basis over the non-cancelable term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. Renewal options in leases with rental terms that are lower than those in the primary term are excluded from the calculation of straight line rent if the renewals are not reasonably assured. We commence rental revenue recognition when the tenant takes control of the leased space. The Company recognizes lease termination payments as a component of rental revenue in the period received, provided that there are no further obligations under the lease.

Deferred Financing Costs

Deferred financing costs represent commitment fees, legal and other third party costs associated with obtaining commitments for financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements on the effective interest method and the amortization is reflected in interest expense. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions which do not close are expensed in the period in which it is determined that the financing will not close.

Stock-based Compensation Plans

We have two stock-based compensation plans, described more fully in Note 14. We account for the plans using the fair value recognition provisions of 505-50 Equity-Based Payments to Non-Employees (“ASC 505-50”) and ASC 718 — Compensation — Stock Compensation (“ASC 718”). ASC 505-50 and ASC 718 requires that compensation cost for stock-based compensation be recognized ratably over the service period of the award. Because all of our stock-based compensation is issued to non-employees and board members, the amount of compensation is to be adjusted in each subsequent reporting period based on the fair value of the award at the end of the reporting period until such time as the award has vested or the service being provided is substantially completed or, under certain circumstances, likely to be completed, whichever occurs first.

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Derivative Instruments

We account for derivative instruments in accordance with Accounting Standards Codification 815 Derivatives and Hedging (“ASC 815”). In the normal course of business, we may use a variety of derivative instruments to manage, or hedge, interest rate risk. We will require that hedging derivative instruments be effective in reducing the interest rate risk exposure they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Some derivative instruments may be associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction will occur. Instruments that meet these hedging criteria will be formally designated as hedges at the inception of the derivative contract.

To determine the fair value of derivative instruments, we may use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash flow analysis, option-pricing models, replacement cost, and termination cost are likely to be used to determine fair value. All methods of assessing fair value result in a general approximation of fair value, and such value may never actually be realized.

We may use a variety of commonly used derivative products that are considered “plain vanilla” derivatives. These derivatives typically include interest rate swaps, caps, collars and floors. We expressly prohibit the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, we have a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors, so we do not anticipate nonperformance by any of our counterparties.

We may employ swaps, forwards or purchased options to hedge qualifying forecasted transactions. Gains and losses related to these transactions are deferred and recognized in net income as interest expense in the same period or periods that the underlying transaction occurs, expires or is otherwise terminated.

Hedges that are reported at fair value and presented on the balance sheet could be characterized as either cash flow hedges or fair value hedges. For derivative instruments not designated as hedging instruments, the gain or loss resulting from the change in the estimated fair value of the derivative instruments will be recognized in current earnings during the period of change.

Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our REIT taxable income to stockholders. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to federal income tax on our taxable income at regular corporate rates and we will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distributions to stockholders. However, we believe that we will operate in such a manner as to qualify for treatment as a REIT and we intend to operate in the foreseeable future in such a manner so that we will qualify as a REIT for federal income tax purposes. We may, however, be subject to certain state and local taxes.

In July 2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109” (“FIN 48”). ASC 740 prescribes a recognition threshold and measurement attribute for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 requires that the financial statements reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. ASC 740 was adopted by

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the Company and became effective beginning January 1, 2007. The implementation of ASC 740 has not had a material impact on the Company’s consolidated financial statements.

Underwriting Commissions and Costs

Underwriting commissions and costs incurred in connection with our initial public offering are reflected as a reduction of additional paid-in-capital.

Organization Costs

Costs incurred to organize Care have been expensed as incurred.

Earnings per Share

We present basic earnings per share or EPS in accordance with ASC 260, Earnings per Share . We also present diluted EPS, when diluted EPS is lower than basic EPS. Basic EPS excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount. At December 31, 2009 and 2008, diluted EPS was the same as basic EPS because all outstanding restricted stock awards were anti-dilutive. The operating partnership units issued in connection with an investment (See Note 6) are in escrow and do not impact EPS.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Significant estimates are made for the valuation allowance on loans held at LOCOM, valuation of derivatives and impairment assessments. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, real estate, loan investments and interest receivable. We may place our cash investments in excess of insured amounts with high quality financial institutions. We perform ongoing analysis of credit risk concentrations in our real estate and loan investment portfolios by evaluating exposure to various markets, underlying property types, investment structure, term, sponsors, tenant mix and other credit metrics. The collateral securing our loan investments are real estate properties located in the United States.

Recent Accounting Pronouncements

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements which was codified in FASB ASC 810 Consolidation (“ASC 810”). ASC 810 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. ASC 810 is effective for the Company on January 1, 2009. The Company records its investments using the equity method and does not consolidate these joint ventures. As such, there is no impact upon adoption of ASC 810 on its consolidated financial statements.

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Disclosures about Derivative Instruments and Hedging Activities

On March 20, 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, which is codified in FASB ASC 815 Derivatives and Hedging Summary (“ASC 815”). The derivatives disclosure pronouncement provides for enhanced disclosures about how and why an entity uses derivatives and how and where those derivatives and related hedged items are reported in the entity’s financial statements. ASC 815 also requires certain tabular formats for disclosing such information. ASC 815 applies to all entities and all derivative instruments and related hedged items accounted for under this new pronouncement. Among other things, ASC 815 requires disclosures of an entity’s objectives and strategies for using derivatives by primary underlying risk and certain disclosures about the potential future collateral or cash requirements (that is, the effect on the entity’s liquidity) as a result of contingent credit-related features. ASC 815 is effective for the Company on January 1, 2009. The Company adopted ASC 815 in the first quarter of 2009 and included disclosures in its consolidated financial statements addressing how and why the Company uses derivative instruments, how derivative instruments are accounted for and how derivative instruments affect the Company’s financial position, financial performance, and cash flows. (See Note 9)

Disclosures about Fair Value of Financial Instruments

In April 2009, the FASB issued FSP 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments codified in FASB ASC 820 Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments and APB 28 Interim Financial Reporting by requiring an entity to provide qualitative and quantitative information on a quarterly basis about fair value estimates for any financial instruments not measured on the balance sheet at fair value. The Company adopted the disclosure requirements of ASC 820 in the quarter ended June 30, 2009.

In June 2009, issued ASU 2009-17 to codify FASB issued Statement No. 167, “ Amendments to FASB Interpretation No. 46(R) ” as ASC 810 (“ASC 810”), with the objective of improving financial reporting by entities involved with variable interest entities (VIE). It retains the scope of FIN 46(R) with the addition of entities previously considered qualifying special-purpose entities, as the concept of those entities was eliminated by FASB Statement No. 166, “ Accounting for Transfers of Financial Assets ” (ASU 2009-16; FASB ASC 860). ASC 810 will require an analysis to determine whether the entity’s variable interest or interests give it a controlling financial interest in a VIE.

On September 30, 2009, the FASB issued ASU 2009-12 to provide guidance on measuring the fair value of certain alternative investments. The ASU amends ASC 820 to offer investors a practical expedient for measuring the fair value of investments in certain entities that calculate net asset value per share. The ASU is effective for the first reporting period (including interim periods) ending after December 15, 2009 with early adoption permitted.

On January 21, 2010, the FASB issued ASU 2010-06, which amends ASC 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. The ASU also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The ASU is effective for the first reporting period (including interim periods) beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years, with early adoption permitted.

Subsequent Events

In May 2009, the FASB issued SFAS 165 Subsequent Events , which is codified in FASB ASC 855, Subsequent E vents (“ASC 855”). ASC 855 introduces the concept of financial statements being available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that

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date, that is, whether that date represents the date the financial statements were issued or were available to be issued. The pronouncement is effective for interim periods ending after June 15, 2009. The Company adopted ASC 855 in the 2009 second quarter. The Company evaluates subsequent events as of the date of issuance of its financial statements and considers the impact of all events that have taken place to that date in its disclosures and financials statements when reporting on the Company’s financial position and results of operations. The Company has evaluated subsequent events through the date of filing and has determined that no other events need to be disclosed.

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Note 3 — Real Estate Properties

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On June 26, 2008, we purchased twelve senior living properties for approximately $100.8 million from Bickford Senior Living Group LLC, an unaffiliated party. Concurrent with the purchase, we leased these properties to Bickford Master I, LLC (the “Master Lessee” or “Bickford”), for initial annual base rent of $8.3 million and additional base rent of $0.3 million, with fixed escalations of 3% for 15 years. The leases contain an option of four renewals of ten years each. The additional base rent is deferred and accrues for the first three years and then is paid starting with the first month of the fourth year. We funded this acquisition using cash on hand and mortgage borrowings of $74.6 million.

On September 30, 2008, we purchased two additional senior living properties for approximately $10.3 million from Bickford Senior Living Group LLC. Concurrent with the purchase, we leased these properties back to Bickford for initial annual base rent of $0.8 million and additional base rent of $0.03 million with fixed escalations of 3% for 14.75 years. The leases contain an option of four renewals of ten years each. The additional base rent is deferred and accrues for the first three years and then is paid starting with the first month of the fourth year. We funded this acquisition using cash on hand and mortgage borrowings of $7.6 million.

At each acquisition, we completed a preliminary assessment of the allocation of the fair value of the acquired assets (including land, buildings, equipment and in-place leases) in accordance with ASC 805 Business Combinations , and ASC 350 Intangibles — Goodwill and Other . Based upon that assessment, the final allocation of the purchase price to the fair values of the assets acquired is as follows (in millions):

Buildings, improvements and equipment	95.1
Furniture, fixtures and equipment	5.9
Land	5.0
Identified intangibles — leases in-place (Note 7)	5.0
$	111.0

Additionally, as part of the June 26, 2008 transaction we sold back a property acquired from Bickford Senior Living Group, LLC that was acquired on March 31, 2008 at its net carrying amount, which did not result in a gain or a loss to the Company.

As of December 31, 2009, the properties owned by Care, and leased to Bickford were 100% managed or operated by Bickford Senior Living Group, LLC. As an enticement for the Company to enter into the leasing arrangement for the properties, Care received additional collateral and guarantees of the lease obligation from parties affiliated with Bickford who act as subtenants under the master lease. The additional collateral pledged in support of Bickford’s obligation to the lease commitment included properties and ownership interests in affiliated companies of the subtenants.

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Future minimum annual rental revenue under the non-cancelable terms of the Company’s operating leases at December 31, 2009 are as follows (in thousands):

2010	9,527
2011	10,176
2012	10,874
2013	10,974
2014	11,062
Thereafter	108,434
$	161,047

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Note 4 — Investment in Loans Held at LOCOM

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As of December 31, 2009 and December 31, 2008, our net investments in loans amounted to $25.3 million and $159.9 million, respectively. During the years ended December 31, 2009 and 2008, we received $138.4 million and $54.2 million in principal repayments and proceeds from the loan sales and recognized $1.5 million and $1.9 million, respectively in amortization of the premium we paid for the purchase of our initial assets as a reduction of interest income. Our investments include senior whole loans and participations secured primarily by real estate in the form of pledges of ownership interests, direct liens or other security interests. The investments are in various geographic markets in the United States. These investments are all variable rate at December 31, 2009 and had a weighted average spread of 6.76% and 5.76% over one month LIBOR and have an average maturity of approximately 1.0 and 2.1 years at December 31, 2009 and 2008, respectively. Some loans are subject to interest rate floors. The effective yield on the portfolio was 6.99%, 6.20% and 8.22%, respectively for the years ended December 31, 2009 and December 31, 2008 and for the period from June 22, 2007 (commencement of operations) to December 31, 2007. One month LIBOR was 0.23% and 0.45% at December 31, 2009 and December 31, 2008, respectively.

December 31, 2009

Property Type(a)	Location — City	State	Cost — Basis (000s)	Rate	Maturity — Date
SNF/ALF(e)(k)	Nacogdoches	Texas	9,338	L+3.15%	10/02/11
SNF/Sr.Appts/ALF	Various	Texas/Louisiana	14,226	L+4.30%	02/01/11
SNF(e)(g)	Various	Michigan	10,178	L+7.00%	02/19/10
Investment in loans, gross			$ 33,742
Valuation allowance			(8,417	)
Loans held at LOCOM			$ 25,325

At the conclusion of 2008, upon considering changes in our strategies and changes in the marketplace discussed in Note 2, we transferred our portfolio of mortgage loans to the lower of cost or market in the December 31, 2008 financial statements because we were not certain that we would hold the portfolio of loans either until maturity or for the foreseeable future. The transfer resulted in a charge to earnings of $29.3 million.

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December 31, 2008

Property Type(a)	Location — City	State	Cost — Basis (000s)	Rate	Maturity — Date
SNF(h)	Middle River	Maryland	$ 9,185	L+3.75%	03/31/11
SNF/ALF/IL(j)	Various	Washington/Oregon	26,012	L+2.75%	10/04/11
SNF(b)(d)/(e)	Various	Michigan	23,767	L+2.25%	03/26/12
SNF(d)/(e)(h)	Various	Texas	6,540	L+3.00%	06/30/11
SNF(d)/(e)(h)	Austin	Texas	4,604	L+3.00%	05/30/11
SNF(b)(d)(e)	Various	Virginia	27,401	L+2.50%	03/01/12
SNF/ICF(d)/(e)(f)	Various	Illinois	29,045	L+3.00%	10/31/11
SNF(d)/(e)/(f)	San Antonio	Texas	8,412	L+3.50%	02/09/11
SNF/ALF(d)/(e)	Nacogdoches	Texas	9,696	L+3.15%	10/02/11
SNF/Sr.Appts/ALF	Various	Texas/Louisiana	15,682	L+4.30%	02/01/11
ALF(b)(e)	Daytona Beach	Florida	3,688	L+3.43%	08/11/11
SNF/IL(c)/(d)/(e)(h)	Georgetown	Texas	5,980	L+3.00%	07/31/09
SNF(i)	Aurora	Colorado	9,151	L+5.74%	08/04/10
SNF(e)	Various	Michigan	10,080	L+7.00%	02/19/10
Investment in loans, gross			$ 189,243
Valuation allowance			(29,327	)
Loans held at LOCOM			$ 159,916

| (a) | SNF refers to skilled nursing facilities; ALF refers to assisted
living facilities; ICF refers to intermediate care facility; and
Sr. Appts refers to senior living apartments. |
| --- | --- |
| (b) | Loans sold to Manager in 2009 at amounts equal to appraised fair
value for an aggregate amount of $42.2 million. (See
Note 5) |
| (c) | Borrower extended the maturity date to July 31, 2012 during
the second quarter of 2009. |
| (d) | Pledged as collateral for borrowings under our warehouse line of
credit as of December 31, 2008. On March 9, 2009, Care
repaid the outstanding borrowings on its warehouse line in full. |
| (e) | The mortgages are subject to various interest rate floors
ranging from 6.00% to 11.5%. |
| (f) | Loan prepaid in 2009 at amounts equal to remaining principal for
each respective loan. |
| (g) | Loan repaid at maturity in February 2010 for approximately
$10.0 million, see Note 19 |
| (h) | Loans sold to a third party in September 2009 for an aggregate
amount of $24.8 million |
| (i) | Loan sold to a third party in October 2009 for approximately
$8.5 million. |
| (j) | Loans sold to a third party in November 2009 for aggregate
proceeds of approximately $22.4 million. |
| (k) | Loan sold to a third party in March 2010 for approximately
$6.1 million of cash proceeds before selling costs |

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Our mortgage portfolio (gross) at December 31, 2009 is diversified by property type and U.S. geographic region as follows (in millions of dollars):

	December 31,
	2009
	Cost	% of
By Property Type	Basis	Portfolio
Skilled Nursing	$ 10.2	30.2 %
Mixed-use(1)	23.5	69.8 %
Total	$ 33.7	100.0 %

	December 31,
	2009
	Cost	% of
By U.S. Geographic Region	Basis	Portfolio
Midwest	$ 10.2	30.2 %
South	23.5	69.8 %
	$ 33.7	100.0 %

(1) Mixed-use facilities refer to properties that provide care to different segments of the elderly population based on their needs, such as Assisted Living with Skilled Nursing capabilities.

During the year ended December 31, 2009, the Company received proceeds of $37.5 million related to the prepayment of balances related to two mortgage loans and received proceeds of $42.2 million related to sales to its Manager. In addition, during the year ended December 31, 2009, the Company received $55.8 million related to sales of mortgage loans to third parties. See Note 13 for a roll forward of the investment held at fair value from December 31, 2008 to December 31, 2009. As of December 31, 2009, our portfolio of three mortgages was extended to five borrowers. Two of those three mortgage loans were sold or repaid in 2010 as indicated in (g) and (k), above. As of December 31, 2008, our portfolio of eighteen mortgages was extended to fourteen borrowers with the largest exposure to any single borrower at 20.9% of the carrying value of the portfolio. The carrying value of three loans, each to different borrowers with exposures of more than 10% of the carrying value of the total portfolio, amounted to 54.9% of the portfolio.

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Note 5 — Sales of Investments in Loans Held at LOCOM

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On September 30, 2008 we finalized a Mortgage Purchase Agreement (the “Agreement”) with our Manager that provided us an option to sell loans from our investment portfolio to our Manager at the loan’s fair value on the sale date. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for a discussion of the terms and conditions of the Agreement. Pursuant to the agreement, we sold loans in 2008 and 2009 as discussed below.

Pursuant to the agreement, we sold a loan with a carrying amount of approximately $24.8 million in November 2009. We incurred a loss on the sale of $2.4 million.

On February 3, 2009, we sold one loan with a net carrying amount of approximately $22.5 million as of December 31, 2008. Proceeds from the sale approximated the net carrying value of $22.5 million. We incurred a loss of $4.9 million on the sale of this loan. The loss on this loan was included in the valuation allowance on the loans held at LOCOM at December 31, 2008. On August 19, 2009, we sold two mortgage loans with a net carrying value of approximately $2.9 million as of December 31, 2008. Proceeds from the sale of those two mortgage loans approximated the net carrying value as of June 30, 2009 of $2.3 million. On September 16, 2009, we sold interests in a participation loan in Michigan with a net carrying value of approximately $19.7 million as of December 31, 2008 and reduced to $18.7 million at the time of sale as a result of principal paydown. Proceeds from the sale of the interests in the participation loan were approximately $17.4 million or approximately $1.3 million less than the net carrying value. All of these loans were sold under the Mortgage Purchase Agreement (the “Agreement”) with our Manager, which was finalized in 2008 and provided us an option to sell loans from our investment portfolio to our Manager at the loan’s fair value on the sale date. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for a discussion of the terms and conditions of the Agreement.

On September 15, 2009, we sold four mortgage loans to a third party with a net carrying value of approximately $22.8 million as of December 31, 2008 and $22.4 million as of June 30, 2009. Proceeds from the sale of these four mortgage loans were approximately $24.8 million or approximately $2.4 million above the net carrying value. On

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October 6, 2009, we sold one mortgage loan with a net carrying value of $8.2 million as of December 31, 2008 and an adjusted value of $8.4 million as of June 30, 2009. Proceeds from the sale of this mortgage loan were approximately $8.5 million or approximately $0.1 million above the net carrying value. On November 12, 2009, we sold one mortgage loan to a third party with a net carrying value of approximately $19.3 million as of December 31, 2008 and an adjusted value of $19.9 million as of June 30, 2009. Proceeds from the sale of this mortgage loan were approximately $22.4 million or approximately $2.5 million above the net carrying value.

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Note 6 — Investments in Partially-Owned Entities

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On December 31, 2007, Care, through its subsidiary ERC Sub, L.P., purchased an 85% equity interest in eight limited liability entities owning nine medical office buildings with a value of $263.0 million for $61.9 million in cash including the funding of certain reserve requirements. The Seller was Cambridge Holdings Incorporated (“Cambridge”) and the interests were acquired through a “DownREIT” partnership subsidiary, i.e., ERC Sub, L.P. The transaction also provided for the issuance of 700,000 operating partnership units to Cambridge subject to future performance of the underlying properties. These units were issued by us into escrow and will be released to Cambridge subject to the acquired properties meeting certain performance benchmarks. Based on the expected timing of the release of the operating partnership units from escrow, the fair value of the operating partnership units was $2.9 million and $3.0 million on December 31, 2009 and 2008, respectively. At December 31, 2014, each operating partnership unit held in escrow at that time is redeemable into one share of the Company’s common stock, subject to certain conditions. The Company has the option to pay cash or issue shares of company stock upon redemption.

In accordance with ASC 820, the obligation to issue operating partnership units is accounted for as a derivative instrument. Accordingly, the value of the obligation to issue the operating partnership units is reflected as a liability on the Company’s balance sheet and accordingly will be remeasured every period until the operating partnership units are released from escrow.

Care will receive an initial preferred minimum return of 8.0% on capital invested at close with 2.0% per annum escalations until certain portfolio performance metrics are achieved. As of December 31, 2009, the entities now owned with Cambridge carry $178.6 million in asset-specific mortgage debt which mature no earlier than the fourth quarter of 2016 and bear a weighted average fixed interest rate of 5.86%.

The Cambridge portfolio contains approximately 767,000 square feet and is located in major metropolitan markets in Texas (8) and Louisiana (1). The properties are situated on leading medical center campuses or adjacent to prominent acute care hospitals or ambulatory surgery centers. Affiliates of Cambridge will act as managing general partners of the entities that own the properties, as well as manage and lease these facilities.

Four of the eight Cambridge legal entities had a 2009 pre-tax loss which was greater than 20% of the Company’s 2009 loss. Supplemental summarized financial data detail for those four entities individually and aggregated for the remaining Cambridge entities with greater than 10% and less than 10% of the Company’s 2009

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loss as of and for the years ended December 31, 2009, along with 2008 amounts which are presented for comparative purposed, are as follows:

December 31, 2009 Balance Sheet Detail

		Nassau	Walnut Hill		Entities with <20% Significance — >10% of Care’s	<10% of Care’s
	Plano	Bay	(Dallas)	Allen	2009 Loss(A)	2009 Loss(B)	Combined
	Dollars in millions
Assets:
Real Estate	$ 58.1	$ 20.8	$ 36.3	$ 13.5	$ 53.2	$ 21.1	$ 203.0
Other Assets	4.6	2.4	3.1	1.6	10.1	1.7	23.5
Total Assets	$ 62.7	$ 23.2	$ 39.4	$ 15.1	$ 63.3	$ 22.8	$ 226.5
Liabilities:
Mortgage Debt	$ 55.0	$ 14.0	$ 28.5	$ 12.1	$ 50.4	$ 18.6	$ 178.6
Other Liabilities	3.0	1.1	1.4	1.2	5.0	0.2	11.9
Total Liabilities	$ 58.0	$ 15.1	$ 29.9	$ 13.3	$ 55.4	$ 18.8	$ 190.5
Equity	$ 4.7	$ 8.1	$ 9.5	$ 1.8	$ 7.9	$ 4.0	$ 36.0

Income Statement Detail

									Entities with <20% Significance
			Nassau		Walnut Hill				>10% of Care’s		<10% of Care’s
	Plano		Bay		(Dallas)		Allen		2009 Loss(A)		2009 Loss(B)		Combined
	Dollars in millions
Rental Revenue	$ 4.8		$ 2.2		$ 2.1		$ 1.1		$ 5.8		$ 1.7		$ 17.7
Operating Expense Reimbursements	1.8		0.3		0.9		0.6		1.2		0.4		5.2
Other Income	0.2		—		1.2		—		0.2		0.3		1.9
Total Revenue	$ 6.8		$ 2.5		$ 4.2		$ 1.7		$ 7.2		$ 2.4		$ 24.8
Operating Expenses	$ 2.1		$ 1.2		$ 1.2		$ 0.8		$ 2.6		$ 0.4		$ 8.3
Depreciation and Amortization	3.0		1.4		1.9		0.9		3.1		1.1		11.3
Total Expenses	8.9		3.4		5.0		2.5		8.8		2.6		31.2
Net Loss	$ (2.1	)	$ (0.9	)	$ (0.8	)	$ (0.8	)	$ (1.6	)	$ (0.2	)	$ (6.4	)

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December 31, 2008 Balance Sheet Detail

		Nassau	Walnut Hill		Entities with <20% Significance — >10% of Care’s	<10% of Care’s
	Plano	Bay	(Dallas)	Allen	2009 Loss(A)	2009 Loss(B)	Combined
	Dollars in millions
Assets:
Real Estate	$ 61.0	$ 19.8	$ 37.8	$ 14.3	$ 56.0	$ 22.2	$ 211.1
Other Assets	5.4	3.2	3.8	1.6	10.2	2.6	26.8
Total Assets	$ 66.4	$ 23.0	$ 41.6	$ 15.9	$ 66.2	$ 24.8	$ 237.9
Liabilities:
Mortgage Debt	$ 55.0	$ 14.0	$ 28.5	$ 12.1	$ 50.6	$ 18.6	$ 178.8
Other Liabilities	3.4	1.3	1.8	1.0	5.1	0.8	13.4
Total Liabilities	$ 58.4	$ 15.3	$ 30.3	$ 13.1	$ 55.7	$ 19.4	$ 192.2
Equity	$ 8.0	$ 7.7	$ 11.3	$ 2.8	$ 10.5	$ 5.4	$ 45.7

Income Statement Detail

									Entities with <20% Significance
			Nassau		Walnut Hill				>10% of Care’s		<10% of Care’s
	Plano		Bay		(Dallas)		Allen		2009 Loss(A)		2009 Loss(B)		Combined
	Dollars in millions
Rental Revenue	$ 4.6		$ 2.1		$ 2.0		$ 1.1		$ 5.6		$ 1.4		$ 16.8
Operating Expense Reimbursements	1.9		0.2		0.9		0.6		1.3		0.3		5.2
Other Income	0.4		—		1.2		—		0.4		0.3		2.3
Total Revenue	$ 6.9		$ 2.3		$ 4.1		$ 1.7		$ 7.3		$ 2.0		$ 24.3
Operating Expenses	$ 2.1		$ 1.0		$ 1.1		$ 0.8		$ 2.7		$ 0.4		$ 8.1
Depreciation and Amortization	3.0		1.3		2.0		0.8		3.0		1.0		11.1
Total Expenses	9.0		3.1		5.0		2.5		8.8		2.5		30.9
Net Loss	$ (2.1	)	$ (0.8	)	$ (0.9	)	$ (0.8	)	$ (1.5	)	$ (0.5	)	$ (6.6	)

| (A) | — Aggregated amounts for the following three entities
whose 2009 significance is between 10% and 20% to Care: Howell,
Gorbutt and Westgate. |
| --- | --- |
| (B) | — Amounts for one entity, Southlake, whose 2009
significance is less than 10% to Care. |

On December 31, 2007, the Company also formed a joint venture, SMC-CIT Holding Company, LLC, with an affiliate of Senior Management Concepts, LLC to acquire four independent and assisted living facilities located in Utah. Total capitalization of the joint venture is $61.0 million. Care invested $6.8 million in exchange for 100% of the preferred equity interests and 10% of the common equity interests of the joint venture. The Company will receive a preferred return of 15% on its invested capital and an additional common equity return equal to 10% of the projected free cash flow after payment of debt service and the preferred return. Subject to certain conditions being met, our preferred equity interest is subject to redemption at par beginning on January 1, 2010. We retain an option to put our preferred equity interest to our partner at par any time beginning on January 1, 2016. If our preferred equity interest is redeemed, we have the right to put our common equity interests to our partner within thirty days after notice at fair market value as determined by a third-party appraiser. Affiliates of Senior Management

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Concepts, LLC have leased the facilities from the joint venture for 15 years, expiring in 2022. Care accounts for its investment in SMC-CIT Holding Company, LLC under the equity method.

The four facilities contain 243 independent living units and 165 assisted living units. The properties were constructed in the last 25 years, and two were built in the last 10 years. Since both transactions closed on December 31, 2007, the Company recorded no income or loss on these investments for the period from June 22, 2007 (commencement of operations) to December 31, 2007.

For the years ended December 31, 2009 and December 31, 2008, our equity in the loss of our Cambridge portfolio amounted to $5.6 million and $5.6 million, respectively, which included $9.6 million and $9.4 million, respectively, attributable to our share of the depreciation and amortization expenses associated with the Cambridge properties. The Company’s investment in the Cambridge entities was $49.3 million and $58.1 million at December 31, 2009 and 2008, respectively. During the years ended December 31, 2009 and December 31, 2008, we received $5.8 million and $2.2 million in distributions from our investment in Cambridge.

For the years ended December 31, 2009 and December 31, 2008, we recognized $1.2 million and $1.1 million, respectively, in equity income from our interest in SMC and received $1.2 million and $1.1 million in distributions, respectively.

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Note 7 — Identified Intangible Assets — leases in-place, net

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The following table summarizes the Company’s identified intangible assets as of December 31, 2009:

| Identified
intangibles — leases in-place (amounts in
thousands ) — Gross amount | $ 4,960 | |
| --- | --- | --- |
| Accumulated amortization | (489 | ) |
| | $ 4,471 | |

The estimated annual amortization of acquired in-place leases for each of the succeeding years as of December 31, 2008 is as follows: (amounts in thousands )

2010	331
2011	331
2012	331
2013	331
2013	331
Thereafter	2,816

The Company amortizes this intangible asset over the life of the leases on a straight-line basis.

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Note 8 — Other Assets

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Other assets at December 31, 2009 and 2008 consisted of the following (amounts in thousands ) :

	December 31	December 31
	2009	2008
Straight-line effect of lease revenue	$ 3,628	$ 1,218
Prepaid expenses	722	390
Receivables	166	—
Deferred exit fees and other	100	820
Total other assets	$ 4,617	$ 2,428

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Note 9 — Borrowings under Warehouse Line of Credit

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On October 1, 2007, Care entered into a master repurchase agreement (“Agreement”) with Column Financial, Inc. (“Column”), an affiliate of Credit Suisse, one of the underwriters of Care’s initial public offering in June 2007. This type of lending arrangement is often referred to as a warehouse facility. The Agreement provided an initial line of credit of up to $300 million, which could be increased temporarily to an aggregate amount of $400 million under the terms of the Agreement.

On March 9, 2009, Care repaid this loan in full and closed the warehouse line of credit.

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Note 10 — Mortgage Notes Payable

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On June 26, 2008 with the acquisition of the twelve properties from Bickford Senior Living Group LLC, the Company entered into a mortgage loan with Red Mortgage Capital, Inc. for $74.6 million. The terms of the mortgage require interest-only payments at a fixed interest rate of 6.845% for the first twelve months. Commencing on the first anniversary and every month thereafter, the mortgage loan requires a fixed monthly payment of $0.5 million for both principal and interest until the maturity in July 2015 when the then outstanding balance of $69.6 million is due and payable. Care paid approximately $0.3 million in principal amortization during the year ended December 31, 2009. The mortgage loan is collateralized by the properties.

On September 30, 2008 with the acquisition of the two additional properties from Bickford, the Company entered into an additional mortgage loan with Red Mortgage Capital, Inc. for $7.6 million. The terms of the mortgage require interest and principal payments of approximately $52,000 based on a fixed interest rate of 7.17% until the maturity in July 2015 when the then outstanding balance of $7.1 million is due and payable. Care paid approximately $0.1 in principal amortization during the year ended December 31, 2009. The mortgage loan is collateralized by the properties.

As of December 31, 2009, principal repayments due under all borrowings for the next 5 years and thereafter are as follows (in millions):

2010	0.9
2011	0.9
2012	0.9
2013	1.0
2014	1.0
Thereafter	77.3

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Note 11 — Other Liabilities

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Other liabilities as of December 31, 2009 and 2008 consist principally of deposits and real estate escrows from borrowers amounting to $1.1 million and $1.3 million, respectively.

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Note 12 — Related Party Transactions

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Management Agreement

In connection with our initial public offering in 2007, we entered into a Management Agreement with our Manager, which describes the services to be provided by our Manager and its compensation for those services. Under the Management Agreement, our Manager, subject to the oversight of the Board of Directors of Care, is required to manage the day-to-day activities of the Company, for which the Manager receives a base management fee and is eligible for an incentive fee. The Manager is also entitled to charge the Company for certain expenses incurred on behalf of Care.

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On September 30, 2008, we amended our Management Agreement (“Amendment 1”). Pursuant to the terms of the amendment, the Base Management Fee (as defined in the Management Agreement) payable to the Manager under the Management Agreement is reduced to a monthly amount equal to 1 / 12 of 0.875% of the Company’s equity (as defined in the Management Agreement). In addition, pursuant to the terms of the Amendment, the Incentive Fee (as defined in the Management Agreement) to the Manager pursuant to the Management Agreement has been eliminated and the Termination Fee (as defined in the Management Agreement) to the Manager upon the termination or non-renewal of the Management Agreement shall be equal to the average annual Base Management Fee as earned by the Manager during the immediately preceding two years multiplied by three, but in no event shall the Termination Fee be less than $15.4 million.

In consideration of the Amendment and for the Manager’s continued and future services to the Company, the Company granted the Manager warrants to purchase 435,000 shares of the Company’s common stock at $17.00 per share (the “Warrant”) under the Manager Equity Plan adopted by the Company on June 21, 2007 (the “Manager Equity Plan”). The Warrant, which is immediately exercisable, expires on September 30, 2018.

In accordance with ASC 505-50, the Company used the Black-Scholes option pricing model to measure the fair value of the Warrant granted with the Amendment. The Black-Scholes model valued the Warrant using the following assumptions:

Volatility
Expected Dividend Yield	5.92 %
Risk-free Rate of Return	3.8 %
Current Market Price	$ 7.79
Strike Price	$ 17.00
Term of Warrant	10 years

The fair value of the Warrant is approximately $0.5 million, which is recorded as part of additional paid-in-capital with a corresponding entry to expense. The Warrant will be remeasured to fair value at each reporting date, and amortized into expense over 18 months, which represents the remaining initial term of the Management Agreement.

On January 15, 2010, the Company entered into an Amended and Restated Management Agreement, dated as of January 15, 2010 (“Amendment 2”) which amends and restates the Management Agreement, dated June 27, 2007, as amended by Amendment No. 1 to the Management Agreement. Amendment 2 became effective upon approval by the Company’s stockholders of the plan of liquidation on January 28, 2010. Amendment 2 shall continue in effect, unless earlier terminated in accordance with the terms thereof, until December 31, 2011.

Amendment 2 reduces the base management fee to a monthly amount equal to (i) $125,000 from February 1, 2010 until June 30, 2010 and (ii) $100,000 until the earlier of December 31, 2010 and the sale of certain assets and (iii) $75,000 until the effective date of expiration or earlier termination of the agreement, subject to additional provisions.

Pursuant to the terms of the Amendment 2, the Company shall pay the Manager a buyout payment of $7.5 million, payable in three installments of $2.5 million on January 28, 2010 and, effectively, April 1, 2010 and either June 30, 2011 or the effective date of the termination of the agreement if earlier. Amendment 2 provides the Company and the Manager with a right to terminate the agreement without cause, under certain conditions, and the Company with a right to terminate the agreement with cause, as defined in Amendment 1.

Pursuant to the terms of Amendment 2, the Manager is eligible for an incentive fee of $1.5 million under certain conditions where cash distributed or distributable to stockholders equals or exceeds $9.25 per share. See Note 16.

We are also responsible for reimbursing the Manager for its pro rata portion of certain expenses detailed in the initial agreement and subsequent amendments, such as rent, utilities, office furniture, equipment, and overhead,

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among others, required for our operations. Transactions with our Manager during the year ended December 31, 2009 included:

| • | Our $0.5 million liability to our Manager for professional
fees paid and other third party costs incurred by our Manager on
behalf of Care and management fees. |
| --- | --- |
| • | Our expense recognition of $0.5 million and
$2.2 million for the three months and year ended
December 31, 2009, respectively, for the base management
fee. |
| • | On February 3, 2009, we sold a loan with a book value of
$27.0 on the date of sale to our Manager for proceeds of $22.5
resulting in an approximate loss of $4.9 million. |
| • | On August 19, 2009, we sold two mortgage loans with a book
value of approximately $3.7 million to our Manager for
proceeds of $2.3 resulting in an approximate loss of
$1.4 million. |
| • | On September 16, 2009, we sold interests in a participation
loan in Michigan with book value of approximately
$22.2 million on the date of sale to our Manager for
proceeds of $17.4 million resulting in an approximate loss
of $4.8 million. |

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Note 13 — Fair Value of Financial Instruments

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The Company has established processes for determining fair values and fair value is based on quoted market prices, where available. If listed prices or quotes are not available, then fair value is based upon internally developed models that primarily use inputs that are market-based or independently-sourced market parameters.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of valuation hierarchy are defined as follows:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following describes the valuation methodologies used for the Company’s financial instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment in loans — the fair value of the portfolio is based primarily on appraisals from third parties. Investing in healthcare-related commercial mortgage debt is transacted through an over-the-counter market with minimal pricing transparency. Loans are infrequently traded and market quotes are not widely available and disseminated. The Company also gives consideration to its knowledge of the current marketplace and the credit worthiness of the borrowers in determining the fair value of the portfolio. At December 31, 2009, we valued our loans primarily based upon appraisals obtained from The Debt Exchange, Inc. or DebtX. When loans are under contract for sale or sold or repaid subsequent to the filing of our Form 10-K, they are valued at their fair value and are valued using level 2 inputs.

Obligation to issue operating partnership units — the fair value of our obligation to issue operating partnership units is based on an internally developed valuation model, as quoted market prices are not available nor are quoted prices for similar liabilities. Our model involves the use of management estimates as well as some Level 2 inputs. The variables in the model include the estimated release dates of the shares out of escrow, based on the expected performance of the underlying properties, a discount factor of approximately 15%, and the market price and expected quarterly dividend of Care’s common shares at each measurement date.

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The following table presents the Company’s financial instruments carried at fair value on the consolidated balance sheet as of December 31, 2009:

	Fair Value at December 31, 2009 — Level 1	Level 2	Level 3	Total
	($ in millions)
Assets
Investment in loans	$ —	$ 16.1	$ 9.2	$ 25.3
Liabilities
Obligation to issue operating partnership units(1)	$ —	$ —	$ 2.9	$ 2.9
	Fair Value at December 31, 2008
	Level 1	Level 2	Level 3	Total
Assets
Investment in loans	$ 22.5	$ —	$ 137.4	$ 159.9
Liabilities
Obligation to issue operating partnership units(1)	$ —	$ —	$ 3.0	$ 3.0

(1) At December 31, 2008, the fair value of our obligation to issue partnership units was $3.0 million and we recorded unrealized gain of $0.1 million on revaluation at December 31, 2009 and an unrealized loss of $0.2 million on revaluation at December 31, 2008.

The tables below present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant Level 2 and Level 3 inputs during 2009. Level 3 instruments presented in the tables include a liability to issue partnership units, which are carried at fair value. The Level 2 and Level 3 instruments were valued based upon appraisals, actual cash repayments and sales contracts or using models that, in management’s judgment, reflect the assumptions a marketplace participant would use at December 31, 2009.

	Level 3 Instruments — Fair
	Value Measurements
	Obligation to		Investment
	issue		in Loans Held
	Partnership		at Lower of Cost
	Units		or Market
	($ in millions)
Balance, December 31, 2008	$ (3.0	)	$ 159.9
Sales of loans to Manager	—		(42.3	)
Sales of loans to third parties	—		(55.8	)
Loan prepayments and principal repayments	—		(40.5	)
Total unrealized gains included in income statement	0.1		4.0
Transfers to Level 2	—		(16.1	)
Balance, December 31, 2009	$ (2.9	)	$ 9.2
Net change in unrealized losses from obligations
owed/investments still held at December 31, 2009	$ 0.1		$ 4.0

In addition we are required to disclose fair value information about financial instruments, whether or not recognized in the financial statements, for which it is practical to estimate that value. In cases where quoted market prices are not available, fair value is based upon the application of discount rates to estimated future cash flows based on market yields or other appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not

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necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

In addition to the amounts reflected in the financial statements at fair value as noted above, cash equivalents, accrued interest receivables, and accounts payable and accrued expenses reasonably approximate their fair values due to the short maturities of these items. Management believes that the mortgage notes payable of $74.6 million and $7.6 million that were incurred from the acquisitions of the Bickford properties on June 26, 2008 and September 30, 2008, respectively, have a fair value of approximately $85.1 million as of December 31, 2009. The fair value of the debt has been determined by evaluating the present value of the agreed upon cash flows at a discount rate reflective of financing terms currently available to us for collateral with the same credit and quality characteristics.

The Company is exposed to certain risks relating to its ongoing business. The primary risk managed by using derivative instruments is interest rate risk. Interest rate caps are entered into to manage interest rate risk associated with the Company’s borrowings. The company has no interest rate caps as of December 31, 2009.

We are required to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position. The Company has not designated any of its derivatives as hedging instruments. The Company’s financial statements included the following fair value amounts and gains and losses on derivative instruments (dollars in thousands):

	December 31,			December 31,
	2009			2008
	Balance	Balance		Balance
Derivatives not Designated as	Sheet	Fair		Sheet	Fair
Hedging Instruments	Location	Value		Location	Value
Operating Partnership Units	Obligation to issue operating partnership units	$ (2,890	)	Obligation to issue operating partnership units	$ (3,045	)
				Other assets	7
Total Derivatives		$ (2,890	)		$ (3,038	)

		Amount of (Gain)/Loss
		Recognized in Income on
		Derivative
	Location of (Gain)/Loss	Year Ended
Derivatives not Designated as	Recognized in Income on	December 31,		December 31,
Hedging Instruments	Derivative	2009		2008
Operating Partnership Units	Unrealized(gain)/loss on derivative instruments	$ (155	)	$ 195
Interest Rate Caps	Unrealized(gain)/loss on derivative instruments	2		42
	Total	$ (153	)	$ 237

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Note 14 — Stockholders’ Equity

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Our authorized capital stock consists of 100,000,000 shares of preferred stock, $0.001 par value and 250,000,000 shares of common stock, $0.001 par value. As of December 31, 2009 and 2008, no shares of preferred stock were issued and outstanding and 21,159,647 and 21,021,359 shares of our common stock were issued respectively and 20,158,894 and 20,021,359 shares of common stock were outstanding, respectively.

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Equity Plan

Restricted Stock Grants:

At the time of our initial public offering in June 2007, we issued 133,333 shares of common stock to our Manager’s employees, some of whom are officers or directors of Care and we also awarded 15,000 shares of common stock to Care’s independent board members. The shares granted to our Manager’s employees had an initial vesting date of June 22, 2010, three years from the date of grant. The shares granted to our independent board members vest ratably on the first, second and third anniversaries of the grant. During the year ended December 31, 2008, 42,000 shares of restricted stock granted to our Manager’s employees were forfeited and 10,000 shares vested due to a termination of an officer of the Manager without cause. In addition, 20,000 shares of restricted stock were granted to a board member who formerly served as an employee of our Manager. These shares had a fair value of $183,000 at issuance and had an initial vesting date of June 27, 2010.

On January 28, 2010, our shareholders approved the Company’s plan of liquidation. Under the terms of each of these awards, the approval of the plan of liquidation by our shareholders accelerated the vesting of the awards on that day.

Schedule of Non Vested Shares — Equity Plan

Independent	Manager’s	Total
Directors	Employees	Grants
Balance at January 1, 2008	15,000	133,333	148,333
Granted	20,000	—	20,000
Vested	5,000	10,000	15,000
Forfeited	—	42,000	42,000
Balance at December 31, 2008	30,000	81,333	111,333
Granted	—	—	—
Vested	30,000	81,333	111,333
Forfeited	—	—	—
Balance at December 31, 2009	—	—	—

Restricted Stock Units:

On April 8, 2008, the Compensation Committee (the “Committee”) of the Board of Directors of Care awarded the Company’s CEO, 35,000 shares of restricted stock units (“RSUs”) under the Care Investment Trust Inc. Equity Incentive Plan (“Equity Plan”). The RSUs had a fair value of $385,000 on the grant date. The initial vesting of the award was 50% on the third anniversary of the award and the remaining 50% on the fourth anniversary of the award. Under the terms of these awards, shareholder approval of the plan of liquidation accelerated the vesting of the awards on that day.

On November 5, 2009, the Board of Directors of Care Investment Trust Inc. (the “Company”) awarded our Chairman of the Board of Directors 10,000 restricted stock units, which were initially subject to vesting in four equal installments, commencing on November 5, 2010. Under the terms of this award, shareholder approval of the plan of liquidation accelerated the vesting of this award on that day.

Long-Term Equity Incentive Programs:

On May 12, 2008, the Committee approved two new long-term equity incentive programs under the Equity Plan. The first program is an annual performance-based RSU award program (the “RSU Award Program”). All

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RSUs granted under the RSU Award Program included a vesting period of four years. The second program is a three-year performance share plan (the “Performance Share Plan”).

In connection with the initial adoption of the RSU Award Program, certain employees of the Manager and its affiliates were granted 68,308 RSUs on the adoption date with a grant date fair value of $0.7 million. 9,242 of these shares were forfeited in 2009. 14,763 of these shares vested in May 2009. Achievement of awards under the 2008 RSU Award Program was based upon the Company’s ability to meet both financial (AFFO per share) and strategic (shifting from a mortgage to an equity REIT) performance goals during 2008, as well as on the individual employee’s ability to meet performance goals. In accordance with the 2008 RSU Award Program 49,961 RSUs and 30,333 RSUs were granted on March 12, 2009 and May 7, 2009, respectively. RSUs granted in connection with the 2008 RSU Award Program were initially subject to the following vesting schedule:

2010	34,840
2011	52,340
2012	52,343
2013	20,074

Under the terms of each of these awards, shareholder approval of the plan of liquidation accelerated the vesting of the awards on that day.

Under the Performance Share Plan, a participant is granted a number of performance shares or units, the settlement of which will depend on the Company’s achievement of certain pre-determined financial goals at the end of the three-year performance period. Any shares received in settlement of the performance award will be issued to the participant in early 2011, without any further vesting requirements. With respect to the 2008-2010 performance periods, the performance goals relate to the Company’s ability to meet both financial (compound growth in AFFO per share) and share return goals (total shareholder return versus the Company’s healthcare equity and mortgage REIT peers). The Committee has established threshold, target and maximum levels of performance. If the Company meets the threshold level of performance, a participant will earn 50% of the performance share grant if it meets the target level of performance, a participant will earn 100% of the performance share grant and if it achieves the maximum level of performance, a participant will earn 200% of the performance share grant. As of December 31, 2009, no shares have been earned under this plan.

On December 10, 2009, the Company granted performance share awards to plan participants for an aggregate amount of 15,000 shares at target levels and an aggregate maximum of 30,000 shares. On February 23, 2009, the terms of the awards were modified such that the awards are now triggered upon the execution, during 2010, of one or more of the following transactions that results in a return of liquidity to the Company’s stockholders within the parameters expressed in the agreement: (i) a merger or other business combination resulting in the disposition of all of the issued and outstanding equity securities of the Company, (ii) a tender offer made directly to the Company’s stockholders either by the Company or a third party for at least a majority of the Company’s issued and outstanding common stock, or (iii) the declaration of aggregate distributions by the Company’s Board equal to or exceeding $8.00 per share.

As of December 31, 2009, 210,677 shares of our common stock and 197,615 RSUs had been granted pursuant to the Equity Plan and 267,516 shares remain available for future issuances. The Equity Plan will automatically expire on the 10th anniversary of the date it was adopted. Care’s Board of Directors may terminate, amend, modify or suspend the Equity Plan at any time, subject to stockholder approval in the case of amendments or modifications. We recorded $2.3 million of expense related to compensation and $1.2 million of expense related to remeasurement of grants to fair value for the years ended December 31, 2009 and 2008, respectively, Approximately $0.8 million of the expense recorded in 2009 related to accelerated vesting in the aggregate. All of the shares issued under our Equity Plan are considered non-employee awards. Accordingly, the expense for each period is determined based on the fair value of each share or unit awarded over the required performance period.

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Shares Issued to Directors for Board Fees:

On January 5, 2009, April 3, 2009, July 1, 2009, October 1, 2009, and January 4, 2010, respectively, 9,624, 13,734, 14,418, 9,774 and 8,030 shares of common stock with an aggregate fair value of approximately $300,000 were granted to our independent directors as part of their annual retainer. Each independent director receives an annual base retainer of $100,000, payable quarterly in arrears, of which 50% is paid in cash and 50% in common stock of Care. Shares granted as part of the annual retainer vest immediately and are included in general and administrative expense.

Manager Equity Plan

Upon completion of our initial public offering in June 2007, approximately $1.3 million shares were made available and we granted 607,690 fully vested shares of our common stock to our Manager under the Manager Equity Plan. These shares are subject to our Manager’s right to register the resale of such shares pursuant to a registration rights agreement we entered into with our Manager in connection with our initial public offering. At December 31, 2009, 282,945 shares are available for future issuances under the Manager Equity Plan. The Manager Equity Plan will automatically expire on the 10th anniversary of the date it was adopted. Care’s Board of Directors may terminate, amend, modify or suspend the Manager Equity Plan at any time, subject to stockholder approval in the case of amendments or modifications.

The 282,945 shares available for future issuance under the Manager Equity Plan are net of 435,000 shares that may be issued upon conversion of a warrant issued to our Manager described in Note 12.

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Note 15 — Loss per share ($ in thousands, except share and per share data)

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					For the Period from
					June 22, 2007
	For the Year		For the Year		(Commencement of
	Ended		Ended		Operations) to
	December 31, 2009		December 31, 2008		December 31, 2007
Loss per share — basic and diluted	$ (0.14	)	$ (1.47	)	$ (0.07	)
Numerator
Net loss	$ (2,826	)	$ (30,806	)	$ (1,557	)
Denominator
Weighted Average Common Shares Outstanding	20,061,763		20,952,972		20,866,526

Diluted loss per share was the same as basic loss per share for each period because all outstanding restricted stock awards were anti-dilutive.

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Note 16 — Commitments and Contingencies

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At December 31, 2009, Care was obligated to provide approximately $1.9 million in tenant improvements related to our purchase of the Cambridge properties in 2010. Care is also obligated to fund additional payments for expansion of four of the facilities acquired in the Bickford transaction on June 26, 2008. The maximum amount that the Company is obligated to fund is $7.2 million. Since these payments would increase our investment in the properties, the minimum base rent and additional base rent would increase based on the amounts funded. After funding the expansion payments and meeting certain conditions as outlined in the documents associated with the transaction, the sellers are entitled to the balance of the commitment of $7.2 million less the total of all expansion payments made in conjunction with the properties. As of December 31, 2009, no expansion payments have been requested and Bickford has yet to meet any of a series of conditions which would need to be satisfied by July 26, 2010 in accordance with the terms of the agreement.

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Under our Management Agreement, our Manager, subject to the oversight of the Company’s board of directors, is required to manage the day-to-day activities of Care, for which the Manager receives a base management fee. The Management Agreement was amended on January 15, 2010, effective on January 28, 2010 (see Note 12).

Under the amended terms, the agreement expires on December 31, 2011. The base management fee is payable monthly in arrears in an amount equal to 1/12 of 0.875% of the Company’s stockholders’ GAAP equity for January 2010 and $125,000 per month thereafter, subject to reduction to $100,000 per month under certain conditions.

In addition, under the amended terms the Company is obligated to make buyout payments, which replaced a termination fee contingency. The buyout payments were paid or payable as follows: (i) $2.5 million paid on January 29, 2010, (ii) $2.5 million upon the earlier of (a) April 1, 2010 and (b) the effective date of the termination of the Agreement by either of the Company or the Manager; and (iii) $2.5 million upon the earlier of (a) June 30, 2011 and (b) the effective date of the termination of the Agreement by either the Company or the Manager.

The table below summarizes our contractual obligations as of December 31, 2009.

	2010	2011	2012	2013	2014	Thereafter
	Amounts in millions
Commitment to fund tenant improvements	$ 1.9	$ —	$ —	$ —	$ —	$ —
Commitment to fund earn out	7.2	—	—	—	—	—
Mortgage notes payable	6.5	6.5	6.5	6.5	6.5	80.4
Management fee	1.5	1.5	—	—	—	—
Buyout fee to Manager	5.0	2.5	—	—	—	—

Care has commitments at December 31, 2009 to finance tenant improvements of $1.9 million and earn out of $7.2 million under certain conditions. The commitment amount for the earn out is contingent upon meeting certain conditions. If those conditions are not met, our obligation to fund those commitments would be zero. $1.7 million of tenant improvement represents hold back from the initial purchase of Cambridge. No provision for the earn out contingency has been accrued at December 31, 2009. The estimated amounts and timing of the commitments to fund tenant improvements are based on projections by the managers who are affiliates of Cambridge and Bickford.

Pursuant to terms of Amendment 2 to the Management Agreement, the Manager is eligible for an incentive fee of $1.5 million under certain conditions where distributable cash to stockholders equals or exceeds $9.25 per share. No provision has been made for the incentive fee.

On September 18, 2007, a class action complaint for violations of federal securities laws was filed in the United States District Court, Southern District of New York alleging that the Registration Statement relating to the initial public offering of shares of our common stock, filed on June 21, 2007, failed to disclose that certain of the assets in the contributed portfolio were materially impaired and overvalued and that we were experiencing increasing difficulty in securing our warehouse financing lines. On January 18, 2008, the court entered an order appointing co-lead plaintiffs and co-lead counsel. On February 19, 2008, the co-lead plaintiffs filed an amended complaint citing additional evidentiary support for the allegations in the complaint. We believe the complaint and allegations are without merit and intend to defend against the complaint and allegations vigorously. We filed a motion to dismiss the complaint on April 22, 2008. The plaintiffs filed an opposition to our motion to dismiss on July 9, 2008, to which we filed our reply on September 10, 2008. On March 4, 2009, the court denied our motion to dismiss. Care filed its answer on April 15, 2009. At a conference held on May 15, 2009, the Court ordered the parties to make a joint submission (the “Joint Statement”) setting forth: (i) the specific statements that Plaintiffs claim are false and misleading; (ii) the facts on which Plaintiffs rely as showing each alleged misstatement was false and misleading; and (iii) the facts on which Defendants rely as showing those statements were true. The parties filed the Joint Statement on June 3, 2009. On July 31, 2009, the parties entered into a stipulation that narrowed the scope of the

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proceeding to the single issue of the warehouse financing disclosure in the Registration Statement. Fact discovery closed on April 23, 2010.

The Court ordered the parties to file an abbreviated joint pre-trial statement on June 9, 2010, and scheduled a pre-trial conference for June 11, 2010. At the conclusion of the pre-trial conference, the Court asked the parties to agree on a summary judgment briefing schedule. The parties have since agreed, and the Court has ordered, that the Defendants file their motion for summary judgment on July 9, 2010 Plaintiffs file their opposition on August 6, 2010 and Defendants file their reply on August 27, 2010. The outcome of this matter cannot currently be predicted. To date, Care has incurred approximately $1.0 million to defend against this complaint and any incremental costs to defend will be paid by Care’s insurer. No provision for loss related to this matter has been accrued at December 31, 2009.

On November 25, 2009, we filed a lawsuit in the U.S. District Court for the Northern District of Texas against Saada Parties, seeking declaratory judgments that (i) we have the right to engage in a business combination transaction involving our company or a sale of our wholly owned subsidiary that serves as the general partner of the partnership that holds the direct investment in the portfolio without the approval of the Saada Parties, (ii) the contractual right of the Saada Parties to put their interests in the Cambridge medical office building portfolio has expired and (iii) the operating partnership units held by the Saada Parties do not entitle them to receive any special cash distributions made to our stockholders. We also brought affirmative claims for tortious interference by the Saada Parties with a prospective contract and for their breach of the implied covenant of good faith and fair dealing.

On January 27, 2010, the Saada Parties answered our complaint, and simultaneously filed Counterclaims that named our subsidiaries ERC Sub LLC and ERC Sub, L.P., external manager CIT Healthcare LLC, and board chairman Flint D. Besecker, as additional third-party defendants. The Counterclaims seek four declaratory judgments construing certain contracts among the parties that are largely the mirror image of our declaratory judgment claims. In addition, the Counterclaims also seek monetary damages for purported breaches of fiduciary duty and the duty of good faith and fair dealing, as well as fraudulent inducement, against us and the third-party defendants jointly and severally.

The Counterclaims further request indemnification by ERC Sub, L.P., pursuant to a contract between the parties, and the imposition of a “constructive trust” on our current assets to be disposed as part of any future liquidation of Care, including all proceeds from those assets. Although the Counterclaims do not itemize their asserted damages, they assign these damages a value of $100 million “or more.” In addition, the Saada Parties filed a motion to dismiss our tortious interference and breach of the implied covenant of good faith and fair dealing claims on January 27, 2010. In response to the Counterclaims, we filed on March 5, 2010, an omnibus motion to dismiss all of the Counterclaims.

On March 22, 2010, we received a letter from Cambridge Holdings, which asserted that the transactions with Tiptree were in violation of our agreements with the Saada Parties.

The Saada Parties filed their opposition to our omnibus motion to dismiss on March 26, 2010, and we filed our response on April 9, 2010.

On April 14, 2010, the Saada Parties’ motion to dismiss was denied and our motion to dismiss was also denied.

On April 27, 2010, we filed an answer to the Saada Parties’ third-party complaint. We continue to believe that the arguments advanced by Cambridge Holdings lack merit. See “Risk Factors — Risks Related to the Tiptree Transaction.”

On May 28, 2010, Cambridge Holdings filed a motion for leave to amend its previously-asserted counterclaims and third-party complaint to include a new claim for breach of contract against Care. This proposed new claim asserts that Cambridge Holdings and Care agreed, in October 2009, upon a sale of ERC Sub, L.P.’s 85% limited partnership interest in the Cambridge properties back to Cambridge Holdings for $20 million in cash plus certain other arrangements involving the cancellation of partnership units and existing escrow accounts. The proposed new

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claim further asserts that Care reneged on this purported agreement after having previously agreed to all of its material terms, thus “breaching” the agreement. Further, the proposed new claim seeks specific performance of the purported contract. Care denies that any agreement of the sort alleged by Cambridge Holdings was ever reached, and Care also believes that the proposed new claim suffers from several deficiencies. Care filed its opposition on June 18, 2010 and Cambridge Holdings replied on July 1, 2010. In the meantime, on June 21, 2010, ERC Sub sought leave to amend its counterclaims to assert a breach of contract action against Cambridge Holdings. Cambridge Holdings did not oppose ERC Sub’s motion. The outcome of this matter cannot currently be predicted. To date, Care has incurred approximately $0.6 million to defend against this complaint. No provision for loss related to this matter has been accrued at December 31, 2009.

Care is not presently involved in any other material litigation nor, to our knowledge, is any material litigation threatened against us or our investments, other than routine litigation arising in the ordinary course of business. Management believes the costs, if any, incurred by us related to litigation will not materially affect our financial position, operating results or liquidity.

Care is negotiating for the sale of the Company with a third party and has presented going concern financial statements based on its expectation that a sale of the company is likely to occur. See Notes 2 and 19.

On January 28, 2010, shareholders approved the Company’s plan of liquidation. See the Company’s definitive proxy statement filed with the Securities and Exchange Commission on December 28, 2010 containing the plan of liquidation. See Note 19.

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Note 17 — Financial Instruments: Derivatives and Hedging

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The fair value of our obligation to issue operating partnership units was $2.9 million and $3.0 million at December 31, 2009, December 31 and 2008, respectively.

On February 1, 2008, we entered into three interest rate caps on three loans pledged as collateral under our warehouse line of credit in order to increase the advance rates available on the pledged loans. These caps were terminated on April 20, 2009 for an amount equal to the remaining book value.

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Note 18 — Quarterly Financial Information (Unaudited)

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Summarized unaudited consolidated quarterly information for each of the years ended December 31, 2009 and 2008 is provided below.

	Quarter Ended — March 31(1)	June 30(1)		Sept. 30(1)		Dec. 31(1)
	(Amounts in millions except per share amounts)
2009:
Revenues	$ 6.1	$ 5.1		$ 5.0		$ 3.9
Income (loss) available to common shareholders	2.5	(0.5	)	(0.4	)	(4.4	)
Earnings per share — basic and diluted	$ 0.12	$ (0.03	)	$ (0.02	)	$ (0.21	)
Earnings per share — diluted	—	—		—		—

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	Quarter Ended — March 31	June 30	Sept. 30(1)		Dec. 31(1)
	(Amounts in millions except per share amounts)
2008:
Revenues	$ 4.7	$ 3.6	$ 6.6		$ 7.4
Income (loss) available to common shareholders	0.5	0.7	(3.5	)	(28.5	)
Earnings per share — basic and diluted	$ 0.02	$ 0.03	$ (0.17	)	$ (1.35	)
Earnings per share — diluted	$ 0.02	$ 0.03	—		—

(1) — Basic and diluted are the same as inclusion of diluted shares would be “anti-dilutive”

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Note 19 — Subsequent Events

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Repayment and Sale of Loans held at LOCOM

On February 19, 2010, one borrower repaid one of the Company’s mortgage loans with a net carrying value of approximately $10.0 million as of December 31, 2008 and a September 30, 2009 interim carrying value of approximately $10.0 million as of December 31, 2009. Proceeds from the repayment of this mortgage loan were approximately $10.0 million.

On March 2, 2010, we sold one mortgage loan to a third party with a net carrying value of approximately $7.8 million as of December 31, 2008 and a September 30, 2009 interim carrying value of approximately $6.1 million before selling costs as of December 31, 2009. Net realized proceeds from the sale of this mortgage loan after selling costs of approximately $0.2 million were approximately $5.9 million.

Amendment to Management Agreement with Manager

See Note 12 for a discussion of a January 15 amendment to the Company’s Management Agreement with its Manager.

Approval of Plan of Liquidation

On December 10, 2009, our Board of Directors approved a plan of liquidation and recommended that our shareholders approve the plan of liquidation. On January 28, 2010, our shareholders approved the plan of liquidation. We have entered into a material definitive agreement for a sale of control of the Company as described below and have not pursued the plan of liquidation.

Sale of Control of the Company

On March 16, 2010, we executed a definitive agreement with Tiptree Financial Partners, L.P. (“Tiptree” or the “Buyer”) for the sale of control of the Company in a series of contemplated transactions. Under the agreement, the parties have agreed to a sale of a quantity of shares to the Buyer to occur immediately following the completion of a cash tender offer by us for Care’s outstanding common shares. The quantity of shares to be sold to the Buyer will be that quantity which would represent at least 53.4% of the shares of the Company’s common stock on a fully diluted basis after completion of the Company’s cash tender offer. The agreement is subject to customary closing conditions and our ability to proceed with the cash tender offer.

In connection with the sale transaction contemplated by the agreement, we intend to make a cash tender offer for up to 100% of the outstanding common shares of Care stock at an offer price of $9.00 per share, subject to a minimum subscription of 10,300,000 shares of Care stock. Also, in connection with the transaction, the Company intends to terminate its existing management agreement with our Manager and it is anticipated that the resulting company will be advised by an affiliate of Tiptree.

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We intend to seek shareholder approval to abandon the plan of liquidation and pursue the contemplated transactions described above. If the contemplated transactions are not completed, we may pursue the plan of liquidation as approved by the stockholders on January 28 or we may consider other strategic alternatives to liquidation. In the event that a liquidation of the Company is pursued, material adjustments to these going concern financial statements may need to be recorded to present liquidation basis financial statements. Material adjustments which may be required for liquidation basis accounting primarily relate to reflecting assets and liabilities at their net realizable value and costs to be incurred to carry out the plan of liquidation. After such adjustments, the likely range of equity value which would be presented in liquidation basis financial statements would be between $8.05 and 8.90 per share.

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Part IV

ITEM 15. Exhibits, Financial Statement Schedules

(a) Documents Filed as Part of this Report

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SMC-CIT Holding Company, LLC

Consolidated Financial Statements as of and for the Years Ended December 31, 2009 and 2008 (unaudited), and Independent Auditor’s Report

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	Page
INDEPENDENT AUDITOR’S REPORT	F-3
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2009 AND 2008 (Unaudited):
Consolidated Balance Sheet	F-4
Consolidated Statements of Operations	F-5
Consolidated Statements of Members Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8 - F-13

/TOC

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Independent Auditors’ Report

To the Members of

SMC-CIT Holding Company, LLC

Salt Lake City, Utah

We have audited the accompanying consolidated balance sheet of SMC-CIT Holding Company, LLC (the “Company”) as of December 31, 2009, and the related consolidated statement of operations, members’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2009, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

July 14, 2010

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SMC-CIT HOLDING COMPANY, LLC

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2009 AND 2008

	2009	2008
		(Unaudited)
ASSETS
INVESTMENT IN REAL ESTATE PROPERTIES — Net of
accumulated depreciation of $3,700,307 and $1,738,862,
respectively	$ 54,789,955	$ 53,211,305
CASH AND CASH EQUIVALENTS	4,492	—
RESTRICTED CASH	—	611,584
DEFERRED RENT RECEIVABLE	1,991,790	1,216,288
DEFERRED FINANCING COSTS — Net of accumulated
amortization of $328,676 and $164,338, respectively	1,314,701	1,479,039
CONSTRUCTION RESERVE	—	3,010,233
TOTAL ASSETS	$ 58,100,938	$ 59,528,449
LIABILITIES AND MEMBERS’ EQUITY
MORTGAGE NOTES PAYABLE	$ 54,176,500	$ 54,176,500
ACCRUED INTEREST PAYABLE	310,016	310,016
OTHER LIABILITIES	—	12,230
Total liabilities	54,486,516	54,498,746
MEMBERS’ EQUITY	3,614,422	5,029,703
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$ 58,100,938	$ 59,528,449

See notes to consolidated financial statements.

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SMC-CIT HOLDING COMPANY, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009		2008
			(Unaudited)
OPERATING REVENUE:
Rental revenue	$ 5,602,178		$ 5,602,178
Operating expense reimbursements	490,817		439,146
Total Revenue	6,092,995		6,041,324
Real estate taxes	236,717		190,709
Other expenses	254,100		248,437
NET OPERATING INCOME	5,602,178		5,602,178
OTHER INCOME (EXPENSES):
Interest income	—		75,598
Amortization of deferred financing costs	(164,338	)	(164,338	)
Professional Fees	(65,000	)	—
Depreciation	(1,961,445	)	(1,738,862	)
Interest on mortgage notes payable	(3,650,191	)	(3,660,193	)
Total other income (expenses)	(5,840,974	)	(5,487,795	)
NET (LOSS) INCOME	$ (238,796	)	$ 114,383

See notes to consolidated financial statements.

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SMC-CIT HOLDING COMPANY, LLC

CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unaudited)

| MEMBERS’ EQUITY (DEFICIT) — January 1, 2008
(unaudited) | Care Member — $ 6,858,410 | $ | (234,448 | ) | Total — $ 6,623,962 | |
| --- | --- | --- | --- | --- | --- | --- |
| Net income (loss) — (unaudited) | 842,759 | | (728,376 | ) | 114,383 | |
| Distributions — (unaudited) | (1,035,714 | ) | (672,928 | ) | $ (1,708,642 | ) |
| MEMBERS’ EQUITY (DEFICIT) — January 1, 2009 | 6,665,455 | | (1,635,752 | ) | 5,029,703 | |
| Net income (loss) | 884,557 | | (1,123,353 | ) | (238,796 | ) |
| Distributions | (1,176,485 | ) | — | | (1,176,485 | ) |
| MEMBERS’ EQUITY (DEFICIT) — December 31, 2009 | $ 6,373,527 | $ | (2,759,105 | ) | $ 3,614,422 | |

See notes to consolidated financial statements.

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SMC-CIT HOLDING COMPANY, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009		2008
			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) / income	$ (238,796	)	$ 114,383
Adjustments to reconcile net (loss)/income to net cash provided
by operating activities:
Amortization of deferred financing costs	164,338		164,338
Depreciation	1,961,445		1,738,862
Changes in operating assets and liabilities:
Deferred rent receivable	(775,502	)	(1,216,288	)
Accounts payable and accrued expenses	—		310,016
Net cash provided by operating activities	1,111,485		1,111,311
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate	(3,540,095	)	(1,440,166	)
Change in construction reserve	3,010,233		2,025,267
Change in restricted cash	611,584		—
Net cash used in investing activities	81,722		585,101
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to members	(1,176,485	)	(1,708,642	)
Checks issued in excess of deposit	(12,230	)	12,230
Net cash used in financing activities	(1,188,715	)	(1,696,412	)
NET INCREASE IN CASH AND CASH EQUIVALENTS	4,492		—
CASH AND CASH EQUIVALENTS — Beginning of year	—		—
CASH AND CASH EQUIVALENTS — End of year	$ 4,492		$ —
Supplemental non-cash activities
Cash paid for interest	3,650,191		3,660,193

See notes to consolidated financial statements.

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SMC-CIT HOLDING COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unaudited)

1. ORGANIZATION

SMC-CIT Holding Company, LLC (the “Company”) was organized on December 12, 2007, as a Delaware limited company with the purpose to own, hold, maintain, encumber, lease, sell, transfer or otherwise dispose of senior living healthcare facilities solely in the state of Utah. Operations of the Company commenced with the initial funding on December 12, 2007 (“Initial Funding”).

The members of the Company are Care Investment Trust Inc. (“Care” or “Investment Member”) and Senior Management Concepts, Inc. (“SMC” or “Managing Member”), (collectively the “Members”). Each Member’s interest is denominated in Units. There is one class of Units, referred to as Common Units, a total of ten thousand (10,000) units were issued. Common Units are based on capital contributions and are allocated 9,000 and 1,000 to SMC and Care, respectively. Care made additional cash contributions in the amount of $6,858,141 at the Initial Funding which is treated as Preferred Capital. The preferred capital is entitled to a 15% annual return payable to Care, which is senior to the return paid to the Unit holders.

The Company will terminate seven years after the final closing date, as defined, unless extended or shortened as provided for in the Limited Liability Company Agreement (the “Agreement”).

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

On July 1, 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”), also known as Accounting Standards Codification (“ASC”) which establishes the ASC as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. The Codification supersedes all existing non-SEC accounting and reporting standards. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. The Company adopted the guidance effective with the issuance of its December 31, 2009 consolidated financial statements. As the guidance is limited to disclosure in the financial statements and the manner in which the Company refers to GAAP authoritative literature, there was no material impact on the Company’s consolidated financial statements.

The accompanying consolidated financial statements have been prepared using the accrual basis of accounting in accordance with GAAP. The preparation of consolidated financial statements in conformity with such principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In connection with the acquisition and financing of its properties, the Company placed the assets and liabilities of the properties into wholly owned single asset limited liability companies. The financial statements of these subsidiaries are consolidated with those of the Company. All transactions and intercompany accounts between the Company and the subsidiaries have been eliminated.

Fair Value Option for Financial Assets and Financial Liabilities

GAAP permits entities to choose to measure eligible financial instruments at fair value. The decision to elect the fair value option (“FVO”) is determined by an instrument-by-instrument basis, and is irrevocable.

The election was effective for the Company on January 1, 2008. The Company did not elect the FVO for any existing eligible financial instruments.

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SMC-CIT HOLDING COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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Investment in Real Estate Property

Investment in real estate property is carried at historical cost less accumulated depreciation.

Expenditures necessary to maintain an existing property in ordinary operating condition are expensed as incurred in accordance with each of the property’s master lease agreements. Expenditures associated with replacements, improvements, or major repairs to real estate property are capitalized.

The Company evaluates the carrying value of its long-lived assets in relation to historical results, current business conditions and trends to identify potential situations in which the carrying value of assets may not be recoverable. If such reviews were to indicate that the carrying value of such assets may not be recoverable, the Company would estimate the undiscounted sum of the expected cash flows of the assets to determine whether the sum is less than the carrying value of the assets, which would indicate the existence of an impairment. If an impairment existed, the Company would write the asset down to its fair value. As of December 31, 2009 and 2008 (unaudited), the Company’s investment in real estate property had no impairments.

Depreciation

Depreciation of buildings, building improvements and furniture and equipment are computed using the straight line method of depreciation over the estimated useful lives of the related property. The useful lives of building, improvements and furnishings are estimated to be from 6 to 40 years.

Cash and Cash Equivalents

For financial reporting purposes, overnight investments and short-term investments purchased with an original maturity of three months or less are considered to be cash equivalents.

Restricted Cash

Restricted cash includes escrowed funds and other restricted deposits in conjunction with the Company’s loan agreements.

Deferred Financing Costs

Deferred financing costs represent loan fees, legal and other third party costs associated with obtaining external financing. Such costs are amortized using the straight-line method, which approximates the effective interest rate method, over the terms of the related mortgage notes payable.

Other Assets

Other assets includes monies set aside at the date of purchase of the properties as a construction reserve. The reserve has been utilized during 2009 for capital improvements.

Revenue Recognition

The Company recognized rental revenue in accordance with ASC 840, Leases (“ASC 840”). ASC 840 requires that revenue be recognized on a straight-line basis over the non-cancelable term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. Renewal options in leases with rental terms that are lower than those in the primary term are excluded from the calculation of straight- line rent if the renewals are not reasonably assured. Rental income is recognized when payment is due pursuant to the terms of the lease agreements.

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SMC-CIT HOLDING COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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Income Taxes

Effective January 1, 2009, the Company adopted the authoritative guidance for uncertainty in income taxes included in ASC Topic 740, Income Taxes , as amended by Accounting Standards Update (“ASU”) 2009-06, Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosures Amendments for Nonpublic Entities . This guidance requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including the resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement, which could result in the Company recording a tax liability that would reduce net assets. The Company reviews and evaluates tax positions in its major jurisdictions and determines whether or not there are uncertain tax positions that require financial statement recognition.

No federal income taxes are payable by the Company, however, the Company may be subject to certain state and local income taxes. Each Member is responsible for reporting income or loss, to the extent required by the federal, state, and local income tax laws and regulations, based upon its respective share of the Company’s income and expenses as reported for income tax purposes.

Upon adoption and as of December 31, 2009, the Company does not have any uncertain tax positions or unrecognized tax benefits for which it believes that it is reasonably possible that they will significantly increase or decrease. For the year ended December 31, 2009, the Partnership did not recognize any interest or penalties related to income taxes in its financial statements. The Company’s tax filings for calendar years 2007 through 2009 remain subject to examination by taxing authorities.

Allocations to Members

Income, losses and cash flows from the Company is allocated to the Members in accordance with the Membership Agreement.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, restricted cash, accounts receivable, and mortgage notes payable.

The Company believes it mitigates credit risk by placing its cash and cash equivalents and restricted cash with high credit quality, federally insured institutions.

The Company is also exposed to counterparty risk with respect to mortgage notes payable in the even the counterparty is unable to fulfill its obligations. The Company minimized its credit risk exposure via formal credit policies and monitoring procedures.

Conditional Asset Retirement Obligations

Conditional asset retirement obligations are legal obligations to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. However, the obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. The uncertainty about the timing and/or method of settlement of the conditional asset retirement obligation is factored into the measurement of the liability.

There were no conditional asset retirement obligations recorded by the Company as of December 31, 2009 and 2008 (unaudited).

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SMC-CIT HOLDING COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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New Accounting Pronouncements

In May 2009, the FASB issued SFAS 165, Subsequent Events , which is codified in FASB ASC 855, Subsequent Events (“ASC 855”). ASC 855 introduces the concept of financial statements being available to be issued. It requires the disclosure of the date through with an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. The pronouncement is effective for interim periods ending after June 15, 2009. The Company adopted ASC 855 as of December 31, 2009. The Company evaluates subsequent events as of the date of issuance of its consolidated financial statements when reporting on the Company’s financial position and results of operations.

1. INVESTMENT IN REAL ESTATE PROPERTIES

The Company owned the following real estate properties at December 31, 2009 and 2008:

				December 31,	December 31,
				2009	2008 (unaudited)
	Acquisition	Number of	Purchase	Historical	Historical
Property	Date	Units	Price(2)	Cost(1)	Cost(1)
SMC Wellington, LLC	12/31/2007	120	$ 23,941,778	$ 24,264,539	$ 24,264,539
SMC Meadows, LLC	12/31/2007	119	11,400,000	11,400,000	11,400,000
SMC Cottonwood Creek, LLC	12/31/2007	106	10,904,946	14,058,942	11,479,472
SMC Charleston, LLC	12/31/2007	64	7,263,276	8,766,781	7,806,156
Total		409	$ 53,510,000	$ 58,490,262	$ 54,950,167

| (1) | Historical cost equals the original purchase price plus capital
improvements made from the purchase date through
December 31, 2009 and December 31, 2008, respectively. |
| --- | --- |
| (2) | Upon acquisition of the properties, an amount of $5,035,000 was
placed in a construction reserve to fund capital improvements.
These amounts were funded during 2008 and 2009. |

Investment in real estate properties at December 31, 2009 and 2008, consisted of the following:

	2009	(unaudited)
Land	$ 5,640,000	$	5,640,000
Land Improvement	5,636,455		5,609,499
Building and improvements	43,007,599		40,105,040
Furniture and equipment	4,206,208		2,520,000
Construction in Progress	—		1,075,628
Real estate properties at cost	58,490,262		54,950,167
Less accumulated depreciation	(3,700,307	)	(1,738,862	)
Real estate properties at cost — net	$ 54,789,955	$	53,211,305

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SMC-CIT HOLDING COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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1. MORTGAGE NOTES PAYABLE

			December 31,	December 31, — 2008
			2009	(unaudited)
	Original	Acquisition	Principal	Principal
Property	Principal	Date	Outstanding	Outstanding
SMC Charleston, LLC(1)	$ 6,374,000	12/31/2007	$ 6,374,000	$ 6,374,000
SMC Cottonwood Creek, LLC(2)	12,480,500	12/31/2007	12,480,500	12,480,500
SMC Meadows, LLC(2)	13,270,000	12/31/2007	13,270,000	13,270,000
SMC Wellington, LLC(2)	22,052,000	12/31/2007	22,052,000	22,052,000
	$ 54,176,500		$ 54,176,500	$ 54,176,500

| (1) | The note bears a fixed interest rate of 6.91% per annum and
requires monthly installments of interest-only payments until
January 31, 2010 and principal and interest payments from
February 1, 2010 until the maturity date of
December 31, 2017. The mortgage note is subject to a
prepayment premium if retired prior to scheduled maturity. The
loan is secured by the property. |
| --- | --- |
| (2) | The note bears a fixed interest rate of 6.61% per annum and
requires monthly installments of interest-only payments until
January 31, 2010 and principal and interest payments from
February 1, 2010 until the maturity date of
December 31, 2017. The mortgage note is subject to a
prepayment premium if retired prior to scheduled maturity. The
loan is secured by the property. |

The Company is subject to certain customary financial covenants under the agreements. The Company was in compliance with such covenants for the years ended December 31, 2009 and 2008 (unaudited).

Principal payments for each of the next five years and thereafter on the Company’s mortgage notes payable at December 31, 2009 are as follows:

Year	Amount
2010	$ 632,869
2011	735,746
2012	786,215
2013	840,148
2014	897,781
Thereafter	50,283,741
	$ 54,176,500

1. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments at December 31, 2009 and 2008 consist of cash and equivalents, restricted cash, accounts receivable, and other assets, mortgage notes payable. At December 31, 2009 and 2008 (unaudited), the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and other assets, approximates fair value.

Based upon the borrowing rates currently available to the Company, the fair value for the mortgage notes payable secured by properties, determined by discounting the future payments required under the terms of the mortgage notes at rates available to the Company for debt with similar maturities, terms, and underlying collateral is estimated to be $53,739,534 as of December 31, 2009 and $52,951,324 as of December 31, 2008 (unaudited).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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1. RISKS AND UNCERTAINTIES

The Company and the properties in which it has an interest are operating in a challenging and uncertain economic environment. Financial and real estate companies continue to be affected by the lack of liquidity in financial markets, declines in real estate values and the reduction in the willingness of financial institutions to make new loans and refinance or extend existing loans on the same terms and conditions. Should market conditions continue to deteriorate there is no assurance that such conditions will not result in further decreased cash flows or the ability to repay, refinance or extend the Company’s debt.

1. MANAGEMENT SERVICES AND RELATED PARTY TRANSACTIONS

For each of the properties owned, the Company has entered into a master lease agreement and property management agreement (the “Master Lease” and “Operator” agreements, respectively) with an affiliate of the Managing Member. Each Master Lease requires the tenant to pay all of the operating expenses of the property, including reimbursing the Company for real estate taxes and insurance costs.

In connection with the Master Lease agreement, the tenant paid expenses on the Company’s behalf for operating expenses totaling $490,817 and $439,146 in 2009 and 2008 (unaudited) respectively.

Non-cancelable base rentals under the Master Lease arrangements for the next 5 years and thereafter are as follows:

2010	5,380,594
2011	5,449,614
2012	5,478,805
2013	5,510,853
2014	5,566,038
Thereafter	46,694,707

1. SUBSEQUENT EVENTS.

Events or transactions occurring after the year end through the date that the consolidated financial statements were ready to be issued, July 14, 2010, have been disclosed in the notes to the accompanying consolidated financial statements.

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(b) Exhibits

Exhibit — No.		Description
3	.1	Amended and Restated Articles of Incorporation of the Registrant
(previously filed as Exhibit 3.1 to the Company’s Form 10-Q
(File No. 001-33549), filed on August 14, 2007 and herein
incorporated by reference.
3	.2	Amended and Restated Bylaws of the Registrant (previously filed
as Exhibit 3.2 to the Company’s Form 10-Q (File No.
001-33549), filed on August 14, 2007 and herein incorporated by
reference).
4	.1	Form of Certificate for Common Stock (previously filed as
Exhibit 4.1 to the Company’s Form S-11, as amended (File
No. 333-141634), and herein incorporated by reference).
10	.1	Assignment Agreement, dated as of January 31, 2009 (previously
filed as Exhibit 10.1 to the Company’s Form 8-K (File No.
001-33549), filed on February 5, 2009 and herein incorporated by
reference).
10	.2	Amendment No. 4 to Master Repurchase Agreement, dated as of
November 13, 2008 (previously filed as Exhibit 10.5 to the
Company’s Form 10-Q (File No. 001-33549), filed on November
14, 2008 and herein incorporated by reference).
10	.3	Amendment to Management Agreement, dated as of September 30,
2008 (previously filed as Exhibit 10.1 to the Company’s
Form 8-K (File No. 001-33549), filed on October 2, 2008 and
herein incorporated by reference).
10	.4	Warrant to Purchase Common Stock, dated as of September 30, 2008
(previously filed as Exhibit 10.2 to the Company’s Form 8-K
(File No. 001-33549), filed on October 2, 2008 and herein
incorporated by reference).
10	.5	Mortgage Purchase Agreement, dated as of September 30, 2008
(previously filed as Exhibit 10.3 to the Company’s Form 8-K
(File No. 001-33549), filed on October 2, 2008 and herein
incorporated by reference).
10	.6	Earn Out Agreement, dated as of June 26, 2008 (previously filed
as Exhibit 10.1 to the Company’s Form 8-K (File No. 001-33549), filed on July 2, 2008 and herein
incorporated by reference).
10	.7	Multifamily Note, dated as of June 26, 2008 (previously filed as
Exhibit 10.2 to the Company’s Form 8-K (File No.
001-33549), filed on July 2, 2008 and herein incorporated by
reference).
10	.8	Exceptions to Non-Recourse Guaranty, dated as of June 26, 2008
(previously filed as Exhibit 10.3 to the Company’s Form 8-K
(File No. 001-33549), filed on July 2, 2008 and herein
incorporated by reference).
10	.9	Master Lease Agreement, dated as of June 26, 2008 (previously
filed as Exhibit 10.4 to the Company’s Form 8-K (File No.
001-33549), filed on July 2, 2008 and herein incorporated by
reference).
10	.10	Amendment No. 3 to Master Repurchase Agreement, dated as of June
26, 2008 (previously filed as Exhibit 10.5 to the
Company’s Form 8-K (File No. 001-33549), filed on July 2,
2008 and herein incorporated by reference).
10	.11	Purchase and Sale Contract, dated as of May 14, 2008 (previously
filed as Exhibit 10.1 to the Company’s Form 8-K (File No.
001-33549), filed on May 20, 2008 and herein incorporated by
reference).
10	.12	Performance Share Award Agreement, dated as of May 12, 2008
(previously filed as Exhibit 10.4 to the Company’s Form
10-Q (File No. 001-33549), filed on November 14, 2008 and herein
incorporated by reference).
10	.13	Restricted Stock Unit Agreement Under the 2007 Care Investment
Trust Inc. Equity Plan, dated as of April 8, 2008
(previously filed as Exhibit 10.1 to the Company’s Form 8-K
(File No. 001-33549), filed on April 14, 2008 and herein
incorporated by reference).
10	.14	Form of Restricted Stock Unit Agreement Under the 2007 Care
Investment Trust Inc. Equity Plan (previously filed as Exhibit
10.2 to the Company’s Form 8-K (File No. 001-33549), filed
on April 14, 2008 and herein incorporated by reference).
10	.15	Contribution and Purchase Agreement, dated as of December 31,
2007 (previously filed as Exhibit 10.1 to the Company’s
Form 8-K (File No. 001-33549), filed on January 4, 2008 and
herein incorporated by reference).
10	.16	Master Repurchase Agreement entered into by Care Investment
Trust Inc. and two of its subsidiaries, Care QRS 2007 RE
Holdings Corp. and Care Mezz QRS 2007 RE Holdings Corp., with
Column Financial, Inc. (previously filed as Exhibit 10.1 to the
Company’s Form 10-Q (File No. 001-33549), filed on November
14, 2007 and herein incorporated by reference).

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Exhibit — No.		Description
10	.17	Registration Rights Agreement (previously filed as Exhibit 10.1
to the Company’s Form 10-Q (File No. 001-33549), filed
on August 14, 2007 and herein incorporated by reference).
10	.18	Management Agreement (previously filed as Exhibit 10.2 to the
Company’s Form 10-Q (File No. 001-33549), filed on August 14, 2007 and herein incorporated by reference).
10	.19	Care Investment Trust Inc. Equity Plan (previously filed as
Exhibit 10.4 to the Company’s Form 10-Q (File No.
001-33549), filed on August 14, 2007 and herein incorporated by
reference).
10	.20	Manager Equity Plan (previously filed as Exhibit 10.5 to the
Company’s Form 10-Q (File No. 001-33549), filed on August
14, 2007 and herein incorporated by reference).
10	.21	Form of Restricted Stock Agreement under Care Investment Trust
Inc. Equity Plan (previously filed as Exhibit 10.5 to the
Company’s Form S-11, as amended (File No. 333-141634), and
herein incorporated by reference).
10	.22	Form of Restricted Stock Agreement under Care Investment Trust
Inc. Equity Plan (previously filed as Exhibit 10.6 to the
Company’s Form S-11, as amended (File No. 333-141634), and
herein incorporated by reference).
10	.23	Form of Restricted Stock Agreement under Care Investment Trust
Inc. Manager Equity Plan (previously filed as Exhibit 10.8 to
the Company’s Form S-11, as amended (File No. 333-141634),
and herein incorporated by reference).
10	.24	Form of Indemnification Agreement entered into by the
Registrant’s directors and officers (previously filed as
Exhibit 10.9 to the Company’s Form S-11, as amended (File
No. 333-141634), and herein incorporated by reference).
10	.25	Assignment Agreement dated as of January 31, 2009, by and
between Care Investment Trust Inc. and CIT Healthcare LLC
(previously filed as Exhibit 10.1 to the Company’s Form 8-K
(File No. 001-33549), filed on February 5, 2009 and herein
incorporated by reference).
10	.26	Loan Purchase Agreement with CapitalSource Bank dated September
15, 2009 (previously filed as Exhibit 10.1 to the Company’s
Form 10-Q (File No. 001-33549), filed on November 9, 2009 and
herein incorporated by reference).
10	.27	Loan Purchase and Sale Agreement dated as of October 6, 2009, by
and between Care Investment Trust Inc. and General Electric
Capital Corporation (previously filed as Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-33549), filed on November
18, 2009 and herein incorporated by reference).
10	.28	Care Investment Trust Inc. Plan of Liquidation (previously filed
as Exhibit A to the Company’s Schedule 14A (File No.
001-33549), filed on December 28, 2009 and herein incorporated
by reference).
10	.29	Amended and Restated Management Agreement by and between Care
Investment Trust Inc. and CIT Healthcare LLC, dated as of
January 15, 2010 (previously filed as Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-33549), filed on January
15, 2010 and herein incorporated by reference).
21	.1	Subsidiaries of the Company.
23	.1	Consent of Deloitte & Touche, dated as of July 14,
2010.
23	.2	Consent of Deloitte & Touche, dated as of July 14,
2010.
31	.1	Certification of CEO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31	.2	Certification of CFO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32	.1	Certification of CEO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32	.2	Certification of CFO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Care Investment Trust Inc.

By: /s/ Paul F. Hughes

Paul F. Hughes

Chief Financial Officer and Treasurer and

Chief Compliance Officer and Secretary

July 15, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been duly signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Salvatore
(Torey) V. Riso, Jr. Salvatore
(Torey) V. Riso, Jr.	President and Chief Executive Officer (Principal Executive Officer)	July 15, 2010
/s/ Paul
F. Hughes Paul
F. Hughes	Chief Financial Officer and Treasurer and Chief Compliance
Officer and Secretary (Principal Financial and Accounting Officer)	July 15, 2010
/s/ Flint
D. Besecker Flint
D. Besecker	Chairman of the Board of Directors	July 15, 2010
/s/ Gerald
E. Bisbee, Jr. Gerald
E. Bisbee, Jr.	Director	July 15, 2010
/s/ Karen
P. Robards Karen
P. Robards	Director	July 15, 2010
/s/ J.
Rainer Twiford J.
Rainer Twiford	Director	July 15, 2010
/s/ Steve
N. Warden Steve
N. Warden	Director	July 15, 2010

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EXHIBIT INDEX

Exhibit — No.		Description
10	.13	Restricted Stock Unit Agreement Under the 2007 Care Investment
Trust Inc. Equity Plan, dated as of April 8, 2008
(previously filed as Exhibit 10.1 to the Company’s Form 8-K
(File No. 001-33549), filed on April 14, 2008 and herein
incorporated by reference).
10	.14	Form of Restricted Stock Unit Agreement Under the 2007 Care
Investment Trust Inc. Equity Plan (previously filed as Exhibit
10.2 to the Company’s Form 8-K (File No. 001-33549), filed
on April 14, 2008 and herein incorporated by reference).
10	.15	Contribution and Purchase Agreement, dated as of December 31,
2007 (previously filed as Exhibit 10.1 to the Company’s
Form 8-K (File No. 001-33549), filed on January 4, 2008 and
herein incorporated by reference).
10	.16	Master Repurchase Agreement entered into by Care Investment
Trust Inc. and two of its subsidiaries, Care QRS 2007 RE
Holdings Corp. and Care Mezz QRS 2007 RE Holdings Corp., with
Column Financial, Inc. (previously filed as Exhibit 10.1 to the
Company’s Form 10-Q (File No. 001-33549), filed on
November 14, 2007 and herein incorporated by reference).
10	.17	Registration Rights Agreement (previously filed as Exhibit 10.1
to the Company’s Form 10-Q (File No. 001-33549), filed
on August 14, 2007 and herein incorporated by reference).
10	.18	Management Agreement (previously filed as Exhibit 10.2 to the
Company’s Form 10-Q (File No. 001-33549), filed on August 14, 2007 and herein incorporated by reference).
10	.19	Care Investment Trust Inc. Equity Plan (previously filed as
Exhibit 10.4 to the Company’s Form 10-Q (File No.
001-33549), filed on August 14, 2007 and herein incorporated by
reference).
10	.20	Manager Equity Plan (previously filed as Exhibit 10.5 to the
Company’s Form 10-Q (File No. 001-33549), filed on August
14, 2007 and herein incorporated by reference).
10	.21	Form of Restricted Stock Agreement under Care Investment Trust
Inc. Equity Plan (previously filed as Exhibit 10.5 to the
Company’s Form S-11, as amended (File No. 333-141634), and
herein incorporated by reference).
10	.22	Form of Restricted Stock Agreement under Care Investment Trust
Inc. Equity Plan (previously filed as Exhibit 10.6 to the
Company’s Form S-11, as amended (File No. 333-141634), and
herein incorporated by reference).
10	.23	Form of Restricted Stock Agreement under Care Investment Trust
Inc. Manager Equity Plan (previously filed as Exhibit 10.8 to
the Company’s Form S-11, as amended (File No. 333-141634),
and herein incorporated by reference).
10	.24	Form of Indemnification Agreement entered into by the
Registrant’s directors and officers (previously filed as
Exhibit 10.9 to the Company’s Form S-11, as amended (File
No. 333-141634), and herein incorporated by reference).
10	.25	Assignment Agreement dated as of January 31, 2009, by and
between Care Investment Trust Inc. and CIT Healthcare LLC
(previously filed as Exhibit 10.1 to the Company’s Form 8-K
(File No. 001-33549), filed on February 5, 2009 and herein
incorporated by reference).
10	.26	Loan Purchase Agreement with CapitalSource Bank dated September
15, 2009 (previously filed as Exhibit 10.1 to the Company’s
Form 10-Q (File No. 001-33549), filed on November 9, 2009 and
herein incorporated by reference).
10	.27	Loan Purchase and Sale Agreement dated as of October 6, 2009, by
and between Care Investment Trust Inc. and General Electric
Capital Corporation (previously filed as Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-33549), filed on November
18, 2009 and herein incorporated by reference).
10	.28	Care Investment Trust Inc. Plan of Liquidation (previously filed
as Exhibit A to the Company’s Schedule 14A (File No.
001-33549), filed on December 28, 2009 and herein incorporated
by reference).
10	.29	Amended and Restated Management Agreement by and between Care
Investment Trust Inc. and CIT Healthcare LLC, dated as of
January 15, 2010 (previously filed as Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-33549), filed on January
15, 2010 and herein incorporated by reference).
21	.1	Subsidiaries of the Company.
23	.1	Consent of Deloitte & Touche, dated as of March 16, 2009.
31	.1	Certification of CEO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31	.2	Certification of CFO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32	.1	Certification of CEO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32	.2	Certification of CFO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

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